Occidental Petroleum Corporation’s subsidiary, 1PointFive, has secured a significant boost for its ambitious direct air capture (DAC) project in South Texas. The U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) has pledged up to $500 million to support the development of the South Texas Direct Air Capture (DAC) Hub.
Located on the King Ranch in Texas, the South Texas DAC Hub will initially have the capacity to remove 500,000 metric tons of CO2 annually. 1PointFive plans to scale this up to over 1 million metric tons, and ultimately, the site could expand to remove an impressive 30 million metric tons per year. The captured CO2 will be securely stored in saline formations underground.
The funding will be disbursed in multiple phases, starting with an initial award of $50 million. This initial funding will be used to advance engineering, permitting, procurement of long-lead equipment, and continued community engagement to refine the community benefits plan. The total award for the South Texas DAC Hub is anticipated to reach $500 million for the initial DAC facility, with potential for expansion to $650 million to support the development of a regional carbon network in South Texas.
Vicki Hollub, President and CEO of Occidental, expressed enthusiasm about the grant, stating, “This award demonstrates how the U.S. Department of Energy is committed to realizing the full potential of DAC and its confidence in the South Texas DAC Hub to deliver CO2 removal at a climate-relevant scale.”
In August, Occidental announced a $3 billion reduction in principal debt, driven by strong organic cash flow and proceeds from divestitures. Following the anticipated closing of the $818 million Barilla Draw divestment, Occidental plans to allocate the proceeds towards further debt repayments.
Investors seeking exposure to Occidental’s stock can explore options such as the Texas Capital Funds Trust Texas Capital Texas Oil Index ETF (OILT) and the First Trust Nasdaq Oil & Gas ETF (FTXN).
On Friday, OXY shares were up 0.80% at $51.40 in premarket trading. This grant signifies a significant step forward in the development of DAC technology, which holds immense potential for mitigating climate change by directly removing CO2 from the atmosphere. The South Texas DAC Hub project could become a landmark achievement in the field, showcasing the scalability and effectiveness of this promising technology.
