The low carbon business of oil major Occidental Petroleum (Oxy) will match the profits of its oil and gas earnings in the coming decades, said CEO Vicki Hollub to analysts this Tuesday.
Firstly, Oxy was one of the first oil companies to set ambitious net-zero and low carbon goals; also, last year created a first-of-its-kind technology to sequestrate carbon dioxide directly from the atmosphere, called direct air capture.
Secondly, that same low carbon venture was awarded this Tuesday with an engineering and design contract for a direct-air-capture facility in the Permian Basin.
Thirdly, initial works for the facility may be completed by 2022; and construction of the actual place may take another 18 to 24 months, Hollub confirmed. According to Reuters, Oxy is partnering with 1PointFive and Worley for the project.
“As part of our low carbon strategy, we can provide a solution for partners and other industries as well; which is airlines and utilities,” Hollub said. “Those industries may not have an alternative means to significantly lower their carbon footprint.”
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Low carbon venture in the face of 4Q financial results
However, Oxy has to deal first with a larger than expected loss in its financials. As we reported previously, on Monday the company announced a larger than expected 4Q loss, despite operational and production excellence.
Oxy reported a $2.9 billion capital budget to sustain 2021 production; also, a used net proceeds from asset sales and cash on hand to repay $2.3 billion of debt in the fourth quarter. In addition, it reported a $1,3 billion loss is attributable to common stockholders for the fourth quarter of 2020.
Consequently, after the post, Oxy’s shares went down 2% to $25,93 this Tuesday. On top of this capital performance, the company faced the Texas winter storm; which shuttered oil output and a fifth of the nation’s refining capacity.
Finally, although the costs of the storm for Oxy have not been quantified, Hollub said: “he good thing is we see no permanent damage with anything, and the wells are starting back and looking very good.”
In conclusion, Oxy’s direct carbon capture technology, as decarbonization efforts are deepening, may compete with its oil and gas earning, and maybe even surpass them.