latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/occidental-on-course-to-transition-from-oil-and-gas-to-carbon-capture-management-61534283 content esgSubNav
In This List

Occidental on course to transition from oil and gas to carbon capture management

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Video

S&P Capital IQ Pro | Powered by Expert Insights

Blog

Insight Weekly: LNG exports surge; investors unfazed by inflation; neobanks drive VC funding

Blog

Insight Weekly: Soaring food prices; bankruptcies reach new low; insurtech M&A to accelerate


Occidental on course to transition from oil and gas to carbon capture management

Occidental Petroleum Corp. aims to make a long-term transition from an oil and gas company to a carbon capture management business, the company's chief executive said.

"I don't know how many years from now, but I think ultimately Occidental becomes a carbon management company, and our oil and gas would be a support business unit for the management of that carbon," President and CEO Vicki Hollub said during a CERAWeek conversation.

Construction of a direct air capture facility in the Permian Basin will begin in late 2022 or early 2023 and would foster the transition, Hollub said.

Occidental will finance and deploy large scale direct air capture, or DAC, technology developed by Carbon Engineering, a Canadian company partly owned by Occidental through its 1PointFive subsidiary, which was formed through its Oxy Low Carbon Ventures LLC in partnership with private equity firm Rusheen Capital Management.

After developing the facility in the Permian Basin through its 1PointFive subsidiary, Occidental can bring the technology to other industries that need to meet emissions targets but lack access to CO2 credits or the ability to partner in sequestration or new-use CO2 projects, Hollub said.

DAC technology, which pulls CO2 from the air, provides a pathway to bolster efforts aligned with the Paris Agreement on climate change to limit global temperature increases to 1.5 degrees Celsius. It also provides synergies with Occidental's oil, gas and chemicals businesses, Hollub said.

Pulling CO2 from the atmosphere requires potassium hydroxide, a chemical Occidental produces on a massive scale. Once separated, the CO2 in reservoirs would help Occidental increase its oil production through enhanced oil recovery.

"So we would be doing both, and I expect that in the not too distant future, our Oxy Chem business will also be involved in some way to use CO2 in some of the products they make," Hollub said.

The CEO said the company has been in the carbon capture business for 40 years. In the past ten years, it developed an integrated carbon strategy away from organic CO2 toward anthropogenic carbon emissions — those associated with human activities.

Occidental announced Nov. 10 during its third-quarter earnings call a target to reach net-zero emissions from its operations before 2040 and net-zero emissions associated with the use of its products by 2050.

The move makes Occidental the first U.S.-based integrated oil and gas company to target not just scope 1 emissions, which come from a company's operations, and scope 2 emissions, which come from the electricity the company purchases, but also scope 3 emissions, which include the emissions from all of the products the company produces. Scope 3 emissions, which can include end-use emissions from cars and factories, can account for up to 90% of some integrated company's total emissions.