LSB Industries Reaches Agreement Establishing a Pathway to 100% Ownership of El Dorado CCS Project
LSB Industries Reaches Agreement Establishing a Pathway to 100% Ownership of El Dorado CCS Project
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Key Terms
carbon capture and sequestrationmedical
Carbon capture and sequestration is a process that captures carbon dioxide emissions from sources like power plants or industrial facilities and stores them underground to prevent them from entering the atmosphere. This technology helps reduce greenhouse gases that contribute to climate change, which can influence the long-term stability of energy and environmental markets. For investors, it represents a way to support cleaner energy solutions and potentially benefit from emerging industries focused on sustainable practices.
CCStechnical
Carbon capture and storage (CCS) is a set of technologies that trap carbon dioxide produced by power plants, factories or industrial processes, then transport and store it deep underground or turn it into usable products. Think of it like catching smoke from a chimney and burying or repurposing it so it doesn't warm the atmosphere. Investors watch CCS because it can lower regulatory and carbon costs, create new revenue from credits or products, and influence the long-term value of energy and industrial companies.
Class VI permittingregulatory
Class VI permitting is the regulatory approval process for deep underground injection wells specifically authorized to store carbon dioxide permanently under government rules. For investors, the permit determines whether a carbon capture and storage project can legally operate, shaping project timing, construction and monitoring costs, and long-term liability—like getting a certified deed and safety inspection to use a sealed underground vault for decades.
injection well permitregulatory
A permit authorizing a company to inject fluids into underground wells for purposes such as disposal of industrial or oilfield wastewater, storage of gases, or enhanced recovery of resources. It matters to investors because holding or losing this permit affects a company’s ability to operate facilities, control costs, and avoid environmental fines or cleanup obligations — like needing a legal “license” to park and manage hazardous material safely underground.
Internal Revenue Code Section 45Qregulatory
A federal tax incentive that pays a fixed amount per ton for capturing and permanently storing or utilizing carbon dioxide, effectively subsidizing projects that remove CO2 from industrial emissions or the air. For investors, it changes the economics of energy and industrial projects by turning avoided pollution into a predictable cash benefit—think of it as a per-unit payment that can lower operating costs, improve returns, and reduce payback time, while depending on long-term performance and regulatory verification.
EPAregulatory
The Environmental Protection Agency (EPA) is a U.S. government agency that sets and enforces rules to limit pollution and protect air, water, and land. For investors, EPA actions can change costs and legal obligations for companies—like forcing upgrades, restricting products, or enabling cleanup funding—so it can affect profits, project timelines, and long-term business plans much like a city’s building code can shape construction costs and timelines.
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Strategic Structure Provides Pathway To Full Ownership While Preserving Near-Term Capital Flexibility
OKLAHOMA CITY--(BUSINESS WIRE)--
LSB Industries, Inc. (NYSE: LXU) (“LSB” or “the Company”), today announced that it has reached an agreement with Lapis Carbon Solutions (“Lapis”) that establishes a strategic pathway for LSB to take full ownership of Project Blue, the carbon capture and sequestration (“CCS”) project currently underway at its El Dorado, Arkansas facility (“the Project”).
“The opportunity to achieve full ownership of this project is an important strategic step for the Company,” said Mark Behrman, Chairman and Chief Executive Officer. “In addition to increasing our economic benefit from the project, this agreement provides greater operational control, commercial flexibility and long-term strategic optionality as we continue to advance the asset toward completion and evaluate future expansion opportunities at our El Dorado site. The milestone-based structure also allows us to align capital deployment with project progress, preserving near-term flexibility while improving our ability to capture the project’s long-term economics as it moves closer to operation.”
Behrman Concluded, “This transaction reflects the strength of our partnership with Lapis, whose technical and regulatory work have positioned this project for success. We look forward to continuing to work alongside the Lapis team as we move towards successful completion and begin operations.”
Key Transaction Details:
LSB Industries to acquire 100% ownership and control of the El Dorado CCS project
No upfront cash payment required at closing
Investment to be made in stages tied to key milestones, with consideration focused on development, permitting, construction, commissioning and operational milestones
Total consideration and remaining completion capital, assuming all milestones achieved, currently estimated at approximately $95 million
Milestone-based structure aligns the Company’s capital deployment with project advancement and limits upfront capital exposure
Full ownership expected to provide enhanced commercial flexibility to optimize the asset and evaluate future expansion opportunities
The Company expects the project to generate between $25 million and $30 million of annual earnings and cash flow, net of any operating costs associated with CCS operations when fully operational
Initially announced in April 2022, the project is expected to permanently capture and sequester between 400,000 and 500,000 metric tons of CO2 per year and is on track for completion by the end of 2026 or early 2027. The sequestered CO2 will qualify for federal tax credits of $85 per metric ton under Internal Revenue Code Section 45Q. In addition, the project will enable LSB to produce between 305,000 and 380,000 metric tons per year of low carbon ammonia, which provides the company opportunities for additional revenue. This includes generating premiums for low carbon products or potentially selling the environmental attributes generated through CO2 sequestration.
Lapis will continue to manage Class VI permitting and regulatory engagement with the Environmental Protection Agency (“EPA”) on behalf of the Company. The EPA is currently reviewing the company’s Class VI injection well permit application. Once the project receives EPA approval, expected later this year, the company intends to use a stratigraphic well drilled and completed in June 2025, for its CO2 injections. Lapis will continue working with the Company on the project throughout the completion of construction and commissioning.
LSB Industries, Inc.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma, is committed to playing a leadership role in the production of low and no carbon products that build, feed and power the world. The LSB team is dedicated to building a culture of excellence in customer experience as we currently deliver essential products across the agricultural and industrial end markets and, in the future, the energy markets. The company manufactures ammonia and ammonia-related products at facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma and operates a facility for a global chemical company in Baytown, Texas. Additional information about LSB can be found on our website at www.lsbindustries.com.
Lapis Carbon Solutions
Lapis Carbon Solutions (“Lapis”) is a full-service carbon capture, utilization and storage (“CCUS”) developer and operator, providing customized solutions for emissions-intensive industry partners. Based in Dallas, Texas, the Lapis team is comprised of leading industry experts with multiple decades of technical, commercial and project experience. Lapis is backed by Cresta Fund Management, a Dallas-based private equity firm specializing in middle market sustainable infrastructure. Visit our website for more information about our company and our projects.
