Occidental’s high-carbon business plan hinges on reducing CO2 in the atmosphere

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When Occidental Petroleum’s CEO outlined the company’s future this week, it was clear that the company would not move away from hydrocarbons.

By 2050, Occidental expects to still be a major oil company, but oil and natural gas production is unlikely to be its primary source of revenue. Neither solar nor wind.

Decades from now, Vicki Hollub, president and CEO of Occidental, has predicted that revenue from carbon capture and storage “will be greater than revenue from oil production.”

During the plenary session of the Unconventional Resource Technologies Conference (URTeC), she described how Occidental is growing its carbon capture business, starting with a facility in the Permian Basin with the capacity to capture 1 million tons of CO2 per year. First announced by Occidental in early 2019, design is underway with construction slated for 2023.

The planned capacity is 250 times greater than any existing plant of this type and will be a first test of the economics of large-scale carbon capture.

While Hollub mentioned developing methods to collect carbon dioxide from industrial emissions, the presentation highlighted extracting the gas from the air. It was strong on potential and light on dollar numbers, like the cost of the Permian facility being developed by Oxy Low Carbon Ventures.

Hollub predicted the cost per ton of carbon dioxide will come down as it builds similar million-tonne-per-year facilities in Colorado, Wyoming and Abu Dhabi, and even more so in West Texas.

“Once we start building direct air capture facilities, the technology curve and the cost curve will go down,” Hollub said, adding, “We’ll hit the $100/tonne cost that most people consider it necessary for it to become economical.

She acknowledged that many said the cost of capturing from the air was too high. To solve this problem, Oxy has a group looking for ways to increase the efficiency of these projects while Worley Ltd. did the front-end engineering for the first plant.

“Every piece of technology is used in industrial sites today, so we should be able to optimize it faster than solar and wind developers” over the past 10 years, she said.

She said the units will be fitted with incredibly large industrial fans to draw air into the units using potassium hydroxide to remove carbon dioxide.

The company plans to increase this production using an innovation from another of its technology bets, Net Power. The company’s method adds oxygen when hydrocarbons are burned to generate electricity. The resulting CO2 is recycled through the combustor, turbine, heat exchanger and compressor, creating emission-free power.

To help pay for all of this, Occidental brought in United Airlines as a partner, and Hollub said they expect to bring in other big companies looking for ways to offset carbon emissions in businesses where electricity is not an option.

On the revenue side, the greatest use of carbon dioxide remains its use to extract more oil from the ground. Occidental builds on 40 years of CO injection2 in ancient Permian fields to extract more crude.

Occidental has the conventional facilities and fields there capable of producing an additional 2 billion barrels of oil using CO2 injections, Hollub said on a recent earnings call.

Although an established method for enhanced oil recovery, its use has been limited by the limited supply of affordable CO2, which was mostly CO2 captured from the exhaust streams. However, a challenge of this method has been the removal of other impurities, especially in coal-fired power plants.

Based on this experience, these injections can increase recoveries in a typical conventional reservoir from 45% of oil-in-place from primary production and flooding to 65%, according to Occidental’s presentation.

He also predicted that unconventional recoveries could be increased by around 10%, from 6-12% to around 20%.

That prediction is based on four “technically successful” carbon dioxide injection projects Occidental has done in the Permian, Hollub said.

Further tests have concluded that it is really difficult to pressurize a fractured shale reservoir with CO2 injections – gas tends to escape from fractured wells.

“We are working on how to make it work. What are the logistics to make this work,” Hollub said, adding that it will be “something the industry can adopt and apply.”

Occidental and others examine the need for carbon capture companies to find a way to make money from a gas society wants to get rid of.

United Airlines invested because it is looking for a way to offset carbon emissions from burning kerosene. There is no alternative in sight for jet fuel, so airlines are among those looking for ways to extract carbon dioxide from the atmosphere to offset these emissions.

“The only way we can truly reduce atmospheric carbon levels is through direct capture and sequestration from the air,” United CEO Scott Kirby said when the investment was announced.

Carbon Engineering, which developed the gas capture method used by Oxy, said some of the carbon dioxide can be used to make plastics or concrete, but so far there is a short list of products. can provide long-term storage.

The gas captured by Occidental will either be injected into saline reservoirs or into oil fields. And like many CO2 normally remains in the ground, this oil has a reduced carbon footprint.

The storage potential in the Permian, where Occidental hopes to eventually have 12 to 20 facilities, totals 150 gigatons, which represents about 28 years of U.S. carbon emissions and 4 years of global production, Hollub said.

It’s a huge undertaking with many unanswered questions. US lawmakers are hopelessly divided over creating a system that puts a price on carbon emissions, and the standards applied to valuing carbon offsets are murky, so Occidental is moving forward based on its judgment of the future.

For example, some companies buy offsets in protected forests that are unlikely to affect emissions because cutting trees there is prohibited, she said.

Accounting for carbon emissions based on the use of hydrocarbons is another gap that Occidental is working to fill.

“There has to be a highly respected organization or group of organizations that can track molecules from reservoirs to end product use,” she said.


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