major move

Oxy subsidiary secures Microsoft as largest-ever DAC carbon removal credit customer

Here's 1PoinFive's newest customer on its Texas CCUS project. Photo via 1pointfive.com

Occidental Petroleum’s Houston-based carbon capture, utilization and, sequestration (CCUS) subsidiary, 1PointFive, has inked a six-year deal to sell 500,000 metric tons of carbon dioxide removal credits to software giant Microsoft.

In a news release, 1Point5 says this agreement represents the largest-ever single purchase of carbon credits enabled by direct air capture (DAC). DAC technology pulls CO2 from the air at any location, not just where carbon dioxide is emitted.

Under the agreement, the carbon dioxide that underlies the credits will be stored in a below-the-surface saline aquifer and won’t be used to produce oil or gas.

“A commitment of this magnitude further demonstrates how one of the world’s largest corporations is integrating scalable [DAC] into its net-zero strategy,” says Michael Avery, president and general manager of 1PointFive. “Energy demand across the technology industry is increasing, and we believe [DAC] is uniquely suited to remove residual emissions and further climate goals.”

Brian Marrs, senior director for carbon removal and energy at Microsoft, says DAC plays a key role in Microsoft’s effort to become carbon-negative by 2030.

The carbon dioxide will be stored at 1PointFive’s first industrial-scale DAC plant, being built near Odessa. The $1.3 billion Stratos project, which 1Point5 is developing through a joint venture with investment manager BlackRock, is designed to capture up to 500,000 metric tons of CO2 per year.

The facility is scheduled to open in mid-2025.

Aside from Microsoft, organizations that have agreed to buy carbon removal credits from 1Point5 include Amazon, Airbus, All Nippon Airways, the Houston Astros, the Houston Texans, and TD Bank.

Occidental says 1PointFive plans to set up more than 100 DAC facilities worldwide by 2035.

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A View From HETI

Vicki Hollub, president and CEO of Occidental, said the company's Stratos DAC project is on track to begin capturing CO2 later this year. Photo via 1pointfive.com

Houston-based Occidental Petroleum is gearing up to start removing CO2 from the atmosphere at its $1.3 billion direct air capture (DAC) project in the Midland-Odessa area.

Vicki Hollub, president and CEO of Occidental, said during the company’s recent second-quarter earnings call that the Stratos project — being developed by carbon capture and sequestration subsidiary 1PointFive — is on track to begin capturing CO2 later this year.

“We are immensely proud of the achievements to date and the exceptional record of safety performance as we advance towards commercial startup,” Hollub said of Stratos.

Carbon dioxide captured by Stratos will be stored underground or be used for enhanced oil recovery.

Oxy says Stratos is the world’s largest DAC facility. It’s designed to pull 500,000 metric tons of carbon dioxide from the air and either store it underground or use it for enhanced oil recovery. Enhanced oil recovery extracts oil from unproductive reservoirs.

Most of the carbon credits that’ll be generated by Stratos through 2030 have already been sold to organizations such as Airbus, AT&T, All Nippon Airways, Amazon, the Houston Astros, the Houston Texans, JPMorgan, Microsoft, Palo Alto Networks and TD Bank.

The infrastructure business of investment manager BlackRock has pumped $550 million into Stratos through a joint venture with 1PointFive.

As it gears up to kick off operations at Stratos, Occidental is also in talks with XRG, the energy investment arm of the United Arab Emirates-owned Abu Dhabi National Oil Co., to form a joint venture for the development of a DAC facility in South Texas. Occidental has been awarded up to $650 million from the U.S. Department of Energy to build the South Texas DAC hub.

The South Texas project, to be located on the storied King Ranch, will be close to industrial facilities and energy infrastructure along the Gulf Coast. Initially, the roughly 165-square-mile site is expected to capture 500,000 metric tons of carbon dioxide per year, with the potential to store up to 3 billion metric tons of CO2 per year.

“We believe that carbon capture and DAC, in particular, will be instrumental in shaping the future energy landscape,” Hollub said.

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