2023-10-04 10:00:00
Private equity firm SK Capital Partners has acquired U.S. oil waste management services company Milestone Environmental Services from Amberjack Capital Partners for an undisclosed amount, the two companies announced Wednesday.
This acquisition reflects increased greenhouse gas reduction programs available to the oil, energy and petrochemical industries, as well as tax credits available for carbon capture and storage (CCS) projects.
Milestone views permanent carbon storage as an extension of its oil waste disposal business in major U.S. shale plays, CEO Gabriel Rio said. Revenues from carbon collection and removal might ultimately be equivalent to those from oil waste disposal.
The company is planning two carbon dioxide (CO2) storage projects in the Permian Basin, the United States’ main shale oil deposit, where it currently collects and burying drilling waste and oil-contaminated water. The first project might start injecting CO2 as early as 2025 and store 2.5 million tonnes of carbon per year.
Milestone will complement Exxon Mobil, Occidental Petroleum and Chevron storage projects in Texas and Louisiana. Its relationships with oil and gas producers and experience with wastewater disposal wells allow it to overcome concerns regarding its size, Mr. Rio said.
“We really understand the geology and how to put waste streams back into the ground, keep them away from groundwater and make them permanently safe,” Mr Rio said.
According to Amar Gujral, managing director of LEK Consulting, the company, with turnover between $100 million and $300 million, accounts for a significant portion of the money currently spent on oil waste management in the two largest Texas shale fields.
Jack Norris, managing director of SK Capital, which oversees investments in materials and chemicals, said his company provides Milestone with a “capital structure that allows it to execute its strategy.” He would not disclose his investment in Milestone or what it will make available for carbon storage projects.
According to Charles McConnell, executive director of the Center for Carbon Management in Energy at the University of Houston, new carbon removal companies are having a hard time convincing industrial emitters to trust smaller companies.
“This is not a market today for companies that are late entrants to the market,” he said, adding that issuers want providers with deep pockets. “This is a nascent industry where everyone is wondering who is going to hold the bag if there is a leak.
Graham Bain, vice president of consulting firm Enverus Intelligence, said more oil companies would turn to CO2 storage.
“There is certainly room for smaller players in the Permian that can take advantage of waste disposal infrastructure and relationships with oil producers,” he said.
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