Houston oil and gas company reveals details on $1B carbon capture facility
Ramping up its investment in clean energy, Houston-based Occidental Petroleum plans to spend up to $1 billion on a facility in the Permian Basin that will pull carbon dioxide from the air.
During a March 23 investor update, executives at Occidental laid out their strategy for developing direct air carbon capture plants and carbon sequestration hubs.
Executives said Occidental’s first direct air capture facility is set to be built in the Permian Basin, a massive oil-producing region in West Texas and southeastern New Mexico. The industrial-scale facility, with an estimated price tag of $800 million to $1 billion, is on track to open in late 2024. Construction is supposed to start later this year.
Occidental expects as many as 135 of its direct air carbon capture plants to be operating by 2035.
According to the International Energy Agency, direct air capture (DAC) technologies extract carbon dioxide, or CO2, directly from the atmosphere. The CO2 can be permanently stored in deep geological formations, or it can be used in food processing or can be combined with hydrogen to produce synthetic fuels.
As of November, 19 DAC facilities were operating around the world, according to the energy agency. Occidental envisions the Permian Basin plant pulling 1 million metric tons of CO2 from the air each year — an amount that would far exceed the combined capacity of the 19 facilities that already are online.
Aside from DAC facilities, Occidental plans to put three carbon sequestration hubs online by 2025. These hubs take carbon dioxide from the air and several other sources, such as factories and power plants, and then transport and store it using shared infrastructure, the Oil and Gas Climate Initiative explains.
Beyond the three locations already accounted for, several more Occidental sequestration hubs are in the works. Some of those sites will be in the Gulf Coast region.
During the investor presentation, Occidental President and CEO Vicki Hollub reiterated that she believes the company’s 1PointFive carbon capture initiative will ultimately create more value than its petrochemical business. The petrochemical unit generated $5.2 billion in revenue last year.
Hollub called carbon capture “a sure opportunity” for Occidental.
“There’s just not going to be enough other alternatives for CO2 offsets for corporate America and … corporations around the world,” Hollub said.
Occidental already is gaining value from DAC. For instance, aircraft manufacturer Airbus recently said it would buy 400,000 metric tons of carbon removal credits from Occidental’s first DAC facility over a four-year span.
Occidental is among numerous companies — including Houston energy heavyweights BP, ExxonMobil, and Shell — seeking to capitalize on the carbon capture and sequestration market. Fortune Business Insights forecasts the value of the global market will grow from $2 billion in 2021 to $7 billion by 2028.