Occidental Petroleum Corp. signed a first-of-its-kind agreement on March 22 for “net-zero oil” created from captured atmospheric CO₂ in the Permian Basin, according to a company release.

“Net-zero oil is an important component of the energy transition and provides a critical bridge as society moves to a net-zero economy,” commented Richard Jackson, president, U.S. onshore resources and carbon management, operations, Occidental.

Under the agreement, SK Trading International, a subsidiary of South Korea’s oil refining company SK Innovation Co. Ltd., may purchase up to 200,000 barrels of net-zero oil per year for five years. SK Trading International expects to convert the net-zero oil into net-zero products.

In a joint release, the companies said the agreement is one step both companies are taking together to further their net-zero ambitions and commitments to address climate change.

“We are pleased to be a part of the world’s first carbon emission reduction initiative that is underpinned by processing net-zero oil on a life-cycle analysis basis. We are also thrilled to team up with Occidental, one of the most respected energy companies in the world,” SUH Sokwon, president and CEO of SK Trading International and president of SK Energy refinery business, said in the joint release.

The net-zero oil is expected to be created by combining crude oil together with environmental attributes generated from the sequestration of atmospheric CO₂ captured via 1PointFive’s planned large-scale Direct Air Capture (DAC) facility and sequestered in Occidental’s EOR reservoirs in the U.S. Permian Basin, according to the release.

“As Occidental advances our Pathway to Net Zero, we are excited to partner with SK Trading International and leverage our licensed direct air capture technology and EOR experience to create a new solution for the transportation sector,” Jackson said.

Net-zero oil, which is compatible with existing refinery infrastructure, can help hard-to-abate industries advance their net-zero commitments by providing an affordable, scalable fuel option that does not contribute to additional atmospheric CO₂, the release said.

“In the midst of energy transition, one of the biggest changes in our time, the sustainable business ecosystem built around net-zero oil and low carbon products will contribute to Global Net Zero efforts in a new way,” added Sokwon.

1PointFive's first DAC facility, which is expected to be online in late 2024 and also will include pure sequestration, is in the process of being deployed using Carbon Engineering's industrial-scale DAC solution. The facility will extract atmospheric CO₂ and permanently store it deep underground in geologic formations delivering permanent and verifiable CO₂ removal.

To produce the environmental attributes that are utilized for the net-zero oil for its agreement with SK Trading International, Occidental plans to inject approximately 100,000 tonnes of captured atmospheric CO₂ volumes per year, which is equal to the expected CO₂ emissions from the entire crude oil lifecycle, including extraction, transportation, storage, shipping, refining, subsequent use and combustion.