Council approves carbon sequestration project

The Beaumont City Council unanimously approved a Chapter 380 economic development and lease agreement that could result in a projected profit of more than $24 million for the city - but it could take 50 years to see the full financial gain.

Civic gain, in the form of positive environmental impact, will take place much sooner, company liaisons detailed before the elected officials, however.

April 25, the city council approved an agreement with Caliche Development Partners (CDP) for a carbon sequestration project.

CDP is a private equity-backed, acquisition and development company focused on the underground storage of natural gas, industrial gases like hydrogen and helium, and carbon sequestration.

Based in Houston, Caliche’s projects are located in Jefferson County and beyond.

Chapter 380 of the Local Government Code authorizes municipalities to offer incentives designed to promote economic development, such as commercial and retail projects.

Specifically, it provides for offering loans and grants of city funds or services at little or no cost to promote state and local economic development and to stimulate business and commercial activity provided that a city first establishes a program to implement the incentives.

CDP Vice President of Operations Darrell Hall presented the city council with information about the project, which he said should begin development in about two years - after the approximate time it will likely take CDP to complete the EPA permitting process. Once permitting is secured, Hall said, development on city property south and west of the city landfill will begin.

Once construction and customer agreements have been finalized, CDP will capture the carbon from its customer facilities and transport it via specialized pipe networks to places where it will be used as a feedstock for various applications or safely stored at a designated site.

CO2 will be injected into underground formations, such as depleted oil and gas reservoirs and deep saline formations through injection wells, where it will be stored and monitored for a period of 50 years, according to CDP.

Hall stated there may be a future use for the captured carbon, but there are no plans at this time.

According to the U.S. Environmental Protection Agency (EPA), carbon dioxide emissions from fossil fuel and industrial processes account for 65% of global greenhouse gas emissions. The increase in greenhouse gas emissions affects various aspects of the climate.

Over time, the warmer temperatures caused by an increase in greenhouse gases have changed weather patterns and disrupted the natural balance in the atmosphere, the ocean, and on land. Carbon sequestration will reduce emissions of greenhouse gases into the atmosphere.

Benefits

Customers may include refineries, energy companies or any producer of carbon. CDP does not specify their customer base at this time, but the surrounding carbon producers are on par with typical clientele.

Local refineries stand to have the most financial gain by partnering with Caliche to reduce CO2 emissions. In an effort to reduce greenhouse gas emissions, carbon capture tax credits and low carbon fuel standards have incentivized CCS projects by providing monetary value on the reduction of CO2 emissions.

The city stands to gain financially from the Chapter 380 economic development and lease agreement with CDP, administration detailed before council.

The city has agreed to accept payment at a rate of $1 per metric ton of carbon dioxide captured, with a $250,000 annual minimum, in addition to a $100,000 direct payment per injection well, and $50,000 annually as the project is monitored over a 50- year period, in exchange for the lease agreement, which is projected for $24 million over the life of the project, according to research provided by CDP.

Assistant City Manager Chris Boone stated that, as part of the Chapter 380 agreement, the city is authorized to offer economic incentives and/or abatements for a project to move forward.

For example, the city entered into a Chapter 380 economic development agreement with HEB when their 11th Street location was proposed.

Best practices and quality engineering will mitigate any risks associated with the project, reported CDP.

Well design, including full boar cement and depth of formation will protect drinking water. Historical mapping and site exploration will guide well placement away from old wellbores.

The surface impact of operations will be mitigated by low-impact practices and good stewardship.

A Bureau of Economic Geology (BEG) study and core sample reviews will confirm seal integrity.

“We will be using EPA and Texas Railroad Commission quality testing and procedures,” Hall added. — Barbara Davis