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Enbridge, Occidental Partner to Build CO2 Pipeline in Texas

Enbridge Inc. ENB is collaborating with Occidental Petroleum OXY to explore the possibility of a carbon dioxide (CO2) pipeline and storage facility near Corpus Christi on the Texas Gulf Coast.

The move is part of the companies’ strategy to slash emissions associated with oil and gas operations. The companies did not reveal a schedule or a cost estimate for the initiative.

Enbridge is collaborating with Occidental’s low-carbon business for the research. The facility will serve some of Enbridge’s nearby facilities and other nearby emitters.

Oil and gas companies are actively involved in carbon capture and storage projects as they offer a transition pathway for the rapid and effective reduction of CO2 emissions beyond what can be achieved by alternative methods like electrification and renewable fuels. Thus, the use of carbon capture and storage in reducing industrial emissions offers an excellent opportunity.

Occidental aims to develop multiple carbon capture projects (as many as 135 direct-air carbon capture facilities) by 2035. OXY believes that the new project will look to develop carbon sequestration sites outside of Ingleside.

Enbridge will construct and operate the CO2 pipeline system, while Occidental will construct and operate the CO2 sequestration facilities. The facility would offer services to CO2 emitters in the Corpus Christi region, home to various energy and industrial activities.

Local environmental groups have voiced uncertainty over carbon capture instead of favoring reducing existing operations or slowing all expansion to drive global warming away. Climate change mitigation can take place by significantly reducing the use of fossil fuels. As fossil fuel use is necessary, it should be paired with carbon capture.

Occidental and Enbridge continue to assess technology options and the scope of opportunity for carbon capture and storage projects. The latest collaboration is an excellent opportunity for the companies to decarbonize their facilities and provides a platform for industrial neighbors seeking to reduce emissions. The collaboration will help accelerate the path to a net-zero future.

Price Performance

Shares of Enbridge have underperformed the industry in the past six months. The stock has lost 12% compared with the industry’s 8.5% decline.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Stocks to Consider

Enbridge currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream, LP DCP is a leading energy infrastructure firm. DCP’s third-quarter adjusted earnings of $1.50 per unit beat the Zacks Consensus Estimate of $1.05.

DCP Midstream is expected to see an earnings surge of 181% in 2022. The company currently has a Zacks Style Score of A for Growth and Value, and B for Momentum. DCP generated an excess free cash flow of $52 million in the reported quarter.

Patterson-UTI Energy PTEN is one of the largest North America land drilling contractors, having a large, high-quality fleet of drilling rigs. PTEN’s third-quarter 2022 adjusted net profit of 28 cents per share beat the Zacks Consensus Estimate of 19 cents.

Patterson-UTI is expected to see an earnings surge of 128% in 2022. The company doubled its quarterly cash dividend to 8 cents per share from the previous 4-cent payout. The dividend will be paid out on Dec 15, 2022, to shareholders of record as of Dec 1, 2022. PTEN also increased its share repurchase authorization to $300 million.

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Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report

Enbridge Inc (ENB) : Free Stock Analysis Report

DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report

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Zacks Investment Research