Carbon capture is the bedrock of Exxon’s climate strategy, which targets net-zero emissions by 2050 from its operations, and buying Denbury would give the oil giant critical and hard-to-replicate infrastructure as it pursues that goal. Exxon has pledged to spend $17 billion on lower-carbon investments through 2027. Capturing carbon from its own operations and third parties in hard-to-decarbonize sectors is a priority. 

Denbury’s Rocky Mountain assets are connected to Exxon’s Shute Creek gas facility near LaBarge, Wyoming, which has captured more carbon than any other asset in the US.

Eoin Treacy's view

The only way decarbonization works in oil and gas is if it is profitable. That’s a big ask since capturing it is an additional cost. That’s why carbon trading programs put a premium on the commodity.

Since the disruption of war in Ukraine, most of the large oil and gas companies have walked back their commitments to decarbonize on practical grounds. Instead, they are boosting investment and those are decade-long plans. The fact Shell is talking about selling a stake in its renewable power venture on the same day that Exxon is buying a carbon dioxide pipeline is a clear indication of the direction the energy sector is taking.