Occidental Petroleum is exploring the sale of technology licenses to facilitate the construction of carbon capture plants, according to Chief Executive Vicki Hollub. This move comes a day after securing investments for its first large-scale plant dedicated to carbon capture.
The initiative has the potential to support over 1,000 projects aimed at mitigating global warming, introducing a new revenue stream by offering licenses for direct air capture (DAC) technology and design expertise.
Speaking in a webcast to discuss third-quarter earnings, Hollub revealed Occidental's intention to license out the technology, stating, “We will be licensing a lot of this out.” DAC technology involves the removal of carbon dioxide from the atmosphere for burial underground or for the production of items such as concrete and aviation fuel.
In a franchise-like model, Occidental plans to charge a licensing fee and delegate the management and construction responsibilities to partners. The first large-scale DAC plant, a $1.3 billion project known as Stratos, is scheduled to commence operations in mid-2025, with additional projects to follow.
“We are just going to build a partnership to make this happen at a pace that is much faster than what we could do ourselves,” explained Hollub.
Occidental aims to allocate approximately $600 million annually through 2026 to develop its own projects, with a potential target of up to 100 such plants. By employing the licensing approach, the company anticipates accelerating the deployment of DAC technology on a global scale.
The recent investment support from BlackRock Inc and a preliminary engineering study agreement with the Abu Dhabi National Oil Company (ADNOC) for a facility in the United Arab Emirates signal a positive trajectory for Occidental's carbon capture endeavors.
Richard Jackson, Occidental's President of U.S. Onshore Resources and Carbon Management, acknowledged the potential shift in focus towards licensing DAC technology, particularly if there is a high demand for carbon dioxide removal credits. Occidental's subsidiary, 1PointFive, has already entered into agreements to sell such credits to major entities like Amazon and All Nippon Airways.
With over 65% of the first plant's capacity through 2030 already sold to partners, Occidental aims to leverage partnerships and licensing to drive the widespread adoption of DAC technology, acknowledging the impracticality of providing all the capital needed for such endeavors.
