ConocoPhillips is applying our disciplined capital allocation approach to the research and development of potential new low carbon opportunities through clear investment criteria and a focused strategy. We have prioritized opportunities in carbon capture and storage (CCS) and hydrogen technologies as they offer potential for competitive returns, assist in reducing GHGs, and align closely with our technical competencies and global reach.

Carbon Capture and Storage

Carbon capture and storage involves capturing CO ₂ from concentrated sources — such as power plants or industrial sources — preprocessing, compressing, transporting and injecting the CO ₂ into geologic formations underground and monitoring the storage site. This process helps reduce the amount of CO ₂ released into the atmosphere. Development of CCS projects could benefit from our existing technical expertise in subsurface and our track record in the safe development and execution of major projects in the oil and gas industry. We have assembled an internal team of subsurface and surface experts, with support from our Land, Regulatory, Legal, Government Affairs, Commercial, Environmental and Sustainable Development and Stakeholder Relations teams, and are actively engaged in subsurface characterization, business development and land acquisition.

We are evaluating an opportunity to participate in the creation of a CCS hub on the U.S. Gulf Coast. Providing CCS at scale to third parties enables monetization of CCS as a new revenue line. These hubs could offer cost advantages and risk mitigations and can be modified to meet increasing demand. Hubs should enable access to a diverse source of industrial customers, reducing both the reliance on a single source of CO ₂ supply and the risk of asset stranding. The Gulf Coast’s large, concentrated industrial emissions sources, coupled with significant subsurface storage capacity in Texas and Louisiana, could make it an ideal location for a hub structure. Long-term off-take agreements would need to be signed with industrial emitters who are looking to address their emissions due to ESG targets, current carbon credits and future possible credits or taxes.

As part of this work, ConocoPhillips’ 25,000-acre position in southeast Louisiana was identified as a potential hub for CCS services. The area, in St. Charles and Lafourche Parishes, is well-suited to serve industrial sites located along the Mississippi River corridor. ConocoPhillips is leveraging our unique land position, technical expertise, project development skills and safety commitment to potentially provide future cost-effective and permanent carbon storage services to industrial sites in the area. Additionally, ConocoPhillips is in negotiations with landowners along the Texas and Louisiana Gulf Coast for additional rights to sequester CO ₂ . The team is also negotiating with large industrial customers near the proposed land positions to provide baseload CO ₂ streams to each of the hubs.

Additionally, we are evaluating potential international CCS opportunities as well as options to deploy CCS in our own operations. For example, the Canada business unit recently joined the Oil Sands Pathways to Net Zero Initiative, an alliance of Canada’s top oil sands operators that is working toward achieving net-zero GHG emissions by 2050 through CCS.

Hydrogen

ConocoPhillips recognizes the important role hydrogen may play in decarbonizing the global economy, particularly in power generation in certain geographies, and hard-to-electrify sectors such as transportation and freight. We have identified two types of hydrogen manufacturing which fit into the company’s core competencies and have the potential to grow into a scalable business — hydrogen from natural gas with associated carbon capture and storage (“blue hydrogen”), and hydrogen from the electrolysis of water using electricity from renewables (“green hydrogen”).

We are evaluating where low-cost hydrogen manufacturing could be sited and how it could best be delivered to end-use customers. The success factors for blue hydrogen are a reliable low-cost natural gas supply and a nearby subsurface site suitable for CCS. A successful green hydrogen business requires low-cost renewable electricity and water supply.

Technologies for manufacturing both types of hydrogen are rapidly evolving and, like CCS, we are pursuing various ways to access these technologies and qualify them for use in projects. Over the last year, we have made early investments in enabling hydrogen technologies, including an innovative and low-cost methane pyrolysis platform. We are also continuing our support of academic and industry research being conducted to advance decarbonization efforts. Leveraging our global reach and technical expertise in liquefaction gained from our existing LNG business, we are evaluating and high-grading hydrogen and ammonia (as a hydrogen carrier) production and marketing opportunities, both domestically and across the world.