The U.S Environmental Protection Agency (EPA) has issued three draft permits to Oxy Low Carbon Ventures (OLCV), a subsidiary of Occidental Petroleum, for the storage of carbon dioxide.
These are the first carbon sequestration draft permits issued in Texas for Class VI wells. The company plans to use them as the final destination of carbon removed from the air by the Stratos direct air capture plant, which is expected to be commercially operational in mid-2025.
With the potential permits shared publicly, they are now open for comments until October 7, with the EPA stating that their review hasn’t found risks to underground water sources in the vicinity of the wells. The full 242 pages of the drafts can be found here.
Stratos, located close to the wells in Ector County, Texas, has a target of capturing 500,000 metric tons of CO2 every year and a large portion of that volume has already been spoken for by clients like Microsoft and Amazon, who struck deals for 500,000 metric tons (over six years) and 250,000 tons (over 10 years) respectively.
A number of other companies like BCG, AT&T, Trafigura and Japanese airliner ANA have also signed carbon removal deals over the last year for smaller volumes.
Though a price per ton for the deals hasn’t been revelead, the number of agreements can be interpreted as confirmation of how sound the business model is and that risk is at an acceptable level.
This was perhaps one of the reasons that prompted Blackrock to make a $550 million investment on behalf of its clients in the development of Stratos in November, 2023. The global investment company entered into a definitive agreement with Occidental, through subsidiary 1PointFive, to form a joint venture that now has ownership of Stratos.
Last but not least, the Blackrock investment followed a government announcement of a $1.2 billion funding package for two DAC hubs in Texas and Louisiana in August 2023, with the former located in Kleberg County and led by 1PointFive with partners Worley and Carbon Engineering.
Read more: Occidental CEO Sees Potential To License 1,000 Direct Air Capture Plants
