Focus: The U.S. oil executive making a big bet on combating climate change

EnLink Midstream LLC

14/09/2022 11:00

By Liz Hampton
    Sept 14 (Reuters) - The chief executive of a small U.S. oil
company has jumped to the forefront of the energy industry's
greenhouse gas reduction efforts, recruiting high-profile firms
to his vision of striking it big by selling access to carbon
storage developments. 
    Tim Duncan, the founder of Talos Energy Inc  TALO.N , a
decade-old offshore oil firm with fewer than 450 employees, has
pulled together partners at four U.S. sites to compete against
multi-billion dollar projects from Exxon Mobil Corp  XOM.N  and
Occidental Petroleum Corp  OXY.N .  
    These alliances have made Duncan's company one of the
largest potential beneficiaries of the Biden administration's
climate, tax and health care bill. The law provides tax credits
and cash payments for companies that target industrial-produced
climate warming gases. 
    Duncan, whose company is tiny compared with Exxon and
Occidental, views carbon capture and storage (CCS), which
collects then injects carbon dioxide (CO2) deep underground at a
carefully selected and safe site for permanent storage, as a
natural extension of the oil and gas business.
    "He is one of our fiercest competitors," said Charles
Fridge, chief executive of CCS startup Verde CO2, who left the
oil and gas sector after losing a key investor to climate
worries. "He is on the forefront compared to so many other
public companies," Fridge said. 
    Duncan has made Talos "a leader among public companies in
building up a carbon capture unit," said Fridge, whose Verde CO2
has five projects under development. Big companies have been
plagued with "paralysis by analysis," over CCS, slowing them
from quickly adopting emerging technologies, he said.  
      
    SEISMIC EPIPHANY 
    Two years ago, Talos assembled a team to explore how to
build out a low-carbon business, which realized its seismic data
could pinpoint carbon sequestration sites as well as oil
reservoirs. Duncan, who was part of several startups before
launching Talos, began to examine carbon capture's potential.   
  
    Today, he has a team developing four carbon capture projects
scattered across the U.S. Gulf Coast. 
    "We had to take a leap of faith," Duncan said in an
interview with Reuters. "We have seismic, we know geology. Who
else is going to do it?" 
    That epiphany led to deals with Chevron Corp  CVX.N ,
Freeport LNG, Howard Energy and pipeline operator EnLink
 ENLC.N . Chevron paid $50 million for half ownership in one
project, an endorsement that got Duncan attention from CCS
rivals.
    CCS is staunchly opposed by environmental groups who view it
as ineffective, but has emerged as a preferred approach by the
oil industry to combat climate change and as a way they might
get to zero emissions by 2050. The International Energy Agency,
in a 2021 report, said that goal will be more difficult without
carbon capture.
    "The history of CCS adaptation in the United States has not
been a good story," said Tyson Slocum, energy program director
at consumer advocacy group Public Citizen. "My fear is CCS is
just going to become the next generation of ESG tomfoolery."
    But Talos could benefit in two ways, say analysts: forming a
business burying greenhouse gases that is immune to the usual
boom-bust oil cycles, and potentially winning back investors who
have shunned oil and gas companies over climate concerns. 
    
    TEAM BUILDING
    The 49-year-old Duncan has been part of three oil and gas
startups and transformed Talos into a sizeable independent Gulf
of Mexico oil producer valued at $1.7 billion through nearly a
dozen acquisitions. 
    That background has helped draw energy companies to Duncan's
vision and his early success with carbon capture has startled
others, said energy executives interviewed by Reuters for this
story. 
    "It's interesting when you are ahead and the big guys are
following you," said Michael Wichterich, chairman of Chesapeake
Energy Corp  CHK.O , a large U.S. natural gas producer who has
known Duncan for years.  
    After Duncan began announcing new projects planned along the
U.S. Gulf Coast, Wichterich said he received a call from a large
oil company and Talos rival wanting to learn more about Duncan. 
    "I'm a meaningful shareholder in Talos," said Chris Wright,
CEO of hydraulic fracking firm Liberty Energy Inc  LBRT.N , who
has known Duncan since both received financing from energy
investor Riverstone Holdings LLC.  
    "I tend to own stocks that are run by people I know, trust
and respect. Tim checks all of those boxes," said Wright. 
    Duncan also has lured senior executives to his vision of a
company that can develop more fossil fuels and still address air
pollution. 
    Robin Fielder, former CEO of pipeline operator Noble
Midstream Partners, now runs Talos' CCS business. Duncan is
"very entrepreneurial, and I use the word 'fast-paced' all the
time," she said. "Tim has been instrumental in helping us get
connections," she said. 
    Duncan currently holds monthly meetings with a dozen
employees from across the company to glean new ideas. 
    "Tim is an exceptional leader," said Paula Glover, president
of the Alliance to Save Energy, an energy efficiency group, who
joined the company's board in part because of Duncan's
commitment to employees and stakeholders.  
    Glover, a Black woman in a largely White, male, industry,
said Duncan stands out because he is building a culture and
company for the long term. 
    "He focused on a culture of belonging - that's how I believe
diversity, equality and inclusion work," said Glover.     

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Talos Energy builds a carbon capture empire    https://tmsnrt.rs/3LdNEk1
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 (Reporting by Liz Hampton in Denver
Editing by Marguerita Choy)
 ((Liz.Hampton@thomsonreuters.com; +1 832 571 8115; Reuters
Messaging: Reuters Messaging: liz.hampton.reuters@reuters.net))