BlackRock has announced it will invest $550m in a direct air capture (DAC) plant in Texas planned by US oil and gas producer Occidental Petroleum.
The Stratos project is the largest planned DAC project in the world, with the plant expected to remove 500,000 tonnes of carbon dioxide from the air each year once operational.
On Tuesday, BlackRock and Occidental subsidiary 1PointFive announced a joint venture to develop the Permian Basin scheme, which is currently around 30 per cent of the way to completion.
“Everything is bigger in Texas – and now that includes direct air capture,” BlackRock CEO and chairman Larry Fink wrote on LinkedIn as the deal was unveiled.
“For the past few months, we’ve been working with Occidental Petroleum, finalising a partnership to help build Stratos, the world’s largest direct air capture (DAC) facility in Ector County, Texas,” he added. “We’ll be investing $550m on behalf of our clients to develop it – a job that will employ 1,000 workers and should be finished by mid-2025.”
Initially projected to cost between $800m and $1bn, Occidental this week hiked its cost estimates to $1.3bn, as it pushed the projected start-date for commercial operations by a year to 2025, according to Reuters.
Vicki Hollub, Occidental’s chief executive, said the deal marked a major milestone in the commercialisation of DAC technology, which is currently limited to a handful of small-scale pilots that are mainly planning to monetise projects by selling carbon credits.
“This joint venture demonstrates that direct air capture is becoming an investable technology,” she said. “BlackRock’s commitment in Stratos underscores its importance and potential for the world.”
However, Occidental’s project remains controversial in some quarters given the potential to use the captured carbon to enable enhanced oil recovery drilling projects in the region, which could effectively boost fossil fuel production.
Earlier this summer, Occidental Petroleum announced plans to build 100 DAC plants, as it announced its acquisition of technology supplier Carbon Engineering Ltd for $1.1bn.
The announcement came just days after a Bloomberg investigation revealed Occidental had quietly divested its flagship Texas carbon capture and storage (CCS) plant, once touted as the largest such facility in the world.
The plant, built in 2010, captured CO2 from a fossil gas processing plant and used the recovered gas a tool to help Occidental produce more oil.
The oil and gas major sold the struggling asset in January 2022 to Mitchell Group for about $200m, after the economics of the plant failed to stack up due to limited fossil gas supply, Bloomberg reported. The firm invested more a $1bn on the plant’s construction.
Bloomberg said the Century project never worked at more than one third of its projected capacity since being switched on.
In a statement provided to the news agency, Occidental said the Century plant “continues to operate as designed” and argued it would be a “mischaracterisation” and “false narrative” to use the plant as an example of CCS project performance.
Want to understand what is going on at the cutting edge of sustainability? Check out BusinessGreen Intelligence – the premier information for professionals focused on the UK’s green economy.