Carbon TerraVault (CTV) today provided an update on its 2023
operations. California Resources Corporation (NYSE: CRC) conducts
its carbon management business through Carbon TerraVault which
pursues carbon capture and sequestration projects that are directly
sited or within close proximity to significant sources of carbon
dioxide (CO2) emissions in California.
“During 2023, our team meaningfully advanced the expansion of
our carbon management business by announcing new Carbon Dioxide
Management Agreements (CDMAs)1, submitting new permits to the EPA
and attracting new greenfield project capital to California,” said
Francisco Leon, CRC’s President and Chief Executive Officer. “The
most recent release of California’s first draft Class VI permits
for the 26R reservoir and the Department of Energy (DOE)
development grant awarded to the California Direct Air Capture
(DAC) Hub reflects our continued commitment to carbon management
solutions for hard-to-abate industries and decarbonization
technologies in the Golden State. Finally, the recently announced
agreement to combine with Aera Energy will enhance our carbon
management business, providing greater scale with which to
accelerate CRC’s efforts to decarbonize California.”
2023 Highlights
- The Environmental Protection Agency (EPA) released California’s
first draft Class VI well permits for underground CO2 injection at
the 26R storage vault, located at the proposed Clean Energy Park at
Elk Hills Field in Kern County
- California DAC Hub, led by CTV's subsidiary CTV Direct, LLC,
was selected to receive approximately $12 million in DOE funding
for a regional initiative focused on the development of
California’s first full-scale DAC plus storage (DAC+S) network
- Submitted 51 million metric tons (MMT) of Class VI permits to
EPA for CTV IV and CTV V storage reservoirs in Northern California.
In total, CTV has submitted permits for 191 MMT of CO2 storage with
an estimated injection rate of 5.3 MMT per year
- Announced CTV's first capture-to-storage project at CRC's Elk
Hills cryogenic gas plant, located in Kern County. This project is
expected to sequester 100 thousand metric tons per year (KMTPA) of
CO2 in the 26R reservoir by year-end 2025
- Signed 760 KMTPA of storage-only CDMAs1 with several greenfield
project developers, helping to decarbonize California’s energy
value chain
- CTV's total CO2 injection rate capacity under CDMAs1 or
agreements is 1.1 million metric tons per year (MMTPA)
- Awarded two DOE research and development grants under the
CarbonSAFE initiative for a total of approximately $18 million
- Built the carbon management business to approximately 50
full-time equivalent employees, including many technical experts
with decades of subsurface experience in California who transferred
from CRC
- Acquired additional pore space in strategic locations that
build upon CRC’s leading mineral, surface, and seismic data
position in California
EPA Class VI Permitting and Kern County
Draft Environmental Impact Review (EIR) Update
In December 2023, EPA released draft Class VI permits for CTV's
“CTV I – 26R” carbon capture and sequestration (CCS) project
located at CRC's Elk Hills field in Kern County. These are the
first draft permits released by EPA in California. In December
2023, Kern County also released the draft EIR prepared in
connection with the conditional use permit application for CTV I –
26R. The draft Class VI permits and draft EIR are subject to public
review and comment. CTV anticipates that EPA and Kern County will
deliver their final decisions on the permits in the second half of
2024.
DOE Carbon Storage Validation and
Testing Funding for Carbon TerraVault Projects
CRC’s carbon management business continues to attract federal
funding for research and development and deployment of carbon
capture technologies to help mitigate the impacts of climate change
and benefit communities across California by improving air quality
and creating new energy transition employment opportunities. In
November 2023, two projects were awarded DOE funding under the
CarbonSAFE initiative for a total of approximately $18 million (80%
of the total project cost). These awards are expected to de-risk
carbon storage via a newly drilled data well. CTV's share of the
total project cost is approximately 20%. These research projects
will be performed over the next 24 months. For further information,
please see:
https://www.energy.gov/fecm/project-selections-foa-2711-carbon-storage-validation-and-testing-round-2
CalCapture Update
CalCapture is a post-combustion CCS project that is designed to
capture CO2 from the Elk Hills Power Plant, a 550-megawatt (MW)
natural gas, combined-cycle power plant, located in Kern County,
California, and inject that CO2 underground for permanent
sequestration in a co-located underground storage reservoir. To
date, two front-end engineering and design (FEED) studies have been
completed. CRC continues to evaluate the technical and economic
aspects of this project such as engineering designs, energy
optimizations, capital requirements, existing regulatory framework
and availability of government assistance for this and other low
CO2 stream concentration projects. CRC expects to provide
additional commentary on the progress of this project in 2025.
Pending Aera Merger
On February 7, 2024, CRC entered into a definitive merger
agreement (Merger Agreement) to combine with Aera Energy, LLC
(Aera) in an all-stock transaction with an effective date of
January 1, 2024. The merger will expand CRC’s leading carbon
management business through the addition of surface acreage and
subsurface rights, and significant new CO2 pore space to enable
future CCS development. As a result of this combination, CRC will
obtain a pending EPA Class VI permit application for 27 MMT of
storage capacity in the Belridge Field. CRC also expects to submit
an additional Class VI permit for approximately 27 MMT of storage
at the Coles Levee Field. The Company will have the potential to
nearly double its injection rate capacity in the San Joaquin Basin,
creating a premier “decarbonization hub” for CO2 storage.
The transaction is subject to certain closing conditions,
including among others, regulatory approvals and approval of the
stock issuance by CRC's shareholders. The transaction is expected
to close in the second half of 2024. For more information about
this transaction please visit:
https://www.crc.com/news/news-details/2024/California-Resources-Corporation-to-Combine-with-Aera-Energy/default.aspx
1 The CDMA frames the contractual terms between parties by
outlining the material economics and terms of the project and
includes conditions precedent to close. The CDMA provides a path
for the parties to reach final definitive documents and final
investment decision.
About Carbon TerraVault
Carbon TerraVault Holdings, LLC (CTV), a subsidiary of CRC,
provides services that include the capture, transport and storage
of carbon dioxide for its customers. CTV is engaged in a series of
CCS projects that inject CO2 captured from industrial sources into
depleted underground reservoirs and permanently store CO2 deep
underground. For more information about CTV, please visit
www.carbonterravault.com.
About Carbon TerraVault Joint
Venture
Carbon TerraVault Joint Venture (CTV JV) is a carbon management
partnership focused on carbon capture and sequestration
development, and was formed between Carbon TerraVault Holdings, a
subsidiary of CRC, and Brookfield Renewable. CTV JV will develop
both infrastructure and storage assets required for CCS development
in California. CRC owns 51% of the CTV JV with Brookfield Renewable
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
has some of the lowest carbon intensity production in the US and it
is focused on maximizing the value of its land, mineral and
technical resources for decarbonization by developing CCS and other
emissions reducing projects. For more information about CRC, please
visit www.crc.com.
Additional Information and Where to
Find It
This communication may be deemed to be solicitation material in
respect of the transactions contemplated by the merger agreement
pursuant to which California Resources Corporation (“CRC”) has
agreed to combine with Aera Energy, LLC (“Aera”) (the “Merger
Agreement”), including the proposed issuance of CRC’S common stock
pursuant to the Merger Agreement. In connection with the
transaction, CRC will file a proxy statement on Schedule 14A with
the U.S. Securities and Exchange Commission (“SEC”), as well as
other relevant materials. Following the filing of the definitive
proxy statement, CRC will mail the definitive proxy statement and a
proxy card to its stockholders. INVESTORS AND SECURITY HOLDERS OF
CRC ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT
DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT CRC, AERA, THE TRANSACTION AND RELATED MATTERS. Investors and
security holders will be able to obtain copies of the proxy
statement (when available) as well as other filings containing
information about CRC, Aera and the transaction, without charge, at
the SEC’s website, www.sec.gov. Copies of documents filed with the
SEC by CRC will be available, without charge, at CRC’s website,
www.crc.com.
Participants in
Solicitation
CRC and its directors and executive officers may be deemed to be
participants in the solicitation of proxies in connection with the
transaction. Information about the directors and executive officers
of CRC is set forth in the proxy statement for CRC’s 2023 Annual
Meeting of Stockholders, which was filed with the SEC on March 16,
2023. Investors may obtain additional information regarding the
interest of such participants by reading the proxy statement
regarding the transaction when it becomes available.
Forward-Looking
Statements
This document contains statements that CRC believes to be
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than historical facts
are forward-looking statements, and include statements regarding
CRC's future financial position, business strategy, projected
revenues, earnings, costs, capital expenditures and plans and
objectives of management for the future. Words such as "expect,"
“could,” “may,” "anticipate," "intend," "plan," “ability,”
"believe," "seek," "see," "will," "would," “estimate,” “forecast,”
"target," “guidance,” “outlook,” “opportunity” or “strategy” or
similar expressions are generally intended to identify
forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in, or implied by, such
statements. Additionally, the information in this report contains
forward-looking statements related to the recently announced Aera
merger.
Although CRC believes the expectations and forecasts reflected
in its forward-looking statements are reasonable, they are
inherently subject to numerous risks and uncertainties, most of
which are difficult to predict and many of which are beyond its
control. No assurance can be given that such forward-looking
statements will be correct or achieved or that the assumptions are
accurate or will not change over time. Particular uncertainties
that could cause CRC's actual results to be materially different
than those expressed in its forward-looking statements include:
- CRC’s ability to finalize definitive documents and reach a
final investment decision with respect to new projects contemplated
by CDMAs;
- the ability of new projects to achieve expected production
volumes and associated CO2 generation and the ability of the CTV to
sequester such CO2 volumes, respectively;
- CRC's ability to successfully execute on the construction of
new projects and other aspects of infrastructure projects and enter
into third party contracts on contemplated terms;
- fluctuations in commodity prices and the potential for
sustained low commodity prices;
- equipment, service or labor price inflation or
unavailability;
- the ability to successfully integrate the business of Aera
assuming the Aera merger is completed;
- the timing, receipt and terms and conditions of any required
governmental and regulatory approvals of the Aera merger that could
reduce anticipated benefits or cause the parties to abandon the
Aera merger;
- the occurrence of any event, change or other circumstances that
could give rise to the termination of the Aera merger;
- the possibility that the stockholders of CRC may not approve
the issuance of new shares of common stock in the Aera merger;
- the ability to obtain the required debt financing in connection
with the Aera merger and, if obtained, the potential impact of
additional debt on its business and the financial impacts and
restrictions due to the additional debt;
- legislative or regulatory changes, including those related to
(i) the management of energy, water, land, greenhouse gases (GHGs)
or other emissions, (ii) the protection of health, safety and the
environment, (iii) CRC's ability to claim and utilize tax credits
or other incentives, or (v) the transportation, marketing and sale
of CRC's products and CO2;
- availability or timing of, or conditions imposed on, permits
and approvals necessary for drilling or development activities and
carbon management projects;
- changes in business strategy and CRC's capital plan;
- CRC's ability to realize the benefits contemplated by the
business strategies and initiatives related to energy transition,
including carbon capture and storage projects and other renewable
energy efforts;
- CRC's ability to successfully identify, develop and finance
carbon capture and storage projects and other renewable energy
efforts, including those in connection with the CTV;
- global geopolitical, socio-demographic and economic trends and
technological innovations;
- limitations on CRC's financial flexibility due to existing and
future debt;
- insufficient cash flow to fund CRC's capital plan and other
planned investments, stock repurchases and dividends;
- insufficient capital or lack of liquidity in the capital
markets or inability to attract potential investors;
- limitations on transportation or storage capacity;
- CRC's ability to successfully gather and verify data regarding
emissions, its environmental impacts and other initiatives;
- the compliance of various third parties with CRC's policies and
procedures and legal requirements as well as contracts it enters
into in connection with CRC's climate-related initiatives;
- climate-related conditions and weather events;
- disruptions due to accidents, mechanical failures, power
outages, transportation or storage constraints, natural disasters,
labor difficulties, cyber-attacks or other catastrophic
events;
- pandemics, epidemics, outbreaks, or other public health events,
such as the COVID-19; and
- other factors discussed in Part I, Item 1A – Risk Factors in
CRC's Annual Report on Form 10-K and its other SEC filings
available at www.crc.com.
CRC cautions you not to place undue reliance on forward-looking
statements contained in this document, which speak only as of the
filing date, and CRC undertakes no obligation to update this
information. This document may also contain information from third
party sources. This data may involve a number of assumptions and
limitations, and CRC has not independently verified them and do not
warrant the accuracy or completeness of such third-party
information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227366330/en/
Joanna Park (Investor Relations) 818-661-3731
Joanna.Park@crc.com
Richard Venn (Media) 818-661-6014 Richard.Venn@crc.com
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