Bloomberg's Natasha White, Akshat Rathi, and Kevin Crowley are reporting on the situation with Occidental Petroleum's carbon capture plant.
Occidental Petroleum Corp. is on the forefront of global efforts to enhance carbon capture technologies, with a billion-dollar project named Stratos in Texas. This facility aims to pull carbon dioxide (CO2) from the atmosphere and store it underground. Prominent companies, including Amazon and Airbus, and even the US President Joe Biden, have backed the technology financially.
Previously, Occidental had constructed a carbon capture and storage (CCS) plant named Century in 2010, which was designed to become the largest carbon capture facility, accounting for over 20% of global capacity. Unlike Stratos, which uses direct air capture (DAC) technology, Century extracts CO2 from a natural gas processing plant. However, despite being cheaper and having a more direct business application, Century failed to deliver significant results. In its 13 years of operation, it ran at only one-third of its capacity. The technology was functional, but the economic model was not sustainable due to inadequate gas supply from a neighboring field. As a result, Occidental sold the project at a loss.
Many previous carbon capture initiatives have faced similar shortcomings. The risk with such projects is often the tie-in with fossil fuel revenues; when commodity prices drop, the projects often fail.
As the world aims for net-zero carbon emissions by 2050, the International Energy Agency advocates for a rapid expansion of CCS projects. Despite the longstanding relationship between the oil sector and carbon capture, global capacity remains at only 45 million tons of CO2 annually, just 4% of the capture needed by 2030 for a net-zero 2050 target.
Challenges with carbon capture include not only the technological aspects but also the economic viability. The cost of capturing CO2 from the air currently stands at over $400 a ton, compared to less than $60 a ton for traditional sources like coal plants. Yet, Occidental remains optimistic about the newer DAC technologies. The company plans to expand oil and gas production, marketing it as "net zero" by pairing it with carbon removal. However, this approach has raised concerns among environmentalists and policymakers who caution against using CCS to greenwash new fossil fuel ventures.
(This article was written with help from ChatGPT)