Oxy Leases Land for More DAC Plants

Occidental Petroleum subsidiary 1PointFive has agreed to lease more than 100,000 acres on the legendary King Ranch in South Texas to support the deployment of as many as 30 direct air capture (DAC) plants.

The agreement marks the beginning of what would be an ambitious new chapter in the rollout of Oxy’s carbon-removal strategy, which the company recently said could involve the construction of as many as 135 DAC plants by 2035.

The lease agreement includes pore space for dedicated CO2 sequestration across some 106,000 acres in Kleberg County, Texas. The pore space has an estimated geologic storage capacity of up to 3 billion tons of CO2, Oxy said in a statement.

The site has the potential to remove up to 30 million tons per year of CO2, assuming all 30 DAC plants are built and operate at full capacity.

In a separate statement, Carbon Engineering, which is providing DAC technology to Oxy, said it has begun front-end planning and engineering for DAC facilities in Kleberg County.

A 1PointFive spokesperson declined to provide a timeline for DAC construction at King Ranch.

‘Pure Sequestration’

The spokesperson said Oxy intends for the King Ranch subsurface to be “used for pure sequestration” rather than enhanced oil recovery (EOR).

Oxy’s first DAC plant (DAC 1) is currently under construction in the Permian Basin in West Texas, Oxy said, with a formal groundbreaking ceremony planned for the end of this month. It will initially capture 500,000 tons/yr of CO2, with an expansion planned to 1 million tons/yr.

CO2 captured at the first plant, which is due on line in late 2024, will be used for EOR at Oxy’s Permian operations.

The Inflation Reduction Act (IRA) passed this summer allows for tax credits of up to $180 per ton for CO2 captured from DAC and sequestered without EOR. Oxy has also begun selling carbon offset credits to help underwrite construction of future DAC plants.

Oxy has hinted at potentially bringing in an equity partner to help finance construction of future DAC plants. DAC 1 is expected to cost $800 million-$1 billion to build.

The King Ranch acreage is also not far from industrial centers in the Gulf Coast region, including Corpus Christi, Texas, making it a potential storage site for captured point-source emissions, Oxy said.

Kingmaking

The 825,000-acre King Ranch is one of the most famous ranches in Texas, with a long history in the energy sector. The company that owns it bills itself as an “agricultural production and resource management company.”

“King Ranch has been focused on conservation for more than a century. While these methods to capture carbon are relatively new, they are consistent with our vision and values,” King Ranch CEO Robert Hodgen said.

Oxy CEO Vicki Hollub said the company is “excited to work with King Ranch on what will be the largest DAC deployment project in the world, as we continue our plans to provide affordable and practical industrial-scale decarbonization solutions.”

Further Opportunities

Separately, Oxy announced last week that its Oxy Low Carbon Ventures (OLCV) unit had agreed with New York-listed Natural Resource Partners (NRP) to evaluate and potentially develop a permanent CO2 sequestration hub in southeastern Texas.

The agreement provides OLCV with the exclusive rights to develop a CO2 storage hub on some 65,000 acres of pore space controlled by NRP.

The site, which was not specifically identified, is close to many industrial CO2 emitters and has approximate storage potential of “at least” 500 million tons of CO2.

NRP says it currently has around 140,000 acres of pore space under lease for carbon sequestration with a total estimated storage capacity of 800 million metric tons of CO2.