Long Beach-based oil, natural gas and carbon storage company California Resources Corp. has received what appears to be the first federal permit in the nation for carbon injection and storage in an old oil field.
The company announced on Dec. 31 that the federal Environmental Protection Agency had issued a Class VI well permit to Carbon Terra Vault – a joint venture of California Resources and Toronto-based Brookfield Renewable Partners – to inject and store up to 38 million tons of carbon dioxide in the depleted portion of California Resources’ Elk Hills Oil Field holdings in western Kern County.
According to the California Resources announcement, this is the first-ever EPA permit for carbon injection and storage in a depleted oil field. And it marks a major milestone for the company’s effort to alter its business model to adapt to state targets to end oil drilling in the state by 2045.
“We are proud to have received the state’s first Class VI permits, enabling us to advance critical clean energy projects in California,” Francisco Leon, California Resources chief executive, said in the company’s announcement. “This milestone underscores our leadership in the carbon capture and storage sector and highlights our capability to deliver carbon management solutions to key industrial partners across the state.”
In a related but separate development, California Resources last month announced that Carbon Terra Vault had signed a memorandum of understanding with Durham, North Carolina-based clean energy company Net Power Inc. to develop Net Power’s ultra-low emission power plants next to Carbon Terra Vault’s planned carbon dioxide reservoirs in California.
Joint venture formed
Carbon dioxide is a greenhouse gas that when emitted into the atmosphere contributes to global warming. Carbon storage or sequestration has been one of the oil industry’s main responses to pressures to curb carbon dioxide and other greenhouse gas emissions.
California Resources, which became the state’s largest oil and natural gas producer after it acquired Aera Energy last year, plunged into the fledgling carbon storage business in 2021 when it formed the Carbon Terra Vault joint venture with Brookfield Renewable Partners. The aim is to make California Resources a net-zero carbon company, meaning for every metric ton of carbon its oil drilling operations release into the air, an equivalent amount of carbon emissions is captured and stored underground.
Under the joint venture arrangement, California Resources controls 51% of Carbon Terra Vault, while Brookfield Renewable has the remaining 49% stake. Brookfield, through its global transition fund, contributed $500 million up front and was expected to provide as much as $1 billion in total to the joint venture.
Carbon Terra Vault immediately filed for EPA permits for carbon storage around its oil fields in the San Joaquin and Sacramento basins, starting with its Elk Hills oil field holdings. According to the company, that reservoir at Elk Hills would have the capacity to store 1.46 million metric tons of carbon dioxide per year up to a total of 38 million metric tons. The company said that’s the equivalent of removing of approximately 200,000 passenger automotive vehicles annually.
In December 2023, the EPA issued a draft permit for the Carbon Terra Vault carbon storage project at Elk Hills.
As it was applying for the federal permit, Carbon Terra Vault also applied for a local permit for the carbon storage operation at Elk Hills from the Kern County government. The county Board of Supervisors granted the permit in October with a unanimous vote.
Now, with both local and federal permits in hand, Carbon Terra Vault appears ready to proceed with the Elk Hills project.
However, there’s still a chance that opponents to the carbon dioxide injection and storage project could mount a legal challenge and stall the project. During the Kern County hearings, some environmental groups expressed concerns about the potential for carbon dioxide leaks during the capture and storage process.
Net Power deal
According to the Dec. 9 announcement from Carbon Terra Vault and Net Power on their agreement, Net Power is planning an unspecified number of ultra-low emission plants adjacent to Carbon Terra Vault’s carbon injection and storage sites. Each of these plants would have a modular construction design and would be capable of generating up to 250 megawatts of power. These would be Net Power’s first plants in California.
With Carbon Terra Vault’s ability to capture and then store the carbon dioxide produced by Net Power’s generation facilities, those plants would ultimately emit very little or no carbon or other gaseous pollutants, such as nitrogen oxides and sulfur oxides, according to the announcement.
“This partnership with Net Power combines our strategically located carbon storage and natural gas assets with California’s call for more clean power,” Leon, California Resources’ chief executive, said in the announcement. “We are solidifying our position as a leader in carbon management solutions in the Golden State.”
