Will Occidental’s Billion-Dollar Carbon Capture Bet Pay Off?

By Felicity Bradstock - Apr 12, 2023

Occidental Petroleum Corporation is building a plant fitted with direct air capture technology to remove CO2 directly from the air.

The captured carbon will be pumped underground to enhance the longevity of OXY's oil operations and help in achieving net-zero emissions by 2050.

The project is supported by the Biden administration’s climate policies and is a significant step towards decarbonizing the oil and gas industry.

U.S. oil and gas company Occidental Petroleum Corporation (OXY) has big decarbonisation plans to keep its oil production going as long as it can. As the U.S. undergoes a green transition, putting pressure on companies across all industries to reduce their greenhouse gas emissions, several companies are introducing new technologies aimed at helping them produce lower-carbon fossil fuels. The use of carbon capture and storage (CCS) technologies is helping energy firms to keep their operations running even as the government pushes for a shift away from fossil fuels to green alternatives. 

OXY is currently installing a huge structure of fans to suck carbon directly out of the air, with the technology expected to be up and running by 2024. The carbon will then be pumped thousands of feet underground into geological formations to remain there for hundreds of years. The firm has leased over 400 square miles of land from Texas to Louisiana for this purpose. It is investing over $1 billion in the first of its plants to be fitted with direct air capture technology, aimed at reducing its carbon footprint substantially. The project is supported by the Biden administration’s climate policies, with the government covering up to 45 percent of the initial costs. 

Direct air capture (DAC) technologies remove CO2 directly from the atmosphere to be stored underground or used in other applications. By September 2022, there were 18 DAC plants around the globe – located in Europe, the United?States, and Canada – capturing around 0.01?Mt?CO2/year. To achieve net-zero emissions by 2050, enough DAC facilities to capture almost 60 Mt?CO2/year would have to be built by 2030. While this is possible, many more companies would need to invest in large-scale DAC projects than are currently being seen.

OXY’s CEO, Vicki Hollub, expects the technology to help the firm achieve net-zero emissions across its operations, as well as its energy use and its customers’ use of its products, by 2050. Hollub is also confident it will enhance the longevity of the company’s oil operations at a time when many are shifting to renewable alternatives.

The large-scale project is thought to be the first of its kind, with the aim of removing CO2 from the air at a huge scale. This has understandably drawn scepticism from scientists and energy experts, many of whom are waiting to see whether the technology will be as effective as OXY expects. The fans are expected to capture 500,000 metric tonnes of CO2 from the air each year, equivalent to the emissions of around 111,000 cars. The 2024 launch will determine the potential for future projects. OXY currently plans to build up to 135 plants fitted with the technology, which would be around seven times the number of existing carbon dioxide removal plants globally. 

The company hopes to make money from carbon sequestration by selling CO2 removal credits to companies in carbon-heavy industries. OXY also hopes to transform some of the carbon dioxide into sellable products, such as synthetic jet fuel. While some will be used to pump more oil. 

However, the use of these giant air-cleaning machines is not without its challenges. For one, the technology will require a huge amount of green power to run. In addition, the scale of the plant needed to effectively clean the air is immense. OXY plans to run its Permian Basin plant from solar power and is currently assessing the potential for mini-nuclear reactors to run future projects.

Many oil and natural gas companies are investing heavily in the incorporation of CCS technologies into operations to ensure they can keep producing fossil fuels for as long as possible. But many are using existing technologies on a smaller scale to support their decarbonisation aims. But OXY is not the only company looking to DAC technologies to support their climate aims. Microsoft, the e-commerce company Shopify, and the reinsurance firm Swiss Re have all invested in DAC in recent years. 

Many of the planned projects are based on the success of existing projects such as World Economic Forum Technology Pioneers Climeworks and Carbon Engineering. Switzerland-based Climeworks began operations at its first DAC plant in 2017 and now has 15 machines. It operates the world’s biggest DAC plant, in Iceland, using a form of solid direct air capture through filters. The firm now is supporting the development of DAC operations for several major brands. Meanwhile, Canada-based Carbon Engineering uses a form of liquid direct air capture and is currently supporting the development of OXY’s ambitious project. 

As works on OXY’s first large-scale DAC project are well underway, all eyes are on the oil company to see if it can achieve the ambitious decarbonisation targets they are hoping for. But many scientists and industry experts remain sceptical about the ability of the DAC technology to clean the air to the extent OXY hopes, as well as foreseeing several challenges in the operation of such an immense project, such as the vast use of energy. Only time will tell whether DAC on this scale can be used to effectively support the decarbonisation of some of the world’s most carbon-intensive industries. 

Source :

https://oilprice.com/Energy/Energy-General/Will-Occidentals-Billion-Dollar-Carbon-Capture-Bet-Pay-Off.html