Two years ago, oil and gas company Occidental acquired carbon capture startup Carbon Engineering. This deal was welcomed as a win-win. Climate technology companies have earned a major exit, and by 2050 fuel companies in the sector worth up to $150 billion have gained foothold.
Now we are more than pondering why Occidental was keen to pick up expensive technology. They want to use it to pump more oil.
Previously, the company said it would use its technology to zero climate impact. However, in Occidental’s revenue call this week, CEO Vicki Hollub said that changing the song and injecting CO2 into the well to force more oil is essential to boost oil production. I’ve said that.
“Removing CO2 from the atmosphere is a technology that needs to work in the United States, and President Trump knows about this incident,” Hollub said. Verge was the first to report on the comments.
Hollub compared CO2 to enhanced oil recovery with Fracking, a technology that has spiked oil and gas production.
However, direct air capture, a technology used by carbon engineering to extract CO2 from the atmosphere, remains expensive, from $600 to $1,000 per metric tonne. However, the Inflation Reduction Act provides several important incentives for using captured CO2 in 2026 with up to $130 oil recovery if gas is stored permanently underground. I will. That alone isn’t enough to make practice appealing, but coupled with carbon credit sales, Occidental expects to be able to change its profits by the end of the decade.
The Trump administration has been working to dismantle climate-related government incentives, particularly the inflation reduction laws. However, with support from companies like Occidental and Exxonmobil, tax credits could survive.
Carbon capture has a long and intertwined history with fossil fuel companies. Although CO2 came from underground sediments, they first began to send oil to the decline in wells in the 1970s. In the early 1980s, pipelines began to grow from Texas, but due to low oil prices, this technique became unused widely.
About a decade ago, NRG Energy took advantage of the rising oil prices to build the country’s first carbon capture facility installed at a coal-fired power plant. A small installation called the Petra Nova is designed to capture about a third of the carbon dioxide in one boiler and use that CO2 to raise a flag southwest of Houston to promote production.
Not as much as I would have hoped, but it worked. Production rose from about 300 barrels per day to 6,000 barrels. NRG closed Petra Nova in 2020, oil prices won the crater early in the pandemic, selling it to JX Nippon three years later.
Oil prices have since recovered, but strengthening oil recovery using CO2 is not appealing in some cases as there are not enough readily available gases. Unlock.
Direct air capture can easily provide ample CO2. For the last century and a half, humans have pumped Gigatons’ worth of gas into the air by burning fossil fuels. Carbon captured from the air can be used to negatively affect oil carbon. This means that while further research into the concepts is needed, it means the process of drilling more carbon than it releases oil storage.
It is difficult to know whether federal incentives for direct air capture will survive for the next four years. But of all tax credits in the Inflation Reduction Act, they may have the best chance thanks to the oil company’s desire to continue their business as normal.
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