In August 2023, Equinor bought a quarter of the Bayou Bend carbon storage project on the Texas Gulf Coast. It paid an undisclosed price to Carbonvert, one of the two companies that had won the lease two years earlier. By then Chevron already held half. Within months, the last founding partner would sell out too.
Key takeaways
- Equinor announced on 28 August 2023 that it had acquired Carbonvert's 25% interest in the Bayou Bend carbon capture and storage project in Texas by buying Carbonvert's subsidiary Texas Carbon 1 LLC, and the deal value was not disclosed.
- Talos Energy and Carbonvert won Bayou Bend in 2021 through the Texas General Land Office's Jefferson County carbon storage lease, the first offshore lease in the United States dedicated to CO2 storage.
- Chevron acquired a 50% stake in Bayou Bend in May 2022 for gross consideration of $50 million, made up of $30 million in upfront cash and $20 million of capital cost reimbursement.
- After a March 2023 expansion onshore into Chambers and Jefferson Counties, Bayou Bend covers about 140,000 acres with an estimated gross potential storage resource of about 1 billion metric tons of CO2.
- In March 2024, TotalEnergies acquired Talos Low Carbon Solutions, which held Talos's 25% of Bayou Bend, for about $148 million, leaving the project owned by Chevron, Equinor and TotalEnergies.
How did Bayou Bend start?
It started as a state lease won by two companies. In 2021, Talos Energy and Carbonvert won the Texas General Land Office's Jefferson County carbon storage lease, each holding 50%. It was the first and only offshore lease in the United States dedicated to CO2 sequestration at the time.
Carbon capture and storage, or CCS, captures carbon dioxide from industrial plants and injects it deep underground for permanent storage. A storage hub like Bayou Bend does not capture anything itself. It provides the pipes, wells and rock that emitters nearby can pay to use.
The original site covered about 40,000 gross acres in state waters off Beaumont and Port Arthur. Talos and Carbonvert estimated it could store about 225 to 275 million metric tons of CO2 from local industry.
What happened when Chevron arrived in 2022?
Chevron took half and became the industrial partner the founders had been looking for. Under a memorandum of understanding announced on 3 May 2022, Chevron acquired 50% of an expanded joint venture, and Talos and Carbonvert each dropped to 25%. Talos stayed on as operator at that stage. The deal completed on 24 May 2022.
The price was small. Chevron paid gross consideration of $50 million to Talos and Carbonvert, of which $30 million was upfront cash. The other $20 million was capital cost reimbursement, expected to cover the two companies' spending until the final investment decision. A final investment decision, or FID, is the point at which owners commit to build. Grossed up, Chevron's price implies about $100 million for the whole project at that stage, including the reimbursement.
Talos had said publicly that it wanted industrial partners for the project. Chevron already held a 47.3% stake in the Gorgon CCS project in Australia, and Enerdatics estimates it funded the Bayou Bend stake from cash on hand.
Why did the project change so much in 2023?
Because it grew. In March 2023 the partners added about 100,000 acres onshore in Chambers and Jefferson Counties. The expanded Bayou Bend now covers about 140,000 acres, with estimated gross potential storage of about 1 billion metric tons.
The location matters as much as the size. Bayou Bend sits close to the Houston Ship Channel and the Beaumont and Port Arthur industrial corridors. Industrial emissions in the Texas Gulf Coast region are estimated at about 100 million metric tons of CO2 a year, from refining, cement, steel, chemicals and manufacturing. A storage site near that many emitters can sign up customers without building long pipelines.
Equinor bought in five months after the expansion. It took Carbonvert's 25% by acquiring Carbonvert's subsidiary Texas Carbon 1 LLC, leaving Chevron with 50%, Equinor with 25% and Talos with 25%. The purchase fits Equinor's aim of building capacity to transport and store 15 to 30 million metric tons of CO2 a year by 2035. Initial injection at Bayou Bend was expected in early 2027.
How did TotalEnergies complete the line-up?
By buying Talos's whole carbon business. In March 2024, TotalEnergies acquired Talos Low Carbon Solutions for about $148 million, made up of a $125 million purchase price plus reimbursements, adjustments and retained cash. Talos said it had made about two times its invested capital on the business, with an internal rate of return above 100%. Further contingent payments are due if other projects reach FID or are sold.
That deal brought TotalEnergies the 25% of Bayou Bend, plus a 65% operated interest in Harvest Bend in Louisiana and 50% of Coastal Bend in Texas. TotalEnergies said it intends to sell its interests in Harvest Bend and Coastal Bend after closing. At that point Bayou Bend was owned by Chevron at 50% as operator, Equinor at 25% and TotalEnergies at 25%.
Enerdatics' data shows how rarely carbon storage deals are priced. Of 165 carbon capture and storage transactions Enerdatics records globally from 2022 to 2024, 126 are joint ventures or partnerships and only 23 carry a disclosed value. Chevron's $50 million is one of them. Equinor's purchase is not, which leaves Chevron's 2022 price and TotalEnergies' $148 million for a three-project business as the nearest public reference points for what a share of Bayou Bend was worth.
What does the deal signal for US carbon storage?
It signals that the developers who win storage acreage are often not the ones who build it. Talos and Carbonvert secured the lease, saw the site expanded and then sold to companies with the balance sheets to fund wells and pipelines. Both exited within about three years of the award.
It also shows supermajors preferring to share large storage hubs rather than own them alone. Three international energy majors now split Bayou Bend between them. Equinor made the move in the same summer that it bought a Brazilian developer, Rio Energy, and Occidental agreed to buy Carbon Engineering for its direct air capture technology. Smaller storage projects are now testing other ownership models, such as oilfield carbon storage joint ventures in Oklahoma.
Frequently asked questions
Who owns the Bayou Bend CCS project?After TotalEnergies bought Talos Low Carbon Solutions in March 2024, Bayou Bend was owned by Chevron with 50% as operator, Equinor with 25% and TotalEnergies with 25%.
How much did Equinor pay for its Bayou Bend stake?The price was not disclosed. Equinor acquired Carbonvert's 25% by buying its subsidiary Texas Carbon 1 LLC in August 2023.
How much CO2 can Bayou Bend store?After its March 2023 expansion, Bayou Bend covers about 140,000 acres with an estimated gross potential storage resource of about 1 billion metric tons of CO2.
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