A pioneering large-scale project to remove carbon dioxide directly from the atmosphere in the core US shale patch of the Permian basin is on target to begin construction in early 2022.
The facility will be the world’s largest direct air capture (DAC) project by some distance. The 15 existing DAC operations capture around 9000 tonnes of CO2 per year combined, but this plant will suck one million tonnes of carbon dioxide out of the air annually.
The venture will be the first commercial application of technology developed by British Columbia, Canada-based Carbon Engineering. The facility is being built by 1PointFive, a joint development company formed by US independent Occidental Petroleum's subsidiary Oxy Low Carbon Ventures and investor Rusheen Capital Management, on a 100-acre site in the prolific play.
Commercial operations are on track to begin in late 2024 or in 2025, says Carbon Engineering chief executive Steve Oldham.
“We are progressing well,” Oldham says. “A successful scenario would then see that plant being replicated multiple times, creating many plants in the same location.”
Carbon capture, utilisation and storage (CCUS) technologies have grown in importance as countries and industries, including oil and gas, aim to make significant greenhouse gas cuts to meet ambitious climate goals and net-zero emissions targets.
High costs have, however, hampered large-scale CCUS projects in the past, a situation that advocates say is changing as technologies are brought to scale and commercial uses for CO2 expanded.
Direct air capture has specific advantages, says Oldham.
“There are only so many flue stacks,” he points out. “And you need pipelines to move CO2 from where you capture it to where you get rid of it.
“The advantage with direct air capture is, you don’t need the pipelines—you put your direct air capture plant where you want to use or bury your CO2.”
Removing CO2 from the atmosphere, regardless of the source, is increasingly seen as a critical tool in net zero strategies, and DAC technology providers have seen a significant increase in interest — and financial backing — in the past year or so.
“I think it’s growing in recognition worldwide that direct air capture has a very important role to play in dealing with all the emission that we can’t figure out how to get rid of, and dealing with legacy CO2 as well,” Oldham says.
“Scalability and cost point will determine its success. Our technology has always been designed for industrial scale, and the cost point is a lot lower than previously estimated. And I think it will fall further as we build more plants.”
The International Energy Agency said in a recent report that the 1PointFive plant’s size would qualify it for the US 45Q tax credit, which provides about $35 per tonne of CO2 used for enhanced oil recovery.
A Carbon Engineering spokesperson tells Upstream the project will also be eligible for California Low Carbon Fuel Standard credits under a “project-based pathway available for DAC with permanent sequestration of atmospheric CO2”.
Oldham declines to put a per-tonne price estimate on CO2 captured using Carbon Engineering’s DAC technology but says the “value stack” of credits and the product itself comes to around $250.
“You can be assured that our cost stack is less than that,” he says.
Some of the CO2 captured at the Permian plant will be injected into nearby reservoirs for enhanced oil recovery, essentially creating carbon-neutral fossil fuel through the offsets created when the greenhouse gas is stored.
Additionally, Oldham says, Occidental has an eye on the energy transition and a burgeoning “carbon economy”.
“In the Permian basin, they have access to large quantities of pore space suitable to sequestering CO2, so I think they’re seeing a new business model here in sequestering CO2 which will position them well for the energy transition.”
Occidental chief executive Vicki Hollub has said as much, pointing out in an industry forum last month that Oxy plans to use CO2 injection in its own projects and as a service to help other Permian players reduce overall emissions.
“The way it works,” Hollub said, “when you inject CO2 in a reservoir for enhanced oil recovery, you have to inject more CO2 into the reservoir than the barrel that you produce from that CO2, so it becomes net-neutral or even a net-negative barrel of oil. We can help provide that to others.”
Oldham says: “Working with (direct air capture) every day, we had no doubts that the technology was available, affordable and feasible. I think the relationship with us and Occidental — and other partnerships — adds knowledge and momentum.”