Oxy Captures Carbon Engineering in $1.1-Billion Deal
Occidental has been an investor in the Canadian climate solution firm since 2019.
Occidental Petroleum has made another big move to solidify its position in the fledgling direct air capturing (DAC) business after announcing its intent to acquire Carbon Engineering for $1.1 billion.
The all-cash deal will see Occidental’s low-carbon subsidiary take over the Vancouver-based company that uses standardized processes and equipment to build DAC plants.
Occidental said the acquisition positions it to “rapidly advance DAC technology breakthroughs and accelerate deployment of DAC as a large-scale, cost- effective, global carbon-removal system.”
The two companies have already been working together on Occidental’s first DAC site in the Permian Basin of west Texas which is expected to be completed in 2025. Occidental has also been an equity investor in Carbon Engineering since 2019.
Previous to the deal, Carbon Engineering was poised to scale alongside its investor after being tapped to help engineer what is proposed to be the first commercial-scale DAC plant in Europe. The facility is tentatively slated to be built by 2026 as a component of Scotland’s Acorn carbon capture and storage cluster.
The Canadian firm also operates a demonstration DAC plant and research center in British Columbia that Occidental said it will maintain. Founded in 2009, Carbon Engineering has raised around $110 million in funding from a group of investors that also includes other energy companies BHP and Chevron.
Occidental has shared on multiple occasions that its long-term plans include building dozens of DAC facilities in the US which would take advantage of new federal tax credits that were recently lifted to $180/ton of CO2 for large-scale projects. Additionally, the company is in the early stages of exploring a joint project with the Abu Dhabi National Oil Company to build the first DAC facility in the UAE.
News of the acquisition also dropped just days after Occidental was selected to be part of a $1.2 billion US federal program that will help fund the building of its second DAC facility in Texas. Dubbed the South Texas DAC Hub, Occidental said its plans include using more than 100,000 acres of pore space to store up to 3 billion metric tons of CO2 over the project’s lifetime.
Occidental expects the acquisition of Carbon Engineering to meet regulatory approvals in the US and Canada and close by the end of the year.