Exxon Buys Pipeline Operator, Making Big Bet on Carbon

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Exxon Mobil is paying almost $5 billion to buy Denbury, a pipeline operator that moves carbon dioxide, increasing its bet that it can make money collecting other companies’ emissions. The deal represents a slight premium for Dallas-based Denbury, which was valued at around $4.4 billion Wednesday. The company emerged from bankruptcy in 2020 and has benefited from the Biden administration’s signature climate bill by expanding its foothold in carbon capture and tapping into billions in government tax credits.

Exxon, which has been sitting on more than $32 billion in cash after record profits last year, has been on the hunt for deals. “It’s going to accelerate the profitable growth of the business and accelerate decarbonization, and that will help the U.S. overall and accelerate the world’s path to net zero," said Dan Ammann, president of Exxon’s low-carbon solutions business.

The deal gives Exxon a leg up on building out the asset base it will need to attract potential customers for its nascent business capturing carbon as a service for so-called hard-to-decarbonize industries such as cement and steel. Since October, Exxon has signed three agreements to capture, move and store carbon emitted from manufacturing plants owned by fertilizer maker CF Industries, industrial gas company Linde, and steel producer Nucor. The first two of those projects are scheduled to come online in 2025, the third in 2026.

Exxon shares dropped around 2% in early trading Thursday. Exxon has said it would spend $7 billion through 2027 beefing up its low-carbon business, which it began in 2021, alongside $10 billion it would spend on curbing its own emissions. Other big energy companies, including Occidental Petroleum and Chevron, have also said