Oil and gas company taps fed cash to explore carbon capture
San Antonio-based Howard Energy Partners recently won its second Department of Energy grant this year to improve a promising climate change strategy known as carbon capture and storage.
The competitive grants from the DOE were awarded from funding created by the 2022 Inflation Reduction Act for addressing climate change mitigation.
In February, Howard Energy received $9 million to join two partners in Corpus Christi to study the best ways to store captured carbon dioxide, or CO2, under the Port of Corpus Christi. In May, the company won $3 million for the earliest stages of planning an ambitious regional carbon capture strategy stretching from Louisiana to many sites along the Texas Gulf Coast.
Understanding the significance of Howard Energy’s grants starts with learning a little about carbon capture.
What it is
If you’re not sure what carbon capture and storage is, you’re normal. In the course of figuring out what the grants mean, I went from zero knowledge of it a month ago to a basic understanding today.
One thing to know about carbon capture in 2023 is that it’s still a plausible and promising future climate mitigation technology that is not ready for prime time to deploy at scale to address climate change.
The big idea of carbon capture and storage is this: If we can create a process for removing CO2 from the atmosphere or, better yet, if we have a process for preventing its release, we can slow or maybe even reverse climate change caused by the accumulation of human activity generated CO2. Capturing the gas at the moment it’s produced, or removing it from the air, is followed by compressing and liquefying it, and subsequently storing it. A main strategy for storing the captured gas is to inject it into underground wells dug for that purpose.
The first Howard Energy grant is to research geologic data that could make injecting CO2 into an underground well more efficient. This is firmly in the research phase, given that in 2023, there’s only one carbon storage well operating in the United States — in Macon, Ill.
With current technology, one well can theoretically store up to 1 million tons of CO2 per year. Based on the scale of emissions in the United States — more than 5 gigatons per year — Howard’s team estimates it would take more than 5,000 carbon storage wells to effectively capture U.S. emissions. That’s a scale nowhere near feasible today.
As Howard Energy CEO
Mike Howard acknowledges, this remains a “drop in the ocean” type of effort in 2023. But it’s a start.
In addition, he said, “There is not geological certainty on how to do this on industrial scale. We have not iterated enough yet.”
Having said that, an estimated 102 sites nationwide have applied for a permit to do CO2 storage in an underground site, up from 16 permit applications before the Inflation Reduction Act was enacted. So we’re in a ramp-up phase, starting from a very low base.
Scaling up
Speaking of ramping up, Howard Energy got its second grant to work toward achieving a much bigger scale on a specific regional project. This one starts with the idea that every big industrial plant produces large amounts of CO2, much of which gets released into the atmosphere. The idea is that the gas captured at some big industrial plants could be concentrated and liquefied, then transported over long distances to centralized storage facilities.
Howard said he’s on board with the analogy that building infrastructure to deal with CO2 as a waste product could be seen somewhat as a massive sewage treatment project. Waste produced in many places can be collected and transported to other places where it is treated and stored.
Howard Energy’s second DOE grant, the $3 million award that it won at the end of May, is to study the feasibility of a regional carbon capture and storage pipeline infrastructure project stretching from Louisiana through South Texas. The big idea would be to place carbon capturing facilities at highemissions industrial plants throughout the region, with the liquefied CO2 transported via pipelines to far-away underground disposal areas.
Howard Energy’s role for the moment is to study engineering feasibility. Ultimately, the company’s expertise as an oil and gas pipeline company makes it a key partner for this ambitious project. Fully built out — as currently imagined — it could handle up to 250 million tons of CO2 per year, which would be better than a drop in the ocean — more like 5 percent of national CO2 emissions. Since the United States accounts for 10 to 11 percent of global emissions, a project at this scale could capture 0.5 percent of the planet’s carbon emissions.
To be realistic, this is decades and billions of dollars away from being built, but Mike Howard is happy to play his part. He told me: “If you want to participate in lowering the carbon intensity of energy, I can’t think of a better way to go about it. This is the action we can take that may have a real impact that you can measure.”
Why I care
Besides this being a speculative, multidecade climate change-mitigation strategy, why should we care? Here’s at least why I do.
My favorite thing in business is when people do something different than the cartoonishsimple thing we expect from them. I mean this in the context of the environmental, social and governance movement, in which climate advocates would be inclined to attack a company like Howard Energy Partners. As one that makes money transporting oil and gas through pipelines, it is a key cog in the fossil fuel industry.
Mitigating climate change by shutting down the oil and gas industry is probably not as clever as it at first appears.
Rather, nudging the oil and gas industry to embrace mitigation strategies feels like a more realistic approach — one that brings industry expertise and capital to the fight.
Mike Howard has been struggling for some years with how to pursue ESG goals through his company, while at the same time pushing back on the simplistic excesses in parts of the ESG movement.
From the other side of the ESG fight, a different and also flawed perspective, one could take notice of Howard Energy’s involvement in DOE-funded carbon capture research and wonder what happened to this midstream energy company to make it go woke.
But Mike Howard scoffs at that reaction: “We’re capitalists. There has to be a financial reason to do this. Infrastructure at the multibillion-dollar scale requires the government. We’re being incentivized to do this through government grants and tax subsidies.”
I think Howard’s outlook is correct, in that he’s responding as any capitalist should to the incentives available to him and the larger opportunities this could create in the future. If the big CO2 pipeline project for the Gulf Coast ever got built, his company would be uniquely suited to help build it.