BKV CEO: If You Have the Skills To Pay the Bills, CCS Is a ‘Tremendous Business’

Abstract

Shale gas producer BKV Corp. has made the leap into the US carbon capture and storage (CCS) sector, becoming the latest upstream firm to challenge the idea that only industry giants can make significant moves in this emerging arena. Founded in 2015 as a privately held subsidiary of Thailand’s coal and energy conglomerate Banpu, BKV and its fewer than 400 employees have quickly built the company into the 17th largest gas producer in the US. In addition to its upstream operations in the Barnett and Marcellus shales, BKV’s business model borrows from its Thai energy roots and includes ownership of two natural gas power plants in Texas. But the firm is better known within upstream technical circles for its leadership in refracturing horizontal wells in the Barnett where it is the largest operator both in terms of acreage and flowing wells. No stranger to diversification, BKV is now shifting its focus to CCS—a market anticipated to balloon almost fivefold from $3 billion to over $14 billion by the end of the decade. This growth is being propelled in the US by new legislation offering $85 in tax credits for each ton of CO2 sequestered, effectively turning the greenhouse gas into a valuable commodity. The company’s inaugural CCS project, in collaboration with Dallas-based EnLink Midstream, launched this past November in Bridgeport, Texas. Called the Barnett Zero Project, BKV and its partner are targeting the sequestration of approximately 210,000 mtpa of CO2e. Hitting that target means potentially generating over $17.8 million in annual tax credits, a sum that offers a swift return on investment for those who can manage costs. BKV has also established a new business unit called dCarbon Ventures which is leading a separate CCS joint venture in the Barnett play called Cotton Cove. The $17.6-million project, $9 million of which will be put up by BKV, is expected to begin injecting up to 45,000 mtpa by the end of next year. Beyond that, BKV and its subsidiaries have secured rights for a large-scale project spanning 21,000 acres in neighboring Louisiana which would source its emissions from the industrial and petrochemical plants around the New Orleans area. Steering these ambitious projects is BKV’s CEO, Chris Kalnin, alongside Lauren Read, vice president of the gas company’s dCarbon Ventures. Under their leadership, BKV hopes to achieve net-zero Scope 1 and 2 emissions by next year—decades ahead of most industry reduction targets. The company is not stopping there and is ambitioning to do what most US-based operators have so far refrained from, which is to offset its Scope 3 emissions sometime next decade. In the following Q&A, Kalnin and Read discuss the motivations behind the Barnett Zero Project, its significance in the context of independent producers, and what it signals about BKV’s broader strategy.