MONEY & MARKETS EXTRA
The business of capturing carbon
Removing carbon dioxide from the air is seen as crucial to reducing the worst impacts of global warming, and the world’s largest effort to do that on a commercial scale is coming from an unlikely source: a Texas oil company.
Occidental Petroleum’s CEO Vicki Hollub plans to transform her oil and gas business into a carbon management company. It will break ground next year on a direct air capture facility that will suck one million metric tons of carbon dioxide from the atmosphere per year. That compares to thousands of tons per year that most current direct air capture plants remove. Then Hollub wants to build many more.
“The barriers right now are those who are so doubtful of the process and the benefits it’s going to provide,” Hollub said.
“Some talk about the cost being too high, but just like solar and wind, the more we build, the more the cost will come down.”
The facility will suck in air and separate the carbon dioxide using chemicals. The carbon dioxide can be stored underground or used by industry.
In 2019, Occidental’s operations and its use of power, heat and steam emitted 28.4 million tons of carbon dioxide equivalent. It stores 20 million tons of carbon dioxide underground annually.
Why was it important to you to invest in this technology?
There is a business case to do it, and whenever you can find a business case that also does good things for the environment, for the communities, for the world, that is certainly a winning scenario.
It creates value for our shareholders by increasing the recovery of oil that we can get out of our existing reservoirs. It reduces the carbon dioxide already in the atmosphere.
Recovering more oil from reservoirs means more future demand can be met with existing development, which we hope will prevent the need to develop oil and gas in environmentally sensitive areas.
We welcome the transition. We’re not stepping forward afraid of it. We’re embracing it and trying to lead it in this area.
Do you expect to make more money from carbon management than oil and gas production?
We believe the carbon management business will equal our chemicals business (which brought in $507 million last year) in 10 to 15 years. Beyond 15 years we expec it will potentially compete and then exceed what our oil and gas operations are making today. We believe this is going to be a critically important technology for the oil and gas industry.
How many of these would you like to build?
It’s got to be hundreds, because it’s really important. We feel like the Tesla of the direct air capture industry, because when they first started, people had doubts about the impact they could make. But Tesla’s been highly successful, and transformed the auto industry. That’s a critical thing for our planet.