Oil company executives find themselves on the receiving end of no shortage of sage advice about how they should proceed to cut their emissions and rebalance their new project investments amid the energy transition. From politicians to academics, media pundits, activists and consulting firms of all shapes and sizes, it seems everyone is trying to get in on this influence game.

Much of this prevailing wisdom advises firms to simply go out and invest in big wind, solar and stationary battery projects as a main means of signalling their green virtues. It is a plan of action some major companies have attempted to follow with mixed results, as evidenced by recent major write-downs of offshore wind projects by BP and Equinor, and announced shifts in strategy by Shell and others during the course of 2023.

“Wind and solar alone cannot solve emissions in the industrial sectors” Woods, ExxonMobil

As the transition has progressed in recent years, it has become increasingly evident that some carbon reducing projects are more fit-for-purpose at oil companies than others. A great example of such a project that plays right into the inherent skillsets already present at a major oil company arose in November with the announcement by ExxonMobil of its plans to develop a major lithium resource in southern Arkansas. The lithium is contained in a heavy brine formation called the Smackover, 10,000ft below the surface.

The magnitude of the Smackover resource has long been understood, and from a process, scientific and technological standpoint, it appears to be right in the ExxonMobil wheelhouse. “That is really our low-carbon strategy, to identify opportunities where we have skills and capabilities that we can bring to these important challenges, for example, lithium,” Patrick Howarth, ExxonMobil’s lithium global business manager, told Hydrogen Economist. “The world urgently needs more lithium. Its demand is anticipated to grow by four times by 2030. So, we need a lot more. North America needs a lot more.”

Battery power

North America will indeed need a stunning increase in lithium production in the coming years if the Biden administration’s plan for mass adoption of electric vehicles (EVs) is to become a reality. Lithium is obviously a key component for the batteries that power EVs, and the fact that a major oil company is likely to become a major supplier of this critical energy mineral to US automakers serves to emphasise the importance of maintaining a vibrant and healthy oil and gas sector.

The process, personnel and equipment involved in the drilling of these lithium wells will be essentially identical to the drilling of a 10,000ft. vertical oil or natural gas well. Even the below-ground geologic structure itself is well-understood and has been targeted by oil and gas drillers for decades. The Arkansas Geological Survey says the Smackover formation was discovered in 1922 and has produced over 600m bl of oil since that time. In preparation for this project, ExxonMobil has secured leasing rights to 120,000 acres in southern Arkansas.

In a speech delivered on 15 November at the APEC Summit in San Francisco, ExxonMobil CEO Darren Woods talked about the central role the oil and gas industry must play to make this energy transition a success. In part, he said, “while renewable energy is essential to help the world achieve net zero, it is not sufficient—wind and solar alone cannot solve emissions in the industrial sectors that are at the heart of a modern society. The technologies ExxonMobil is pursuing can.”

Carbon capture

These kinds of fit-for-purpose technologies are far from limited to drilling 10,000ft wells in Arkansas, though. CCS is another field in which companies such as ExxonMobil already possess the on-staff engineering, scientific, project management and technical expertise to execute. Indeed, ExxonMobil has been in the CCS business for decades and has captured and stored more carbon than any other company on earth.

One of the company’s biggest planned projects centres on the Houston area. The plan is to capture emissions at the tailgates of major industrial plants in the area and store them in underground caverns along the Texas and Louisiana Gulf Coast. ExxonMobil says this project could ultimately “capture and store approximately 50mt of CO₂/yr by 2030—and 100m by 2040, significantly reducing CO₂ emissions from one of the US’ largest industrial areas”.

“Our low-carbon strategy is to identify opportunities where we have skills and capabilities that we can bring to these important challenges” Howarth, ExxonMobil

In early November, ExxonMobil completed its acquisition of Denbury Resources, whose extensive system of CO₂ pipelines will integrate nicely into the Houston project and other planned CCS projects in the years to come. “It really fits in very well,” Lydia Johnson, vice-president of product development in ExxonMobil’s low-carbon solutions business unit, told Hydrogen Economist.

“What we like to say is, it is really the three Ps that Denbury has brought for us,” she continued. “It is pipeline, pour space and people, and all those things really help accelerate our vision for the US Gulf Coast, which we are heavily invested in across the entire value chain. And I think our integration across all of that has been key, and bringing Denbury into that mix just strengthens that integration and really allows us to unlock even more sectors and customers faster.”

Baytown blue

The company’s institutional expertise in the CCS field is also enabling another carbon-cutting project, the major hydrogen hub already underway at its Baytown refinery and chemical complex. The plan is to use much of the hydrogen produced to power the complex, and to capture and store as much as 98% of the emissions.

When asked if the company has concerns over the ongoing opposition to so-called ‘blue’ hydrogen, produced using natural gas, Johnson pointed out that the colour assigned to the production is not important. What matters is its emissions profile.

“It is low-carbon hydrogen that we are doing there,” she said. “And there are really five components that are going to determine that hydrogen viability. It is carbon intensity. It is our technological development, and it is the scale of demand, geography and policy. So all of these are going to influence us at Baytown. That is right with our CCS capabilities there; that makes the most sense. We focus more on carbon intensity versus colour. It is really colour agnostic: The amount of carbon that is in the product is the key.”

The excess hydrogen will be sold to either domestic or overseas customers, and ExxonMobil is already negotiating supply agreements and shipping arrangements in anticipation of first production coming online in 2027–28.

“We see a pretty strong demand from other fuel-switching customers and ammonia customers,” Johnson said. “This is really part of our value proposition: we have got the integrated solution that not only works for our own needs but enables us to take that out and work with customers and industries to help them with their solutions as well. That is really the key.”

The fact that virtually all of it can be achieved with staff expertise already on hand is an advantage few companies will enjoy as this energy transition moves ahead in the decades to come.

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Author: David Blackmon