CRC Approves California's First Carbon Capture and Storage Project

Project to Capture and Store up to 100 Thousand Metric Tons of CO2 Annually From the Elk Hills Cryogenic Gas Plant

LONG BEACH, Calif., Jan. 06, 2025 (GLOBE NEWSWIRE) -- California Resources Corporation (NYSE: CRC) and its carbon management business, Carbon TerraVault (CTV), today announced approval of the Golden State’s first carbon capture and storage (CCS) project, located at CRC’s Elk Hills cryogenic gas plant in Kern County, California.

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"We are pleased to advance California’s first CCS project to the next stage of its development highlighting our ability to deliver carbon management solutions while reducing our own emissions," said Francisco Leon, CRC’s President and Chief Executive Officer. "This project strengthens Carbon TerraVault’s economic opportunities and positions us to create lasting value for our shareholders and partners. Carbon TerraVault remains at the forefront of providing innovative decarbonization solutions that support a cleaner, affordable, and reliable energy future for California."

"This project represents another step forward in California’s world-leading pathway to combat climate change and achieve carbon neutrality over the next two decades," said California Natural Resources Secretary Wade Crowfoot. "While slashing carbon pollution is the main thrust of our climate programs, capturing and removing carbon from our atmosphere is also essential to meeting our carbon targets. This project, which repurposes fossil fuel extraction infrastructure and expertise to sequester carbon, is a forward-looking way to remove emissions while creating jobs in an emerging sector. Simply put, getting projects like this operating in a safe and effective way is critical for our climate progress."

Project approval follows CRC’s recent receipt of final Class VI well permits from the Environmental Protection Agency (EPA) for underground injection and storage of carbon dioxide (CO2) into the 26R reservoir, located at CRC’s Elk Hills Field in Kern County, California. The 26R reservoir is part of CTV’s joint venture with Brookfield.

"This announcement underscores California’s leadership in carbon capture and sequestration in the United States and reaffirms our commitment to collaborating with the right partners on impactful and economically viable energy solutions that advance the transition to net zero," said Natalie Adomait, Managing Partner at Brookfield. "Together with CRC, we are deploying our clean energy expertise to accelerate decarbonization and drive capital deployment across California’s critical industries."

26R is one of two depleted oil and natural gas reservoirs that comprise the CTV I storage site, with an expected injection rate of 1.46 million metric tons of CO2 storage per annum. Total estimated capacity of 26R is up to 38 million metric tons.

Cryogenic Gas Plant CCS Project Highlights

• Capture and Sequestration: CRC plans to capture and, through its joint venture with Brookfield (CTV JV), permanently store up to 100 thousand metric tons (KMTPA) of CO2 per annum from its Elk Hills cryogenic gas plant in the 26R reservoir.

• First Injection: Operations are expected to commence in late 2025.

• Capture Incentives and Revenue Equivalents: CRC is expected to qualify for $85 per metric ton in 45Q tax credits, with potential for Low Carbon Fuel Standard (LCFS) credit generation and reduction in Cap-and-Trade (C&T) liabilities pending California Air Resources Board (CARB) rulemaking. Decarbonized gas throughput is projected to increase propane recovery by up to 100 barrels of natural gas liquids per day.

• Operating Costs: The project’s proximity to CRC’s 26R reservoir will minimize transportation costs associated with sequestration.

• Operating Profitability: Through this project, CTV JV is projected to generate EBITDA1 of $50 - $60 per metric tons in sequestration fees paid by CRC, consistent with the economic type curve2 for CTV storage-only projects.

• Capture Capital Investment: CRC’s capture project capital spending is estimated at $14 - $18 million.

• Reduced GHG Emissions: Project expected to lower Scope 1 and 2 emissions from the Elk Hills Power Plant by up to 7%.

CRC’s internal rate of return from this capture and storage project is expected to be at the high-end of its previously disclosed range of 10% - 30%.

1 EBITDA is a non-GAAP measure. Estimates include realization of tax credits which may change based on future IRS guidance and other factors and assumes that wage and apprenticeship requirements are met. Based on a storage-only project. Assumes full utilization of the CTV I – 26R reservoir and Brookfield’s full participation in this project with storage buy-in capital prorated to cryogenic plant CCS project’s capital needs2 For information on CTV economic type curve, please see CRC’s second quarter 2022 earnings release at www.crc.com/investor-relations/events-and-presentations.

About Carbon TerraVault

Carbon TerraVault (CTV), CRC’s carbon management business, is developing services to capture, transport and permanently store CO2 for its customers. CTV is engaged in a series of proposed CCS projects that if developed will inject CO2 captured from industrial sources into depleted reservoirs deep underground for permanent sequestration. For more information, visit carbonterravault.com.

About Carbon TerraVault Joint Venture

Carbon TerraVault Joint Venture (CTV JV) is a carbon management partnership focused on CCS development formed between Carbon TerraVault I, LLC, a subsidiary of CRC, and Brookfield, to develop both infrastructure and storage assets required for CCS development in California. CRC owns 51% of CTV JV with Brookfield owning the remaining 49% interest.

About California Resources Corporation

California Resources Corporation (CRC) is an independent energy and carbon management company committed to energy transition. CRC is committed to environmental stewardship while safely providing local, responsibly sourced energy. CRC is also focused on maximizing the value of its land, mineral ownership, and energy expertise for decarbonization by developing CCS and other emissions reducing projects. For more information about CRC, please visit www.crc.com.