U.S. oil and gas company Occidental Petroleum announced its plans to acquire Canadian-based direct air capture (DAC) firm Carbon Engineering for $1.1 billion in cash.
The acquisition is part of Occidental’s goal to prioritize low-CO2 solutions and boost its environmental sustainability.
The oil giant aims to build approximately 100 facilities that use DAC technology that remove carbon from the atmosphere to store it permanently or use it for materials such as concrete or aviation fuel.
Still in its early commercialization stage, direct air capture needs substantial investments to prove its economic viability.
“This is not a huge deal for Occidental, but we think it adds to near-term leverage and heightens concerns over cash burn at (Occidental’s) Low Carbon Ventures division,” Roth MKM brokerage firm said as reported by Reuters.
The $1.1 billion will be paid over three annual periods, with the first one expected to be due before the end of this year.
According to Occidental, the company has been partnering with Carbon Engineering on direct air capture deployment since 2019.
“The acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” said Occidental CEO Vicki Hollub.
Direct Air Capture (DAC) is a carbon removal technology designed to capture carbon dioxide (CO2) directly from the atmosphere in an effort to mitigate the effects of climate change. The captured carbon can then be utilized in various industries, or permanently sequestered underground.
Read more: Occidental Begins Work On The World’s Largest Direct Air Capture Plant
