California Resources enlists Brookfield for CCS partnership
Brookfield Renewable Partners has backed plans by California Resources Corp (CRC) to develop carbon capture and storage (CCS) in California, investing at least $500mn in several CCS projects led by CRC, including the first, at its Elk Hills oilfield, which it plans to have operational by 2027.
The private equity firm will take a 49% stake in a joint venture vehicle dubbed the California Carbon Management Partnership, a $2.5bn investment that aims to sequester up to 200mn metric tons of CO2, including 5mn mt/yr within the first five years.
Brookfield's initial contribution, made through its subsidiary fund Global Transition Fund, will help CRC buy pore space, carbon capture equipment and other capital needed for Elk Hills and other CCS developments.
By 2025 CRC aims to reduce scope 1,2 and 3 emissions to net zero, which implies bringing some 20mn mt/yr of carbon into CCS projects. The strategy aligns with the climate goals of CRC's home state, including plans to reach net zero across California by 2045.
The partnership was revealed by CRC August 3 on the back of a second quarter upgrade that saw its full year and production guidance increase. CRC posted an adjusted EBITDAX result of $204mn, down marginally from $206mn yr/yr.
In a second quarter earnings call, CRC president and CEO Mac McFarland said Brookfield's investment amounted to $10/mt of carbon for their 49% share of the CCSS infrastructure.
CRC president and CEO Mac McFarland said: "We are pleased to partner with Brookfield to develop industry leading CCS projects that support California's energy transition,"
"The Brookfield partnership aligns our carbon management strategy with a strong investment partner, bringing significant operational and development expertise to reinforce our efforts. Brookfield's capital commitment also accelerates our carbon management opportunities."