Occidental Petroleum, the seventh largest oil and gas company in the U.S. with $19.7 billion in revenues, is trying to establish itself as a leader in carbon dioxide removal.
Last week, the company said that it would be spending between $800 million and $1 billion on a facility to remove carbon dioxide from the air. It would be the world's largest direct air capture project and is set to begin construction in the largest oilfield in the U.S. -- the Permian basin -- later this year.
Airbus, the French airplane manufacturer, said it would buy carbon credits from the facility. And Occidental thinks that the revenue from its carbon dioxide removal operations could one day soon rival the income from its chemicals business, which rakes in nearly $1.5 billion annually.
The company, led by Vicki Hollub, is the first oil business in the U.S. to lay out concrete plans for a direct air capture facility that would remove carbon dioxide directly from the air.
Other companies, like ExxonMobil, Chevron, and ConocoPhillips are focused on carbon capture and storage projects, which, to date, have failed to achieve their desired results.
ExxonMobil's Shute Creek CCUS facility has only managed to capture about 50% of the carbon dioxide from its operations. Of that 50% the majority has been sold to oil companies to recover oil from existing wells, while only 3% of the captured CO2 has been sequestered underground, according to a report Institute for Energy Economics and Financial Analysis.
Over the lifetime of the Shute Creek facility, ExxonMobil reported it only captured one third of its designed capture capacity, based on publicly available data and company disclosures according to IEEFA’s findings.
Occidental's facility is substantively different from the technology that ExxonMobil is using. Developed more recently by the company Carbon Engineering, the technology at the Permian Basin site will use giant fans to draw air into a chamber where a series of chemical reactions capture the carbon dioxide in the air -- the CO2 is then further processed into a gas and then stored.
The system that Carbon Engineering, and Occidental plan to build has a goal of removing 1 million tons of CO2 from the atmosphere per year. That's 100 times bigger than the direct air nature plants currently operating, according to data from the International Energy Agency cited by Reuters.
This year's investments in the low carbon business will total $275 million, and the company plans to develop over time three carbon sequestration hubs that will be online by 2025 and another 69 smaller DAC facilities by 2035, it told investors.
Occidental shares were up less than 1% at $60.03 in midday trading. Its shares have nearly doubled this year driven by rising oil prices, continuing debt reductions, and a revived share buyback program.
"There's just not going to be enough other alternatives for CO2 offsets," Reuters quoted Hollub saying. "So this is a sure opportunity."