ExxonMobil Carbon Capture Deal Drives Supply Chain and Capital Efficiency, Demonstrates Economies of Scale in Action

By Joshua Trott, Chief Revenue Officer

ExxonMobil has announced a deal with Nucor Corporation to capture, transport, and store up to 800,000 metric tons per year of CO2 from the steel-maker’s manufacturing site in Louisiana. After recent agreements with industrial gas company Linde and agricultural fertilizer producer CF Industries, ExxonMobil is on track to capture, transport, and store 5 million metric tons of carbon dioxide per year with these three projects alone — the equivalent of changing 2 million gas-powered cars to EVs, Dan Ammann, president of ExxonMobil Low Carbon Solutions, told Forbes.

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It’s a clear win for ExxonMobil, which called the Nucor agreement “the latest example of how we’re delivering on our mission to help accelerate the world's path to net zero and build a compelling new business” in a statement announcing the news. It’s a great example of how conventional Oil & Gas companies can, and will, lead the energy transition. But above all it is a valuable demonstration of how clustering investments makes the most of a company’s capital and delivers ROI — to both the company and the planet — on multiple levels. With geographic clustering, it can take just one initial investment to start to reap these rewards.
Like just about every challenge the energy industry takes on, carbon capture projects are resource-intensive. Steel. Concrete. Engineering. Electrical. Transportation. The list of equipment, services, materials, and logistics required to deliver just one of these projects goes on and on. Emissions from carbon capture projects are stored underground, so states like Louisiana and Texas — which are rich in underground pore space, and have the infrastructure and technical talent to support these projects — make an ideal target for clustered investment.

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Again, ExxonMobil is a case in point: After investing in two projects, with CF Industries in south Louisiana and Linde not too far away in southeastern Texas, the company says the infrastructure at one site quickly began supporting the other. “We’re already getting to the types of economies of scale that we think will be…necessary to support the scaling-up of these kinds of projects,” Ammann said, “as opposed to just doing everything on a one-off basis.”

New infrastructure required to support these projects, such as pipelines for the Nucor project, “will be quite limited,” Ammann added, “since the Nucor facility is geographically quite close to the CF Industries site.” What that means is that after an initial investment in Louisiana, ExxonMobil can quickly begin reaping the rewards of geographical clustering, including:

• More ROI from every dollar spent as projects share resources 
• The ability to deliver more carbon capture and contribute to the nation’s efforts to hit ambitious climate targets 
• The minimization of infrastructure required to connect these projects together — which saves capital and mitigates the carbon cost of implementing these facilities and the environmental impact of new transmission lines, roads, and bridges

Workise is committed to absorbing supply-chain complexity and bringing efficiency to energy projects. Experience tells us that once you’ve executed one specific type of project in a new region, you have infrastructure — as well as a network of personnel, suppliers, and services vendors — to more efficiently execute the next one. And the one after that.

The concept of economies of scale isn’t new, but it can seem very much out of reach, especially given the supply-chain constraints today’s energy companies must grapple with. It’s reassuring to see how with just one foothold, major efficiencies can be gleaned; and economies of scale can be delivered not after 100 projects, but after a single investment. This is what value looks like, both for clients like ExxonMobil and for the planet.

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Joshua Trott has spent his career serving the energy industry, including at Workrise where as Chief Revenue Officer and previously as Head of Oil & Gas he has helped shepherd the company’s rise to the No. 1 O&G labor provider in the country. A lifelong soccer player and fan, he lives in Austin, Texas.

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