Occidental is acquiring all of the outstanding equity in direct air capture (DAC) technology firm Carbon Engineering Ltd. through a wholly owned subsidiary for total cash consideration of approximately $1.1 billion.
The transaction will be made in three roughly equal annual payments, with the first at closing, expected before the end of 2023, subject to Canadian judicial reviews, Canadian and US regulatory approvals and other customary closing conditions, Occidental said in a press release on Tuesday. . Upon closing, Carbon Engineering would become a wholly owned subsidiary of Oxy Low Carbon Ventures.
Occidental said it has been working with Carbon Engineering on the deployment of DAC since 2019. The acquisition aligns with Occidental’s integrated net-zero strategy and allows Occidental’s subsidiary 1PointFive to “advance rapidly on technological advancements of DAC and accelerate the deployment of large-scale and cost-effective DAC global carbon removal solution,” according to the press release.
Carbon Engineering focuses on the global deployment of large-scale DAC technology that captures carbon dioxide from the atmosphere for permanent underground storage or the production of clean and affordable transportation fuels. Company personnel will continue to drive ongoing DAC technology development efforts and work closely with the Occidental and 1PointFive teams to bring DAC solutions to market. Carbon Engineering’s research and development activities, as well as its innovation center, will remain in Squamish, British Columbia, according to the release.
“We expect the acquisition of Carbon Engineering to provide value to our shareholders through an enhanced drive for technology innovation and accelerated cost reduction at DAC,” said Vicki Hollub, Occidental’s president and CEO. “The technology partnership also adds new revenue streams in the form of technology licenses and royalties. Importantly, the acquisition allows Occidental to catalyze broader development partnerships for the deployment of DAC in the most efficient and valuable in terms of capital”.
“We look forward to continuing our collaboration with the Carbon Engineering team, which has been a leader in pioneering and advancing DAC technology. Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a relevant scale for the climate and make DAC the preferred solution for companies looking to eliminate their hard-to-reduce emissions,” added Hollub.
“We have always believed that global partnerships and cross-sector collaboration would be required to deploy DAC infrastructure at the scale needed to have a relevant climate impact,” said Carbon Engineering CEO Daniel Friedmann. “Carbon Engineering and Occidental have been working increasingly together over the past five years to address the CO2 issue, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey. At the core of this deeper relationship is the commitment to invest in the development of our technology here in Canada and the global reach to accelerate the implementation of DAC-based climate solutions in the US and around the world.”
1PointFive wins an OCED grant
In a separate press release, Occidental said 1PointFive was selected to receive a grant from the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) for the development of its DAC center in southern Texas, which will be located at the King Ranch in Kleberg County. . Occidental plans to build the world’s first DAC plant designed to remove up to one million metric tons of carbon dioxide per year in central South Texas.
The OCED funding will support 1PointFive’s development of the DAC Hub through the advancement of planning, detailed design, environmental permitting and procurement of long-lead equipment, according to the release.
1PointFive’s lease agreement for the South Texas DAC Center with King Ranch covers approximately 106,000 acres of pore space estimated to host up to three billion metric tons of carbon dioxide in salt formations. 1PointFive estimates that the center has the potential to remove and store up to 30 million metric tons of carbon dioxide per year through the DAC. The property is also close to industrial emitters on the Texas Gulf Coast, where carbon dioxide can also be safely captured, transported and sequestered at the Hub, according to the press release.
“We appreciate the US Department of Energy’s leadership in advancing direct air capture and look forward to our partnership in deploying this vital carbon removal technology at a climate-relevant scale and establishing the United States and 1PointFive as world leaders in demonstrating the commercial viability of DAC.” said Hollub. “We believe this selection validates our readiness, technical maturity and ability to use Oxy’s expertise in major projects and carbon management to advance the technology so it can reach its full potential.”
For South Central Texas, Occidental and Carbon Engineering are adapting the front-end design and engineering study for Stratos, 1PointFive’s first commercial-scale DAC plant under construction in the Permian Basin, which is expected to be commercially operational by mid-2025, according to the news release.
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