"Carbon Removal Will Be the Next Big Boom for Fossil Fuels, Says Oil Company."

Occidental, the oil giant that has sought to position itself as a leader in climate technology, is clarifying its focus on carbon dioxide emission capture, a capability it considers key to fossil fuel production in the future. It is not surprising that an oil company would adopt this strategy, especially since Occidental has developed an entire division of its business dedicated to combating climate change.

In 2023, the company acquired the startup Carbon Engineering, known for its work on technologies that remove CO2 from the air. Occidental, through its subsidiary 1PointFive, is constructing large facilities in Texas using Carbon Engineering's technologies. These projects have received backing from the Biden administration and from companies like Amazon and Microsoft, which are also looking to meet their own climate goals. The intention to remove carbon dioxide from the air is aimed at eliminating pollution that contributes to climate change.

However, this strategy, known as direct air capture (DAC), does not address the fundamental problem: the extraction and burning of fossil fuels that generates the pollution responsible for global warming. An even more complex question is what happens to the carbon once it is captured. DAC is promoted as a solution to climate change because the captured carbon can be stored underground, thus preventing the greenhouse gas from accumulating in the atmosphere and raising global average temperatures.

Vicki Hollub, president and CEO of Occidental, stated in a call with investors that the next round of technologies that will yield significant reserves (between 50 and 70 billion barrels) relies on the use of CO2 in enhanced oil recovery. This statement arises in the context of a change in administration, from one that prioritized action against climate change to another that favors the expansion of oil extraction.

Hollub described the use of captured carbon for enhanced recovery as a significant advancement for fossil fuels, comparable to the impact that fracking had on the U.S. shale oil revolution. Although the company has observed a slight decline in its oil production in recent years, its leadership is confident that it can reverse this trend with the help of captured CO2.

On the other hand, direct air capture remains an expensive endeavor, with costs potentially reaching hundreds of dollars per ton of CO2. The future of this method in the United States may depend on whether the current administration maintains the tax credits from the Biden era for the technology, something that Hollub mentioned on the call. The company is eager to ensure that its DAC plants do not become obsolete assets.

Occidental's first large DAC plant, named Stratos, is expected to start operations this year in Texas, and there are plans for an even larger project at King Ranch, which was federally funded in 2023. Microsoft and Amazon have established agreements with 1PointFive for the removal of hundreds of thousands of tons of carbon dioxide, conditions that include the permanent storage of the captured carbon, without being used to produce more oil and gas.

However, there are concerns about the actual success of these agreements. DAC plants must operate effectively for the CO2 to be successfully sequestered. Companies that purchase carbon removal services incorporate this into their accounting, aiming to meet their own climate goals. Instead of redirecting time and resources towards reducing greenhouse gas emissions by adopting cleaner energy sources, they may be allocating resources to carbon removal technologies that may never become commercially viable.

For now, Occidental can continue to rely on its fossil fuel business, allowing it to benefit from extraction and the suppression of some of the CO2 it produces, even using captured pollution to boost its fossil fuel production.