World Oil Industry News (Correspondent Wang Huan)October 11, 2022 Bloomberg reported that, according to people familiar with the matter, ExxonMobil is considering acquiring Denbury, an oil and gas producer with the largest carbon dioxide pipeline network in the United States. ExxonMobil has expressed initial interest in the Plano, Texas-based company, the people, who spoke on condition of anonymity. They added that no final decision has been made yet and ExxonMobil may choose not to push forward possible deals. At 3:49 pm on October 10, Denbury's stock price rose 12% to $98.83, with a market value of about $4.9 billion. A Denbury representative declined to comment, and an ExxonMobil representative did not immediately respond to a request for comment.
ExxonMobil (Photo source network)
Denbury has over 1300 miles (2092 kilometers) of pipelines along the Gulf Coast and the Rocky Mountains. Carbon capture is the cornerstone of ExxonMobil's climate strategy, which aims to eliminate operating emissions by 2050, and the acquisition of Denbury will provide the oil giant with the critical, difficult-to-replicate infrastructure to achieve this goal.
Denbury Co., Ltd. Carbon Dioxide Bay Coast Pipeline Map (Photo source J.P.Morgan)
If the acquisition is successful, it will also be the largest carbon management investment since the passage of the Inflation Cut Act in August, which provides a large amount of tax incentives for burying carbon dioxide . The bill raises the tax credit for carbon capture by 70% to $85/t. Executives, including ExxonMobil CEO Darren Woods, praised the bill for funding for carbon capture. Morgan Stanley said carbon capture could have high profits in the future.
Denbury's net zero emission target is the most aggressive among the large U.S. oil companies, with the goal of achieving "negative carbon" based on Scope 3 (including customer emissions) by 2030.
Bloomberg News reported in August that the company is working with a consultant to explore the sale. Denbury exited bankruptcy in 2020, and for more than 20 years the company has been using carbon dioxide to squeeze more crude oil from old oil fields, a process known as to increase oil recovery . During the shale revolution, increasing oil recovery was unpopular due to its high costs and low output, but has recently become popular due to its green potential, especially its ability to store carbon underground more than it emits from the oil it produces.
Earlier this year, ExxonMobil promised to invest $15 billion in low-carbon investment by 2027, making carbon capture a priority project. Denbury's Rocky Mountain assets are linked to ExxonMobil's Shute Creek gas facility near LaBarge, Wyoming, which captures more carbon than other U.S. assets invested in.
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