Oil major Chevron has closed the transaction to enter a U.S. Gulf of Mexico carbon capture and storage joint venture with Talos Energy and Carbonvert.
The companies on Tuesday announced the execution of definitive documentation and closing of the expanded joint venture to develop the Bayou Bend CCS offshore carbon capture and sequestration hub, effective May 1, 2022.
Under the terms of the transaction, Chevron has acquired a 50 percent stake in the expanded Bayou Bend CCS joint venture for a gross consideration of $50 million to Talos and Carbonvert, consisting of $30 million of gross upfront cash and up to $20 million of gross capital cost reimbursement, expected to cover Talos and Carbonvert capital expenditures through the project’s final investment decision (“FID”).
Equity interests in the joint venture are now 25 percent Talos, 25 percent Carbonvert, and 50 percent Chevron, and Talos is the operator. The three companies have also established an Area of Mutual Interest (“AMI”) over the full ~231,000-acre Jefferson County offshore region contemplated in the State of Texas’s original request for proposal, aligning the parties for future expansion opportunities.
In 2021, a joint venture between Talos and Carbonvert (now known as Bayou Bend CCS) was the winning bidder for the Texas General Land Office’s (“GLO”) Jefferson County, Texas, carbon storage lease, located in state waters offshore Beaumont and Port Arthur, Texas.
The Bayou Bend CCS project site encompasses over 40,000 gross acres and, based on Talos and Carbonvert’s preliminary estimates, could potentially sequester 225 to 275 million metric tons of carbon dioxide (CO2) from industrial sources in the area. The Bayou Bend CCS lease is the first offshore lease in the U.S. dedicated to CO2 sequestration.