U.S. oil producer Occidental Petroleum Corp. on Nov. 9 increased by about 22% the estimated investment for the world’s first large scale direct air capture (DAC) project to capture carbon emissions and disclosed plans to build others.
The Houston-based company expects to spend now $1.1 billion in the project under construction in Ector County, Texas, from $800 million-$1 billion before.
“Inflationary pressures felt across the economy, especially for construction materials and labor” explain the added costs, CEO Vicki Hollub told analysts in a webcast to discuss the company’s third-quarter results.
Occidental is aiming to build a profitable business by pulling CO₂ out of the air and burying it underground. It bets the world will need oil for decades to come and that government and business climate goals will only be achieved if emissions are not only reduced, but also actively removed from the air.
But the technology will be a cash drain for investors until it gains commerciality—and the time estimate for it is unclear. Occidental’s first large-scale project started construction in September, when it had its start-up delayed by a few months to late 2024.
RELATED:
Vicki Hollub Says Occidental Will Nearly Double Carbon Capture Projects
Despite the hurdles, the company on Nov. 9 expanded future plans for DAC. Government incentives and the passage of the Inflation Reduction Act into law allow it to plan 100 DAC facilities by 2035, from 70 before, Hollub said. Land for half of them has been secured.
“It’s not as well recognized yet. But when the world realizes how much the transition will cost, I do believe that this will become the preferred option to ensure that we can continue the production of low-carbon fuel for those that need it,” Hollub said.
Occidental’s first DAC plant progress is closely watched by the oil industry for its scale. It has a goal of removing up to 1 million tonnes of CO₂ from the atmosphere per year—100 times more than all 18 DAC plants currently operating worldwide combined, according to the International Energy Agency.
In October, it started planning and engineering for DAC facilities at a second Texas site, in Kleberg County, with a combined capacity to remove 30 million tonnes of CO₂ annually.
Shares fell as much as 9% following the call to discuss its quarterly results, which slightly missed Wall Street estimates. Shares of energy firms were down across the industry.
Occidental’s shares have more than doubled this year. It attracted the interest of Warren Buffett’s Berkshire Hathaway Inc., now Occidental’s largest shareholder, with a 20.9% stake.
The company has been using the cash from high oil prices to pay down debt and plans to reduce it to $18 billion until the end of the year, exceeding its previous target by $2 billion.
Starting next year, the company will “have significantly more capital available” which Hollub said “will be allocated mostly” to shares buybacks.
Recommended Reading
RRC Orders Blackbuck's Disposal Well to Close Over Earthquake Fears
2025-06-19 - The Texas Railroad Commission had called for an emergency suspension of Blackbuck Resources’ water disposal well operations on May 13, after an earthquake with a record 5.4 magnitude struck West Texas 10 days earlier.
TotalEnergies Signs Deal to Convert Cooking Oil into SAF
2025-06-19 - TotalEnergies has signed an agreement with Quatra to produce biodiesel and sustainable aviation fuel from used cooking oil.
Energy Transfer Drivers to Hold Vote on Leaving Union
2025-04-22 - The National Labor Relations Board has accepted a petition from an Energy Transfer driver based in Texas.
Segrist: Greenpeace’s Next Move After North Dakota Knock-Down
2025-04-30 - Energy Transfer won a massive lawsuit against the environmental group Greenpeace that will likely change the tactics of future protests.
Wildfire in Alberta Disrupts Oil Operations, Prompts Evacuations
2025-05-27 - The blaze, which Alberta Wildfire said is approximately 1,600 hectares in size, is burning out of control about 7 km north of the town of Swan Hills in the northern part of the province.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.