Exxon acquires more land for carbon storage in the Gulf of Mexico

By Sabrina Valle and Nichola Groom

HOUSTON, March 29 (Reuters) - Exxon Mobil Corp on Wednesday was high bidder on 69 blocks in the U.S. Gulf of Mexico's shallow waters, in a move to expand the potential territory it could claim to store carbon emissions.

The largest U.S. oil producer was among the top bidders in a U.S. government auction of oil and gas drilling rights in the Gulf of Mexico that generated $263.8 million in high bids. The U.S. will disclose details of high bidders and acres later in the day.

Exxon was high bidder on blocks off the Texas coast adjacent to areas it previously acquired, the U.S. Bureau of Ocean Energy Management indicated.

The No. 2 U.S. oil producer, Chevron Corp, which is expanding its oil and has production in the U.S. Gulf, also was among the high bidders. A spokesperson said the company was pleased with the auction results and intends to further evaluate the blocks' potential.

Exxon's bid was on areas close to onshore infrastructure suitable for carbon capture and storage (CCS), signaling an expansion of property for burying carbon dioxide underground.

The U.S. oil producer is proposing a large decarbonization hub in South Texas. Last year, it signed its first deal offering decarbonization services for high-polluting industries in the region based on CCS. It also disclosed plans for a large-scale hydrogen plant in Texas for 2027, equally backed by carbon storage. Exxon says it expects double-digit returns from these new businesses in the future.

The company's energy transition strategy couples curbing CO2 while increasing its oil and gas production, a contrast with European firms moving away from fossil fuels and toward renewable solar and wind power.

It budgeted $7 billion for carbon capture, hydrogen and biofuels projects between 2022 and 2027.

Exxon first bought acreage for carbon capture in 2021. (Reporting by Sabrina Valle in Houston and Nichola Groom in Los Angeles)