Potential in Carbon Capture Market
ExxonMobil predicts that the carbon capture and storage market could reach a value of $4 trillion globally by 2050. This presents a tremendous opportunity for Kinder Morgan, and here’s why.
The Role of Carbon Capture, Utilization, and Sequestration (CCUS)
CCUS holds the potential to contribute significantly to reducing global emissions. The captured carbon dioxide can be utilized, such as for enhanced oil recovery (EOR), or stored underground.
At present, the United States captures minimal amounts of carbon dioxide. However, in 2022, the country signed a groundbreaking commercial agreement with CF Industries to capture and store up to 2 million metric tons of carbon dioxide annually from one of their manufacturing complexes in Louisiana. Exxon will transport the captured carbon dioxide through pipelines operated by EnLink Midstream. Exxon has further expanded its carbon capabilities by acquiring Denbury Resources, a leader in EOR and carbon dioxide infrastructure. With 1,300 miles of carbon dioxide pipelines and 15 strategically located storage sites, Exxon is well positioned in this sector.
Kinder Morgan’s operations involve producing carbon dioxide from natural source fields and transporting it to legacy oil fields in the Permian Basin. There, the company injects it into the fields to facilitate oil production through EOR. This segment of Kinder Morgan’s business generates substantial free cash flow.
Capitalizing on its expertise and existing infrastructure, Kinder Morgan aims to establish a prominent presence in the growing CCUS market. The company has already begun constructing a carbon capture project in Colorado, expecting completion later this year. With an investment of approximately $50 million, this venture will capture carbon dioxide from two natural gas-treating facilities.
Considering future opportunities in carbon capture, one industry estimate suggests that the United States will need to invest nearly $225 billion until 2050 to build approximately 70,000 miles of pipeline. Additionally, $80 billion will be required for developing storage sites. Kinder Morgan, with its expertise and existing infrastructure, seems well-positioned to capitalize on these prospective investments.
Kinder Morgan’s involvement in transporting and utilizing carbon dioxide for EOR makes it a leader in this field. This presents a substantial potential for the company to become a major long-term growth driver, supporting the expansion of its high-yielding dividend in the future.