Carbon dioxide (CO2) at the Jackson Dome in Mississippi is dropping on a month-by-month basis, and looks set to be highly compromising for the merchant CO2 market in the US.
Between January 2024 and June 2024 – the most up-to-date figures published by the Mississippi State Oil and Gas Board (MSOGB) – CO2 production at the Jackson Dome had fallen 37%.
According to MSOGB figures, in January 2024 the Jackson Dome produced 13,996,736 million cubic feet of CO2 and in June produced 9,568,169 million cubic feet. If this downward trend continues, these numbers will dip further in the coming months.
A source has told gasworld that this decline is already negatively impacting the market and will continue to be a major disruption for the CO2 supply chain, putting end-user businesses on the backfoot.
The Jackson Dome has long been renowned for its role in the CO2 market.
According to gasworld Business Intelligence, it contributes around 4% of the US’ total CO2 supply. With a daily capacity of around 2,000 tonnes (tpd), before any reductions, the Jackson Dome significantly surpassed the standard CO2 plant capacity of circa 300 tpd.
The news comes at a time when the CO2 market in the US is already on the verge of significant shortages.
The market is said to have been tight since May because of usual maintenance turnarounds over the summer months, but gasworld reported last week that longer than usual plant shutdowns are having a deeper impact on supply chains and temporary plant closures in Ohio (August) and Virginia (September) are likely to have a major impact on supply in the weeks and months ahead.
What’s behind the contraction?
The Jackson Dome source became briefly contaminated in 2022, which hugely shook the market and led to high-profile shortages, but this contraction in CO2 supply is due to increased sequestration rather than any other limiting factor.
gasworld understands a number of issues had meant that CO2 production at the Jackson Dome was already in decline, but this leaning towards sequestration has been more evident since oil and gas major ExxonMobil announced its acquisition of Denbury Inc. and, by default, the Jackson Dome for a hefty $4.9bn.
Completed in November 2023, ExxonMobil’s purchase of Denbury included the largest CO2 pipeline network in the US, coming in at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi, in addition to 10 strategically located onshore sequestration sites. The Jackson Dome was included in the sale.
Both prior to closing the deal and again post-transaction, ExxonMobil stressed that sequestration will be a priority at the site.
Sequestration prevails
With ExxonMobil’s plans for the Jackson Dome so heavily focused on sequestration, gasworld understands there has been longstanding concern from the huge number of end-users that need CO2 for their businesses to function.
The sequestration vs utilisation debate has been ongoing for some time. While 45Q has placed a tax benefit on capturing CO2 as the US looks to reduce its emissions, it favours sequestration. At the time of writing, companies that sequester CO2 can expect to receive $85 per tonne, but for utilisation they will only receive $65 per tonne.
Ultimately, sequestration becomes a simpler and more economical route for the big well operators such as ExxonMobil.
This was an underlying topic of discussion and debate at gasworld’s North American CO2 Summit in Indianapolis in September 2023, and will once again be the subject of increasing scrutiny when the event returns for 2024 in Nashville from September 17-19.
Already this year, gasworld has spoken to the Compressed Gas Association (CGA) about this issue. President and CEO Rich Gottwald assured that he is working with the wider CO2 Solutions Coalition to educate policymakers on the impact this legislation will have on the market – and very clearlyi s having on the market already.