We are mining CO₂ in America

Luke Lana, host of the CO₂ industry podcast Catching Carbon, summed up well the irony of mining CO₂ in the show’s second episode, recorded last summer. Lana’s main job is leading project development for TomCO₂ Systems, an industrial CO₂ and refrigeration equipment supplier. “We’re talking about pulling out of naturally occurring domes, while legislation is pushing to sequester CO₂,” he said. “We’re putting it into the ground, and we’re pulling it right back out. How long is that really going to last? . . . How long until we say, ‘These domes are closed up; this is going exactly against everything we’re pushing for’?”

Lana’s cohost and TomCO₂’s vice president for sales, Jeff Holyoak, tells C&EN that he isn’t aware of any active legislation to ban CO₂ mining but that it seems inevitable. Shutting off the taps on mined CO₂ would be a clear climate win, especially if it also curtailed petroleum production, but it would cause major headaches for industries like meatpacking and beer brewing, which also depend on the mined CO₂.

“Twenty-five percent of our commercial CO₂ comes from those domes,” Holyoak says. “If you were to shut them down without a replacement, we would have all sorts of problems.”

The major players in the so-called produced CO₂ space are the petroleum firms Denbury, which controls the Jackson Dome supply; KinderMorgan, which has CO₂ fields in southeastern Colorado; and Occidental, which extracts CO₂ from wells in Colorado and New Mexico.

Mining for CO₂ is mostly a US phenomenon. Linde and a handful of regional firms extract CO₂ from wells and geothermal projects in Turkey, but the output is small compared with operations in the US.

The consulting firm Advanced Resources International says enhanced oil recovery operations in North America used 68 million t of CO₂ in 2014 and 38 million t in 2021. Consumption of CO₂ for this use fluctuates widely based on the cost of petroleum. Globally, enhanced oil recovery uses 70–80 million t of CO₂ per year, according to a 2019 report from the International Energy Agency.

Advocates for enhanced oil recovery argue that most of the injected CO2 stays underground, more or less returning mined gas to where it started. And companies like Denbury claim that if the CO₂ is a by-product recovered from, say, an ethanol plant, injecting it underground for enhanced oil recovery more than makes up for the carbon in the extracted petroleum. The International Energy Agency says the carbon math on such “blue oil” can work at some enhanced oil recovery sites, but only if the CO₂ comes from sustainable biomass or is captured from ambient air.

Mining pure geological reservoirs is one of a few sources of CO₂ for enhanced oil recovery. Natural gas deposits often contain CO₂, and energy companies always separate it out before sending the natural gas to customers. Converting natural gas to hydrogen also produces a voluminous CO₂ by-product that can be used to recover oil.

Oil companies aren’t the only ones dependent on mined CO₂. Gas industry consultant Maura Garvey says the US merchant CO₂ market depends on mined gas for 25% of its overall supply of about 10 million t per year. Carbon dioxide from the production of ethanol and ammonia cover a combined 59%; hydrogen production and other sources make up the difference. Merchant market customers are served by industrial gas companies like Linde, Air Li­quide, Air Products, Messer, and Matheson.

Mined CO₂ is a cheap and usually reliable supply that insulates users from more volatile sources, such as ethanol and ammonia manufacturing, where CO₂ production levels are subject to the vicissitudes of the main business.

In an attempt to break away from this fickle market for high-purity gas, commodity-scale brewers like Anheuser-Busch have been canning beer with CO₂ harvested from fermentation for years, but the equipment doesn’t pencil out as well for craft and microbreweries. As a result, all but the biggest breweries typically vent their by-product CO₂ and buy liquid CO₂ on the merchant market. After acquiring Earthly Labs, Chart Industries began offering CO₂ recycling equipment sized and priced for craft breweries in 2022.

Another complication for CO₂ users is that government incentives for carbon sequestration and enhanced oil recovery are starting to draw by-product CO₂ out of the merchant market. Gary Robson, CEO of the CO₂ purification specialist Sure Purity, says that carbon-free processes may replace conventional ammonia and hydrogen production in a handful of years and that firms attempting to turn CO₂ into fuels and chemicals could gobble up enormous quantities of available CO₂.

In the long term, carbon capture might provide plenty of CO₂ for anyone who wants it. Prices for carbon capture systems are dropping as more are built and delivered, and captured carbon can protect CO₂ users from disruptions like the loss of a major supplier, Robson says.

Only about 25% of US ethanol plants capture their CO₂, for example. The nonprofit Global CCS Institute recently reported that 43 million t of carbon capture capacity is operational worldwide now and that another 208 million t is in development.

“Where you get your CO₂ from today will not be where you get your CO₂ from tomorrow,” Holyoak said in another Catching Carbon episode. He tells C&EN that CO₂ prices will continue rising, from about $20 per metric ton traditionally to at least the $85 per metric ton the US Inflation Reduction Act offers in tax credits for sequestration.

Holyoak explains that the legislation creates a price floor for CO₂. “If I have that capability in my operation to capture it, sequester it, and get my tax credit, why would I sell it for less than $85?” he asks.

Robson urges CO₂ users to figure out their future supply plans now. The UK recently shuttered its last natural gas–based ammonia plant, which was also the main source of merchant CO₂ for the British Isles, he says. As a result, plants that use CO₂ to process meat or make beer have had to curtail production or shut down if they weren’t able to secure an imported supply.

Despite the supply crisis, he says, UK customers weren’t willing to turn to mined CO₂ from Turkey because of the impact on their products’ carbon footprint. Instead, they imported CO₂ derived from biogas and other anthropogenic sources in the EU and Asia.

Denbury declined to participate in this article, but a look at the firm’s recent financial and sustainability reports suggests that it thinks the days of mining CO₂ are numbered—though there are still about 4 billion t in Jackson Dome. The company says it reduced the share of mined CO₂ in its enhanced oil recovery pipelines from 75% in 2019 to 60% in 2022. Continuing that trend is Denbury’s main way of attacking an internal goal to be net negative in greenhouse gas emissions by 2030, the reports say.

The firm is also developing a carbon management business that includes CO₂ sequestration sites, offtake agreements with industrial carbon capture developments, and supply agreements with CO₂-to-chemicals projects.

In February, Denbury said that it will supply more than 2 million t per year of CO₂ to a pair of companies in Texas seeking to make fuels from CO₂ and hydrogen; it also said it had invested in companies offering carbon capture technologies. It’s not a total shift to cleantech, however. That same day, the firm reported more than $1 billion in 2022 sales of oil from enhanced oil recovery, compared with sales of $61 million from selling and sequestering CO₂.

Holyoak says all companies that supply CO₂ today will struggle to adapt to changes that will occur in the next 3–5 years—including where CO₂ comes from, where it goes, and what it costs. And mined CO₂ is a prime example. “It’s a cash cow with sunk costs,” Holyoak says. “I think the current distribution market falters because they won’t be able to see their way out of the model that they’re in today. . . . Can they really see a different business model?”.