California Resources Corporation - Committed to Our Net Zero Future

Video Transcript

CCS is the proven process of safely capturing carbon dioxide (CO₂) from industrial processes and transporting and permanently storing it underground.

Flue gas is transferred by huge ducts from the stack of an industrial plant to the carbon capture plant.

Customized liquid absorbents called amines are used in the capture plant to absorb CO₂. Heat is then used to recover the purified CO₂ for pumping and storage underground.

CO₂ enters the compression complex where dehydration and compression of CO₂ occurs.

CO₂ is injected into deep underground rock formations at depths of more than a mile.

These storage-capable formations include depleted reservoirs as well as deep saline aquifers and are defined by permeable “injection zones” capped by thick impermeable rock to permanently store the injected CO₂.

To put this in perspective, 8000 ft Injection Zones are up to 3 times deeper than the tallest building in the world.

CCS provides a real solution for reaching and maintaining carbon neutrality, and helping California meet the emissions reduction goals under the Paris Climate Accord. END

CCS is a Real Solution

Carbon capture and storage (CCS) provides real solutions for reaching and maintaining carbon neutrality, and helping California meet the emissions reduction goals under the Paris Climate Accord. According to the International Energy Agency, CCS is one of the only technology solutions that can “...deliver the deep emissions reductions needed across key industrial processes..., all of which will remain vital building blocks of modern society.” That’s why California Resources Corporation's (CRC) Carbon TerraVault is developing pathways that offer both immediate decarbonization benefits and long-term solutions to reach and maintain carbon neutrality.

With some of the strongest decarbonization goals in the country, California is a leader in addressing climate change, and is committed to pursuing innovative technology solutions to achieve its emissions reductions and mitigate climate change.

Employee wearing helmet looking at hills

Carbon TerraVault

CRC launched Carbon TerraVault (CTV) as part of its carbon management business in 2021 to help advance the energy transition and curb rising global temperatures at 1.5°C. We aim to do this by building scalable, low-carbon, and cost-effective solutions and bringing rewarding jobs to our local communities.

CTV will provide services that include the capture, transport and storage of carbon dioxide (CO₂) for its customers. CTV is developing CCS and direct air capture plus storage (DAC+S) projects that inject CO₂ captured from industrial sources into depleted underground reservoirs and permanently store CO₂ deep underground.

CRC has identified up to 1 billion metric tons of CO₂ permanent storage capacity across California that will help contribute to the decarbonization of the state. CRC has applied for several permits for permanent CCS vaults at the Elk Hills Field in Kern County and in the Sacramento Basin in Northern California.

Learn more by downloading our Carbon TerraVault fact sheet (PDF).

Carbon management is a natural extension of CRC’s core competencies and a pillar of our 2045 Full-Scope Net Zero goal for Scope 1, 2 and 3 emissions. Adopted in November 2021, CRC’s Net Zero goal places the company among a select few industry peers to include scope 3 emissions in their Net Zero goal. Learn more about our ESG Goals page in our ESG section.

California Carbon
Management Partners

In August 2022, CRC entered into a joint venture (JV) with Brookfield Renewable (Brookfield) focused on CCS development opportunities.

Brookfield has committed an initial $500 million to invest in CCS projects that are jointly approved through the JV. The investment from Brookfield will be allocated through the Brookfield Global Transition Fund (BGTF), the world’s largest fund dedicated to facilitating the global transition to a net zero carbon economy. Brookfield, together with its institutional partners, will participate in the joint venture through BGTF.

The first CCS project designated for development is CRC’s 26R reservoir in the Elk Hills Field which was contributed to the partnership at a value of $10 per metric ton. The initial Brookfield commitment of $500 million provides CRC with additional capital to advance the Company's carbon management strategy, de-risks its CCS projects and aims to significantly progress the decarbonization of California. The JV is targeting the injection of 5 million metric tons per annum and 200 million metric tons of total CO₂ storage development, aligned with CRC’s 2027 goal. Reaching this target would require an estimated $2.5 billion of total capital, and Brookfield could make additional investments of more than $1 billion in the strategic partnership assuming it fully participates in these CCS projects.

The strategic partnership will benefit substantially from CRC’s first mover advantage in gaining access to available storage assets in the state of California and Brookfield’s knowledge in global clean energy markets. California is a world-leading location for the development of CCS projects, driven by the state’s Low Carbon Fuel Standard and Cap-and-Trade programs, together with the federal 45Q tax credit of $50 per ton of CO₂ captured and permanently stored. CRC is currently progressing CO₂ storage project permit applications and represents four out of the five Class VI well project applications on file in California.

The strategic partnership will involve developing both infrastructure and storage assets required for CCS projects in California through newly created joint venture entities, Carbon TerraVault JV HoldCo, LLC (HoldCo), Carbon TerraVault JV Storage Company (StorageCo) and Carbon TerraVault JV Infrastructure Company, LLC (InfraCo).

StorageCo will build, install, operate, and maintain CO₂ storage facilities. CRC has contributed the storage rights in the 26R storage reservoir in the Elk Hills field to a wholly owned subsidiary of StorageCo.
InfraCo will build, install, operate, maintain CO₂ capture equipment and transportation assets, and provide funding as projects develop.
StorageCo and InfraCo are wholly owned by HoldCo.

For more information, view the California Carbon Management Partnership presentation (PDF).

Partnership Highlights

The California Carbon Management Partnership with Brookfield is an important step in CRC’s Full-Scope Net Zero 2045 Goal and Carbon Management Strategy. It highlights the value of CRC's expansive CO₂ pore space portfolio while demonstrating the Company’s commitment to capital discipline and retaining flexibility for strategic corporate objectives including shareholder returns and investing in the business.

Strengthens CRC’s competitive position in CCS deployment with Brookfield’s infrastructure investment experience, operating knowledge, and capital allocation. CRC and Brookfield are targeting the development of the injection of 5 million metric tons of CO₂ per annum over the first five years of the strategic partnership.

CRC and Brookfield will jointly develop CCS projects in California through a newly created JV. The JV will be owned 51% by CRC and 49% by BGTF.

Timeline

Carbon TerraVault
Is Born

Up to 1 billion metric tons (MT) of CO₂ Storage Opportunity
Initial 200 million MT of CO₂ in Focus
Submitted Class VI Permit for CTV I (26R)

2021

2045 Full-Scope Net Zero Goal

Defined a path to reduce CRC's Scope 1, 2 and 3 emissions
Submitted Class VI permit for CTV I (A1/A2)

Early-Stage Development Goals

200 million MT of Class VI permits submitted by YE25
Begin 1 million metric tons per annum (MTPA) Injection by YE25
Begin 5 million MTPA injection by YE27

Introduced CTV to Northern California

Submitted Class VI Permit for CTV II and III
Announced NextDecade CalCapture Feed Study
Defined CRC’s ESG Goals

CTV JV With Brookfield Renewable

Initial commitment of $500 million from BGTF¹
Kern County Energy Transition Investment

Expanded California’s CCS Market Opportunity By 2.4x⁴

Expanded CCS total market opportunity to include New Energy Economy emissions
Inflation Reduction Act: 45Q tax Incentive rose to $85/MT for Carbon Storage³

California's First CCS Storage Project - Carbon Dioxide Management Agreement (CDMA) with Lone Cypress Energy Services

Blue Hydrogen Facility at CTV I
Sequester 100,000 MTPA of CO₂
Announced Net Zero Industrial Park at Elk Hills

2022

CDMA with Grannus LLC

Blue Ammonia and Hydrogen Facility at CTV III
Sequester 370,000 MTPA of CO₂
Decarbonizing California's Agricultural Sector

California DAC Hub Consortium

Accelerating DAC+S in California through its wholly owned subsidiary CTV Direct
The first DAC Hub is targeted for Kern County and is expected to store CO₂ at the CTV I reservoir

Advancing CalCapture & Lone Cypress Project to the Next Stage of Development

Completion of NextDecade Feed Study
Targeting to FID CalCapture in 1H24
Targeting to FID Lone Cypress Project in YE23⁵

CTV VI Permit and CDMAs

Submitted Class VI permit for CTV IV
Signed CDMAs with Yosemite Clean Energy, LLC and InEnTec Inc. for 40,000 and 100,000 MTPA of CO₂ injection, respectively

CTV V Permit and CDMA

Submitted Class VI permit for CTV V
Signed CDMA with Verde Clean Fuels Inc.
Expanded Lone Cypress blue hydrogen project to expected 205,000 MTPA

California DAC Hub Selected to receive funding from the DOE

2023

2024

2021

Carbon TerraVault Is Born

Up to 1 billion metric tons (MT) of CO₂ Storage Opportunity
Initial 200 million MT of CO₂ in Focus
Submitted Class VI Permit for CTV I (26R)

2021

2045 Full-Scope Net Zero Goal

Defined a path to reduce CRC's Scope 1, 2 and 3 emissions
Submitted Class VI permit for CTV I (A1/A2)

2022

Early-Stage Development Goals

200 million metric tons (MT) of Class VI permits submitted by YE25
Begin 11 million metric tons per annum (MTPA) Injection by YE25
Begin 5 million MTPA injection by YE2

2022

Introduced CTV to Northern California

Submitted Class VI Permit for CTV II and III
Announced NextDecade CalCapture Feed Study
Defined CRC’s ESG Goals

2022

CTV JV With Brookfield Renewable

Initial commitment of $500 million from BGTF¹
Kern County Energy Transition Investment

2022

Expanded California’s CCS Market Opportunity By 2.4x⁴

Expanded CCS total market opportunity to include New Energy Economy emissions
Inflation Reduction Act: 45Q tax Incentive rose to $85/MT for Carbon Storage³

2022

California's First CCS Storage Project - Carbon Dioxide Management Agreement (CDMA) with Lone Cypress Energy Services

Blue Hydrogen Facility at CTV I
Sequester 100,000 MTPA of CO₂
Announced Net Zero Industrial Park at Elk Hills

2023

CDMA with Grannus LLC

Blue Ammonia and Hydrogen Facility at CTV III
Sequester 370,000 MTPA of CO₂
Decarbonizing California's Agricultural Sector

2023

California DAC Hub Consortium

Accelerating DAC+S in California through its wholly owned subsidiary CTV Direct
The first DAC Hub is targeted for Kern County and is expected to store CO₂ at the CTV I reservoir

2023

Advancing CalCapture & Lone Cypress Project to the Next Stage of Development

Completion of NextDecade Feed Study
Targeting to FID CalCapture in 1H24
Targeting to FID Lone Cypress Project in YE23⁵

2023

CTV VI Permit and CDMAs

Submitted Class VI Permit for CTV IV
Signed CDMAs with Yosemite Clean Energy, LLC and InEnTec Inc. for 40,000 and 100,000 MTPA of CO₂ injection, respectively

2023

CTV V Permit and CDMA

Submitted Class VI permit for CTV V
Signed CDMA with Verde Clean Fuels Inc.
Expanded Lone Cypress blue hydrogen project to expected 205,000 MTPA

2023

California DAC Hub Selected to receive funding from the DOE

Source: CRC unless otherwise stated. (1) Brookfield Global Transition Fund. Initial commitment applies to CCS projects that are jointly approved through the CTV JV. (2) EBITDA is a non-GAAP measure. For all historical nonGAAP financial measures please see the Investor Relations page at www.crc.com for a reconciliation to the nearest GAAP equivalent and other additional information. Note CTV JV EBITDA estimates include 45Q tax credits. See slides 27, 28 and 38 of CRC’s 3Q22 Earnings slides for detailed information on the previously disclosed Type Curve. (3) Source: Inflation Reduction Act. (4) Source: Energy Futures Initiative and Stanford University. “An Action Plan for Carbon Capture and Storage in California: Opportunities, Challenges, and Solutions.” October 2020; EPA; NATCARB; CARB; Internal estimates; Includes Brownfield and Greenfield opportunities; CARB Scoping Plan: AB32 Source Emissions Final Modeling Results, October 28, 2022; Department of Energy Hydrogen Program Plan, U.S. Department of Energy, November 2020. Converted from CARB’s estimated 13% of U.S. hydrogen demand of 21 – 44MMTPA. (5) Draft permit expected by YE23, but is subject to EPA approvals and public review. FID subject to permit approvals.