Occidental Petroleum and its carbon removal subsidiary 1PointFive have signed an agreement with XRG, the investment arm of Abu Dhabi’s ADNOC, to explore a joint venture aimed at investing in a major carbon capture site in South Texas.
XRG is considering a $500 million investment in the planned Direct Air Capture (DAC) facility, which is designed to pull 500,000 tonnes of carbon dioxide from the atmosphere each year. The project would be built on the expansive King Ranch in Kleberg County, a location close to Gulf Coast industry and pipelines for CO2 storage or reuse.
This new deal builds on Occidental’s progress at STRATOS, its first DAC facility in West Texas, and comes alongside a $650 million award from the U.S. Department of Energy. Occidental’s Vicki Hollub and ADNOC’s Sultan Al Jaber signed the deal during President Trump’s visit to the UAE.
“We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals. Agreements like this, along with U.S. DOE support, demonstrate continued confidence in DAC as an investable technology that can create jobs and economic value in the United States and Texas,” said Hollub.
Another Chapter in the Occidental ADNOC Partnership
This agreement is the most recent development in the Occidental/ADNOC CO2 relationship, with the two companies signing a Memorandum of Understanding in August 2023. It’s goal was to explore the investment potential of DAC projects and CO2 sequestration hubs in both the United States and the United Arab Emirates.
Relevant: Occidental And ADNOC To Explore Potential Of Carbon Management In The U.S. And UAE
In late 2023 ADNOC and Occidental also shared plans to jointly work on a preliminary engineering study for the construction of a DAC facility in the UAE. The study was aimed at investigating the feasibility of establishing a one million metric tons per annum DAC facility, which would be linked to ADNOC’s existing carbon dioxide infrastructure.
In the U.S. 1PointFive has made significant strides after the award of up to $650 million in funding from the U.S. Department of Energy to support the development of its South Texas Direct Air Capture (DAC) Hub. BlackRock also announced it will invest $550 million on behalf of clients in the development of STRATOS, the first large-scale project the company is developing.
Its facility, planned for King Ranch in Kleberg County, is designed to capture up to 500,000 tonnes of CO2 and is on schedule to begin commercial operations by the end of 2025.
Continued 45Q reliability
The energy independence angle mentioned by CEO Hollub appears to be the catching on when it comes to carbon capture and removal. The two approaches have seen rapid growth and investment in the U.S. after the enactment of the Inflation Reduction Act (IRA) in 2022 and the use of the 45Q tax credit.
The last few weeks have seen large portions of the IRA coming under scrutiny with support for clean energy likely to be discontinued. But the 45Q appeared to remain largely intact in a draft with proposed budget changes released by the House Ways & Means Committee yesterday.
This would mean projects in carbon management will continue benefiting from credits ranging from $60 (for captured and utilized CO2) to $180 per ton (for CO2 removed from the atmosphere through approaches like DAC).
Read more: 45Q Carbon Management Incentive Preserved In Latest Budget Proposal
