CRC completes pipelines acquisition, says it may use 2,000-mile network for CO2 transport
There might be more than just crude riding on California's biggest oil pipeline transaction in years.
Kern County oil producer California Resources Corp. said Tuesday its completion of a previously announced acquisition of Crimson Midstream Holdings LLC gives it a "broader set of options" for sending carbon dioxide from industrial sources to depleted oil and gas reservoirs, where the gas would be permanently buried in support of climate action.
CRC's announcement on the roughly $63 million purchase may be the first time California's largest oil producer has publicly linked the 2,000-mile pipeline network to its ambitious plans in the field of carbon management.
CRC has worked with Southern California Gas Co. in expectation the Sempra-owned gas utility would help build or manage CO2 pipelines. The oil company's purchase of Crimson, whose pipelines run through oil production hubs, could affect that partnership by allowing CRC to use former oil pipelines to move CO2.
The deal also carries big implications for local oil production. The Crimson acquisition is expected to help solve a bottleneck that developed in December with the closure of the San Pablo Bay Pipeline, the last conduit linking Kern County oil production with a Bay Area refinery. Local oil producers blame the closure for helping lower prices they receive when selling their crude to refiners elsewhere in the state.
As a "common carrier," the San Pablo, which came with the Crimson acquisition, is expected to transport CRC oil as well as crude produced by competitors in the southern Central Valley.
CRC President and CEO Francisco Leon said in a news release Tuesday the acquisition "will enhance our ability to efficiently deliver California-produced barrels directly to the highest-value markets, while increasing operating flexibility and flow assurance across our portfolio."
"In addition," he added, "Crimson's pipeline corridors add to the broader set of options we'll continue to evaluate as we look at longer-term development of CO2 transportation across California."
The company also stated that investing in critical infrastructure "helps ensure California-produced energy is transported safely and reliably."
"It also strengthens energy resilience and supports affordability for Californians by reducing dependence on important crude and refined products," the release added.
The company took the opportunity to update its financial outlook, saying it expects the acquisition to add between $1 million and $2 million to its general and administrative costs in the third quarter, along with capital investment of roughly the same amount.
The California Public Utilities commission approved of the sale on Aug. 13. The seller was Denver-based CorEnergy Infrastructure Trust Inc.
