Chevron's Pursuit of a Slice of the Global CCS Market: Opportunities and Challenges

Another step toward its lower carbon ambitions

Chevron signed a memorandum of understanding with Japan's JX Nippon Oil & Gas Exploration to evaluate exporting carbon dioxide from Japan to storage projects in the Asia-Pacific region. The companies will study the feasibility of building a CCS value chain, including capturing the greenhouse gas from industrial sources in Japan, including affiliates of JX, and transporting it by ship to storage sites operated by Chevron in Australia. The partners would also evaluate other potential storage sites throughout the Asia-Pacific region.

CCS represents a potential win-win solution for Chevron and other energy and industrial companies. It could enable them to continue operating their legacy businesses for decades to come while reducing the impact fossil fuel usage has on the environment.

A step behind the leaders

Most of Chevron's projects are still in the evaluation stages. That puts it at risk of falling behind rivals Exxon and Occidental Petroleum, which have projects under construction secured by commercial contracts.

Occidental is currently building the world's largest direct air capture project in Texas, which will be capable of capturing 500,000 tons of carbon dioxide per year from the air. The company formed a joint venture with a fund managed by BlackRock, which will invest $550 million into the project. The Stratos project is already under construction and should begin commercial operations next year. Occidental is commercializing the facility by selling carbon credits to several customers.

Exxon is taking a different approach. It focuses on transporting and storing carbon dioxide captured directly at the emissions source.

In 2022, Exxon signed a landmark commercial agreement with CF Industries to capture and permanently store 2 million metric tons of carbon dioxide annually from its manufacturing complex in Louisiana starting next year. Exxon will transport the gas via pipelines operated by EnLink Midstream to a sequestration site the oil giant is developing. Exxon has gone on to sign several additional commercial agreements with large industrial customers.

Looking for ways to capture a slice of this enormous opportunity

Chevron continues to evaluate potential CCS projects. The oil giant wants to find commercially viable opportunities that would benefit the environment and its business. While it currently lags behind leaders Exxon and Occidental, the opportunity is so potentially vast that there's plenty of room for Chevron to secure needle-moving opportunities. That upside adds to its long-term investment appeal.