Oxy’s Hollub: EOR Essential to Energy Security as Oil Supply Peaks

OKLAHOMA CITY, Oklahoma — Occidental Petroleum’s CEO is urging Congress and the White House this spring to value 45Q credits the same regardless of whether the CO₂ is used in EOR or permanently buried.

More EOR will be essential in U.S. energy security as reservoirs currently supplying U.S. oil will peak in a few years, said Vicki Hollub, Oxy president and CEO.

Hollub spoke April 24 at the “Powering AI Global Leadership Summit” hosted by Oklahoma State University’s Hamm Institute for American Energy.

Currently, companies receive a credit of $180 per metric ton when they use direct air capture (DAC) to extract CO₂ from the atmosphere and bury it. When the CO₂ is used in EOR, the credit is only $130.

Making the credit “for the use of that CO₂ equal to that of sequestration” is Hollub’s  No. 1 ask from the Trump administration and Capitol Hill.

The credit’s value should be greater than the current $130 “because what we're doing is taking a pollutant, CO₂, out of the air and converting it to a valuable product [when] putting it in oil reservoirs to make incremental oil that becomes net-zero-carbon oil, “ she said.

But that the credit is less than if the CO₂ is buried means use in EOR is being penalized, she added.

“And to penalize us for doing that versus putting it in a saline reservoir where it does nothing for this country is crazy.

“So we need [the credit’s value] to be equal.”

She added that it would be a mistake to get rid of the credit program, which was created by the Inflation Reduction Act in 2022.

Rather, “we need It to be strengthened,” she said.

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Assuring operators are using EOR is important to ensure the U.S. has sufficient supply, Hollub said.

“People don't realize that 25% to 30% of the natural gas produced in the United States today comes from oil production. It's associated gas.

“So, when we're thinking about powering AI data centers, we have the natural gas sources, but we also have to keep oil going as well.”

More than 1 trillion barrels of oil remain in the U.S. to be produced.

“That's oil in the ground. But we're only going to get about 20% or less than that from that oil if we don't use advanced technologies to recover more of that oil,” she said.

The federal government should incentivize development of the technologies needed to surface more of the remaining oil.

“We have to do it sooner rather than later. We can't wait because there's going to come a time when we see oil production in the United States falling off.

“It's going to hit peak supply probably in the 2027 to 2030 timeframe,” she said.

“And to see that dropping off means that the natural gas associated with it will drop as well. We can't have that happen if we're going to continue to grow AI in a very meaningful way.”

What’s left to produce will be from reservoirs “that are very difficult,” she said.