ExxonMobil acquired Denbury Resources for $5 billion, marking its major milestone in the carbon capture and storage (CCUS) sector. According to a report published by Carbon Credit on Friday, the purchase aims to enhance Exxon's CCUS capacity and support its low-carbon energy strategy.
Denbury Resources, an oil and gas producer with an extensive CO2 pipeline transport network spanning 1,300 miles across the U.S. Gulf Coast, specialises in enhanced oil recovery (EOR) using captured carbon.
The acquisition deal gives Exxon ownership of the country's largest operating carbon pipeline network, bolstering its position in the growing CCUS industry, with the Gulf Coast region—a key CCUS market offering significant expansion opportunities.
By integrating Denbury's infrastructure, Exxon expects to reduce CO2 emissions in the region by over 100 million metric tons annually as the company considers CCUS a crucial business, projected to become a $4 trillion global market by 2050.
While the CCUS sector faces criticism and scepticism, the positive outlook and upward trend in the carbon credit market highlight its importance in reducing carbon emissions and promoting sustainable business practices.
The acquisition also aligns with Exxon's long-term contracts to capture and sequester CO2 from various industrial sources, forming the foundation for sequestration hubs along the Gulf Coast. Exxon has collaborated with CF Industries, Nucor, and Linde to capture and store CO2 emissions while also delivering on existing CCUS commitments.
EXxon's acquisition of Denbury Resources positions the company to benefit from the maturing carbon credit market, allowing heavy emitters to offset their carbon emissions by supporting carbon reduction projects.
With the transaction expected to be finalised in the fourth quarter of this year, the company plans to invest $17 billion in low-carbon projects to reduce its carbon emissions significantly.
Exxon and other major oil companies, including Occidental, Chevron, and Shell, have recognised the potential of carbon capture and the associated credits.