The Houston-based oil and gas company Occidental Petroleum Corp. marked an important milestone in carbon capture utilization and storage. The company signed a five-year deal with SK Trading International, a unit of South Korea’s SK Group, to import 200,000 barrels of net zero oil per year from 2025.
The net zero oil will be used for the production of eco-friendly aviation oil and other low carbon products. This event represents the world’s first zero carbon oil contract.
Occidental plans to produce the net zero oil once its DAC facility in the Permian Basin, Texas starts operating, expected from the second half of 2024. The facility using Carbon Engineering direct air capture technology is planned to collect about one million tons of carbon dioxide annually.
According to Occidental, the emissions removed via direct air capture from the plant will be enough to offset all the emissions associated with that crude oil’s life cycle from extraction to consumption. That is why it has received its zero carbon oil status.
Some analysts find Occidental’s new carbon capture and utilization initiatives the “most exciting part” of the company’s business and could make up a large part of its stock valuation over the next decade.
The oil and gas major also has backing from companies like United Airlines Holdings Inc. that want to use the DAC facility to offset their own emissions.
SK Trading International will use Occidental carbon neutral oil to make products, driving the wheel of the carbon recycling economy. The Korean refiner claims the introduction of net-zero oil is well aligned with its net-zero commitments and is expected to accelerate the company’s sustainable growth.
“We are pleased to be a part of the world’s first carbon emission reduction initiative that is underpinned by processing net-zero oil on a life-cycle analysis basis,” said SK Trading International CEO Suh Sok-won.