CapturePoint, a Texas-based carbon capture and enhanced oil recovery specialist, is seeking to grow by offering carbon capture services to existing industrial emitters.
The company, started with an initial focus on enhanced oil recovery operations using CO2, has launched a subsidiary called CapturePoint Solutions to capitalize on growing demand for carbon capture services at industrial plants, CEO Tracy Evans said in an interview.
Evans, a former chief operating officer of Denbury Resources, has years of experience operating CO2 capture units, pipelines, and oil wells. “The only difference between EOR utilization and sequestration is going to the saline aquifers,” he said of the pivot.
The company’s primary focus is on existing emissions, Evans said, emphasizing the immediate opportunity over proposed plants that might take many years to build. He added that the company would target “pure” sources of CO2 versus diluted sources.
Evans brought in a JV equity partner for the CCS business, but declined to name them. He said the company is sufficiently capitalized for now but might need to raise additional equity as it signs up new projects in the next 12 to 16 months.
Tax equity and CCS
CapturePoint recently completed a tax equity deal for a CCS facility that has been operational since 2013, thanks to changes to provisions governing the use of 45Q for carbon capture that allowed existing plants to qualify if they capture over 500,000 tons of CO2.
The deal, at CVR Partners’ Coffeyville fertilizer plant, opened up an initial payment of $18m and includes installment payments, payable quarterly until March 31, 2030, totaling up to approximately $22m.
An ethanol facility where CapturePoint operates will also qualify for 45Q benefits because 80% or more of the carbon capture unit is being rebuilt, Evans said. The company was able to finance the new construction at the ethanol facility from cash flow out of its oil & gas operations.
Going forward, new projects installed at existing emitters will follow a project finance model, with equity, debt, and 45Q investors, Evans said. The company will use a financial advisor when the time is right, the executive noted, but said there’s more work to be done on sizing and costs before an advisor is lined up.
“The capture costs are similar for each site,” he said. “The pipeline distances to a sequestration site is what drives significant variation in total capital costs.”
Evans believes that tax credit increases in the Inflation Reduction Act – from $35 per ton to $60 per ton for CO2 used in EOR, and $50 per ton to $85 for CO2 sequestration – should help the CCS market evolve and lead to additional deals.
“There wasn’t much in it for the emitter at $35 and $50, to be honest,” he said, “whereas at $60 and $85 there’s something in it for the emitter.”
