Large Scale Carbon Storage in the Gulf Region

Large Scale Carbon Storage in the Gulf Region

Large Scale Carbon Storage in the Gulf Region

Written by
Blake Armand

Carbon Storage Project At A Glance

  • Dudley Houston Office
  • CO2 Storage in Gulf Region
  • Vetted tens of thousands of acres for site feasibility
  • Dudley land agents contacted over 80,000 acres of landowners
  • Clearly articulated client’s goals & value proposition to landowners
  • Offered landowners in a depleted O&G region income they didn’t know was possible
  • Secured first right of refusal for 6 months
  • Created custom CO2 lease form from scratch

Client Ask

Our client needed help securing leases for a carbon storage project. Their business goal was to reduce their carbon footprint and avoid government penalties for emissions. 

Our Goals

  • Reduce client’s carbon footprint
  • Take advantage of government tax credits
  • Process 80,000 acres of landowner data
  • Determine ideal site for carbon storage
  • Negotiate leases for contiguous acreage

The First Project of This Scale

Our land agents tapped into their extensive experience to come up with innovative solutions for the unique challenges that came with a project of this scale. 

Contiguous Acreage

Current laws require contiguous land for carbon storage. Our team needed to secure leases for 100% of tens of thousands of acres.

Site Feasibility

All abandoned wells needed to be plugged to 2020 standards and the client’s area of interest was very large but relatively shallow.

No Case Law

We needed to create a lease form from scratch & negotiate with attorneys who have never negotiated a lease form for carbon storage.

Surface Use

Landowners use the surface for agriculture. We needed to articulate how a carbon storage lease would provide more revenue for them.

Tight Margins

Clearly articulating the client’s value prop was essential for protecting their margins and meeting landowner hopes for future raises.

Extended Timeline

We were seeking long, 5-year options from landowners because of the unknown timeline to get a permit from the federal government.

Landowner Relationships + Education = Success

In a project this new and large, our land agents needed to rely on their understanding of how rural landowners use their land and their historical income from mineral rights. That, in addition to their ability to build relationships, was key to being able to articulate the value of our client’s offer.

Our Conversation Focuses:

  • The small surface footprint of this type of project: only 1 - 2  injection sites per 10,000 acres
  • How carbon storage will affect landowner’s future mineral earning potential, water quality, agricultural operations, etc. 
  • A new source of revenue from depleted land that landowners didn’t know was even possible
  • Quantifying the financial benefit of giving up agricultural acreage for carbon storage

Defining Success

Our client was not the only player in the area trying to secure carbon storage leases.

Our strategy centered on identifying the right parcels and then building relationships with larger, influential landowners first. With them on board, it was easier to fill in the gaps with smaller landowners. 

Our experience with leasing work was essential for forming a strategy for success in this project.

Client Wins Included:

  • Selecting most attractive acreage that didn’t require a large cash outlay to bring abandoned wells up to 2020 plugging standards
  • Securing first right of refusal for 6 months, giving our client the time they needed to finish lease negotiations
  • Operable lease forms that make sense for client financially and for their operations
  • Secured 100% contiguous acreage close to emitting site & pipeline
  • Agreements that:
    • Addressed landowner concerns about surface use & increases in revenue over time
    • Don’t hold client’s future operations hostage 
    • Were highly organized (with landowner contact data) & detailed
solutions you need

The Long-Term
Partner You Deserve