Denbury Executes Term Sheet with Gulf Coast Midstream Partners for Joint Development of Texas Gulf Coast CO2 Sequestration Project
04 November 2021 - 11:20AM
Business Wire
Denbury Inc. (NYSE: DEN) (“Denbury”) today announced that its
wholly-owned subsidiary, Denbury Carbon Solutions, LLC, and
Houston-based Gulf Coast Midstream Partners, LLC (“GCMP”) have
executed a non-binding letter of intent and term sheet (“LOI”) for
the permanent sequestration of CO2 in a planned underground storage
project southwest of Houston, Texas. The project is currently being
developed by GCMP’s wholly-owned subsidiary, Gulf Coast Carbon
Solutions, LLC (“GCCS”) and the arrangement contemplates Denbury
participating as an equity investor alongside GCMP with up to 50%
equity ownership in the project. Denbury’s election of its equity
ownership level will be determined prior to the execution of final
agreements.
Located just 25 miles from Denbury’s existing CO2 Green
Pipeline, the project site is ideally positioned to sequester large
volumes of CO2 from Gulf Coast industrial emissions sources. Total
CO2 storage capacity is estimated to be up to 400 million metric
tons, with potential to begin sequestration by early 2025. Initial
injection rates are anticipated to be 1.5 million metric tons per
year (“MMTPA”), with the ability to increase capacity up to 9 MMTPA
to meet anticipated market demand. GCMP has already initiated the
Class VI permitting process with the U.S. Environmental Protection
Agency for the project.
Chris Kendall, Denbury’s President and Chief Executive Officer,
commented, “Today’s announcement with GCMP reinforces Denbury’s
strategy of providing low cost, safe and reliable permanent storage
for captured industrial CO2 emissions. Not only does this project
provide significant near-term storage potential, the western
extension of our Gulf Coast CO2 pipeline infrastructure enhances
CO2 offtake and storage access for industrial facilities in the
southwest Houston area. We are excited to work with GCMP on this
significant storage project.”
John M. Hopper, GCMP’s Chief Executive Officer, said that “We
are very pleased to partner with Denbury in our carbon
sequestration project. Denbury’s world-class CO2 transportation
infrastructure and CO2 management skill set are an ideal complement
to GCMP’s underground storage development and operations expertise.
Together, GCMP and Denbury are well-positioned to offer a bundled
CO2 transportation and permanent sequestration service to meet the
evolving needs of the carbon capture sequestration market.”
ABOUT DENBURY
Denbury is an independent energy company with operations and
assets focused on Carbon Capture, Use and Storage (CCUS) and
Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain
regions. For over two decades, the Company has maintained a unique
strategic focus on utilizing CO2 in its EOR operations and since
2013 has been active in CCUS through the injection of captured
industrial-sourced CO2. The Company currently injects over three
million tons of captured industrial-sourced CO2 annually, and its
objective is to fully offset its Scope 1, 2, and 3 CO2 emissions
within this decade, primarily through increasing the amount of
captured industrial-sourced CO2 used in its operations. For more
information about Denbury, visit www.denbury.com.
The Denbury Carbon Solutions team was formed in January 2020 to
advance Denbury’s leadership in the anticipated high-growth CCUS
industry, leveraging its unique capabilities and assets that were
developed over the last 20-plus years through its focus on CO2
EOR.
Follow Denbury on Twitter and LinkedIn.
ABOUT GULF COAST MIDSTREAM PARTNERS
Gulf Coast Midstream Partners and its principals formed GCMP for
the purpose of developing both hydrocarbon and non-hydrocarbon
underground storage options, including carbon sequestration
solutions in secure geologic storage facilities through GCCS that
qualify for credits under IRS Section 45Q as well as in the
voluntary carbon credits market. The principals in GCMP have a
combined 150+ years of hands-on experience in designing, developing
and operating large-scale infrastructure projects including
underground storage facilities in solution-mined salt caverns and
depleted oil & gas reservoirs. GCMP’s management team members
have been directly involved in the development and
commercialization of more than two dozen underground storage
projects, totaling in excess of $2 billion in aggregate capex
spend. For more information about Gulf Coast Midstream Partners,
please see GCMP’s web site at: www.gulfcoastmidstream.com.
This press release contains forward-looking statements that
involve risks and uncertainties, including Denbury and GCMP
negotiating and executing definitive agreements documenting the
anticipated arrangements discussed above, the construction of the
connecting CO2 pipeline and sequestration facilities and their
becoming operational, and the estimated levels of CO2 emissions
being available for sequestration. These statements are based on
engineering, geological, financial and operating assumptions that
management of both parties believe are reasonable based on
currently available information; however, their achievement are
subject to a wide range of business risks, and there is no
assurance that these goals and projections can or will be met.
Actual results may vary materially. In addition, any
forward-looking statements represent the parties’ estimates only as
of today and should not be relied upon as representing its
estimates as of any future date. The parties assume no obligation
to update these forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20211104005084/en/
DENBURY CONTACTS: Brad Whitmarsh, Executive Director,
Investor Relations, 972.673.2020, brad.whitmarsh@denbury.com Susan
James, Manager, Investor Relations, 972.673.2593,
susan.james@denbury.com
GCMP CONTACTS: John M. Hopper, Chief Executive Officer,
713.974.5607, john@gulfcoastmidstream.com Ben Danielson, Chief
Development Officer – CCS, 832.919.6862,
ben@gulfcoastmidstream.com
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