US oil executive makes big bet on tackling climate change

September 14 (Reuters) – The chief executive of a U.S. junior oil company has moved to the forefront of the energy industry’s greenhouse gas reduction efforts, recruiting leading companies for his vision of hit hard by selling access to carbon storage developments.

Tim Duncan, the founder of Talos Energy Inc (TALO.N), a decade-old offshore oil company with less than 450 employees, brought together partners at four U.S. sites to compete with multi-billion dollar projects from Exxon Mobil Corp (XOM.N) and Occidental Petroleum Corp.

These alliances have made Duncan’s company one of the biggest potential beneficiaries of the Biden administration’s climate, tax and healthcare bill. The law provides tax credits and cash payments for companies that target global warming gases produced by industry.

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Duncan, whose company is tiny compared to Exxon and Occidental, considers carbon capture and storage (CCS), which collects and then injects carbon dioxide (CO2) deep underground at a carefully selected and safe site for the permanent storage, as a natural extension of oil and gas trading.

“He’s one of our fiercest competitors,” said Charles Fridge, chief executive of startup CCS Verde CO2, which quit the oil and gas business after losing a key investor to climate concerns. “It’s cutting edge compared to so many other public companies,” Fridge said.

Duncan has made Talos “a leader among public companies in building a carbon capture unit,” said Fridge, whose Verde CO2 has five projects in development. Large enterprises have been plagued by CCS “paralysis by analysis”, preventing them from rapidly adopting emerging technologies, he said.

EARTHQUAKE EPIPHANY

Two years ago, Talos assembled a team to explore how to develop a low-carbon business, which realized its seismic data could identify carbon sequestration sites as well as oil reservoirs. Duncan, who was part of several startups before launching Talos, began looking at the potential for carbon capture.

Today, he has a team developing four carbon capture projects scattered across the US Gulf Coast.

“We had to take a leap of faith,” Duncan said in an interview with Reuters. “We have the seismic, we know the geology. Who else is going to do it?”

This epiphany led to deals with Chevron Corp (CVX.N), Freeport LNG, Howard Energy and pipeline operator EnLink (ENLC.N). Chevron paid $50 million for half ownership of a project, an endorsement that drew Duncan’s attention to rivals CCS.

CCS is strongly opposed by environmental groups who see it as inefficient, but it has emerged as a preferred approach by the oil industry to combat climate change and as a way to achieve zero emissions by 2050. International Energy Agency, in a 2021 report, said this goal would be more difficult without carbon capture.

“The story of CCS adaptation in the United States has not been a good story,” said Tyson Slocum, energy program director at consumer advocacy group Public Citizen. “I fear CCS will become the next generation of ESG deceptions.”

But Talos could benefit in two ways, analysts say: form a greenhouse-gas-burying company that’s immune to oil’s usual boom-and-bust cycles, and potentially win back investors who have shunned the companies. oil and gas due to climate concerns.

TEAM BUILDING

Duncan, 49, has been part of three oil and gas startups and has grown Talos into a major Gulf Coast independent oil producer valued at $1.7 billion through nearly a dozen acquisitions.

That backdrop helped draw energy companies to Duncan’s vision and his early success with carbon capture surprised others, said energy executives interviewed by Reuters for this story.

“It’s interesting when you’re ahead and the big players are following you,” said Michael Wichterich, chairman of Chesapeake Energy Corp, a major U.S. natural gas producer who has known Duncan for years.

After Duncan began announcing planned new projects along the US Gulf Coast, Wichterich said he received a call from a major oil company and a Talos rival wanting to know more about Duncan.

“I am a significant shareholder in Talos,” said Chris Wright, CEO of hydraulic fracturing company Liberty Energy Inc (LBRT.N), who has known Duncan since they both received funding from energy investor Riverstone. Holdings LLC.

“I tend to own stocks run by people I know, trust and respect. Tim ticks all of those boxes,” Wright said.

Duncan also attracted senior executives to his vision of a company that could develop more fossil fuels while tackling air pollution.

Robin Fielder, former CEO of pipeline operator Noble Midstream Partners, now leads Talos’ CCS business. Duncan is “very enterprising, and I use the word ‘fast’ all the time,” she said. “Tim has been instrumental in helping us build relationships,” she said.

Duncan currently holds monthly meetings with a dozen employees from across the company to glean new ideas.

“Tim is an exceptional leader,” said Paula Glover, president of the Alliance to Save Energy, an energy efficiency group, who joined the company’s board in part because of Tim’s commitment. Duncan to employees and stakeholders.

Glover, a black woman in a predominantly white, male industry, said Duncan stands out because he’s building a culture and a business for the long haul.

“He focused on a culture of belonging — that’s how I believe diversity, equality and inclusion work,” Glover said.

Offshore oil producer Talos Energy is grabbing land and winning big partnerships to build carbon capture centers along the Gulf Coast.

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Reporting by Liz Hampton in Denver Editing by Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.

Teresa H. Sadler