ExxonMobil to boost carbon management with Denbury buy

ExxonMobil will pay $4.9 billion to acquire Denbury, a publicly traded company that owns and operates a network of carbon dioxide mines and pipelines primarily serving oil drilling operations. Denbury is also a major supplier of CO₂ for the industrial gas market in the southeastern US.

ExxonMobil says the purchase is motivated by a desire to grow its carbon capture, sequestration, and utilization operations, which serve both to reduce its own greenhouse gas emissions and manage CO₂ for other companies. Exxon says Denbury’s assets have the potential to reduce US CO₂ emissions by more than 100 million metric tons per year.

In recent annual reports and other communications, Denbury portrays itself as a company in transition. Most of its revenue comes from extracting CO₂from a naturally occurring geological deposit near Jackson, Mississippi, and injecting the gas into depleted oil fields to extract more oil, a process called CO₂-enhanced oil recovery. Denbury also takes some CO₂ into its pipelines from industrial processes including ammonia, natural gas, and hydrogen production.

More and more industrial firms are looking to send their CO₂ to the pipelines, Denbury says, as they try to reduce greenhouse gas emissions. CO₂ used for enhanced oil recovery is usually expected to remain underground permanently. Oil companies say the practice results in a net sequestration of carbon—even accounting for the produced oil. Many scientists and environmental activists question this claim.

At an investor presentation about the deal, ExxonMobil showed plans to extend Denbury’s pipeline network—which links CO₂ sources and users in Mississippi, Louisiana, and Texas—to ExxonMobil sites along the Gulf Coast. The pipelines are also near onshore and offshore CO₂ sequestration-only projects that ExxonMobil and other firms are planning.

Joe Powell, a chemical engineering professor at the University of Houston and the executive director of the school’s Energy Transition Institute, says the sustainability claims and messaging around this deal should be taken seriously, even though Denbury and ExxonMobil are both oil companies.

Depleted oil fields are the safest and most readily accessible storage sites for CO₂, Powell says, because they are already characterized and permitted, giving them a head start over novel, sequestration-only projects. “This purchase is a bold move by Exxon and shows that it is serious about CO₂ management and creating a business that can help others manage CO₂,” he says.