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Chevron's (CVX) Gorgon Project Misses Carbon Capture Target

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Chevron Corporation’s (CVX - Free Report) Gorgon liquefied natural gas (LNG) project in Western Australia, which is a carbon capture and storage (CCS) plant, has failed to fulfill its emission-reduction objectives due to its rocky start.

Management recently announced that the company will not be able to meet its expected injection rates with the project only collecting a quarter of the toxic carbon dioxide emission estimated in the first five years of its LNG facility's operation.

The system operates by pumping naturally existing carbon dioxide from offshore gas reserves into a massive sandstone deposit, two kilometers beneath the Barrow Island where it remains stored. It prevents the release of tons of greenhouse gases into the environment.

The plant was built to capture 4 million tons of carbon dioxide per year but it has only caught 5 million tons since the operation began in August 2019, thereby falling short of its goal of 80% emission capture, on average, in the first five years of its operation.

Chevron is consulting with the authorities of Western Australia to fill in the gap and will report publicly on its progress later this year. It takes time to optimize a new system to guarantee its effective operation throughout 40 years of operation, as it does with any pioneering endeavor.

While Chevron is the chief operator of Gorgon LNG project holding 47.3% stake, Exxon Mobil Corporation (XOM - Free Report) and Royal Dutch Shell plc (RDS.A - Free Report) own 25% interest each. The remainder is held by Osaka Gas, Tokyo Gas and Chubu Electric Power.

Gorgon LNG project is the largest single resource endeavor in Australia, dealing with the delivery of natural gas to international and domestic customers. Valued at $69 billion, it is one of the costliest energy projects, employing more than 10,000 people to construct the processing facility at Barrow Island. The Gorgon LNG project boasts a shipment capacity worth 15.6 million metric tons per year.

Brief on the Company

Chevron is one of the largest publicly-traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this energy player is a fully-integrated company, participating in every energy-related process, ranging from oil production to refining and marketing.

Zacks Rank & Key Pick

Chevron currently has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is PetroChina Company Limited (PTR - Free Report) , presently flaunting a Zacks Rank #1 (Strong Buy). You can see  the complete list of today’s Zacks #1 Rank stocks here.