A West Texas school district has ratified a $50 million tax incentive for a direct air capture (DAC) carbon removal project developed by an Occidental (NYSE: OXY) subsidiary – Low Carbon Ventures JV.
Occidental Low Carbon Ventures JV and private equity firm Rusheen Capital’s joint venture, 1PointFive LLC, have been moving forward with construction of the $811 million DAC in Ector County near the Midland Basin.
The incentive comes under chapter 313 of the Texas tax code and reduces the risk of what some investors see as a tricky move for Occidental, whose CEO Vicki Hollub said back in May that the company is headed toward becoming a business that manages carbon, as opposed to an oil company.
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The actual construction is slated to start in summer 2022 with operations planned to start at the end of 2024. It’s target will be to initially extract around 500,000 metric tons of CO2 every year. If demand for carbon removal is maintained, then planned expansions will double that capacity, making it the largest DAC plant globally.
Occidental’s assessment of the carbon management business is that it will grow rapidly in the coming years and presents an opportunity to capture half a billion dollars of revenue.
Read more about it here: Occidental Petroleum Stock To Benefit From $507 Million A Year Carbon Management Business
One customer could be United Airlines who have provided financial backing for the project. They joined 1PointFive’s initiative in late 2020. The company is looking for ways to offset its aviation emissions and this Occidental carbon project could help them cover any current or future requirements coming from state or federal regulations.
The technology for the DAC facility comes from Canadian company Carbon Engineering, who have already constructed a pilot plant in Squamish, British Columbia, Canada. But this facility would be the first true commercial test for the technology.
