A major challenge facing Occidental and other direct air capture ventures is whether the process can be made cost-competitive.
Storage is a major factor that includes scale, technical risk and proximity to carbon emitters, Peter Findlay, Wood Mackenzie’s director of CCUS economics globally, told Hart Energy. (Source: Shutterstock)
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By
Jennifer
Pallanich
Hart Energy
The industry has been capturing carbon for decades, but most of that has been the easier-to-capture pre-combustion carbon.
Direct air capture (DAC) is taking on “the harder stuff,” or the post-combustion carbon, Rohan Dighe, North American analyst at Wood Mackenzie, told Hart Energy.
“There’s lots of different capture technologies for that. The more accepted industry standard right now is using amines as a solvent, but there’s new proposed solvents,” he said. “There’s new absorbents, there’s membranes, there’s other technologies that are being proposed and are at different levels of technology readiness and commercial adaptability.”
The technology to capture carbon is only part of the puzzle when it comes to carbon capture, utilization and sequestration (CCUS). Storage is a major factor that includes scale, technical risk and proximity to carbon emitters, Peter Findlay, Wood Mackenzie’s director of CCUS economics globally, told Hart Energy.
He said a challenge of storage is ensuring there’s enough scale to deal with two to four decades of emissions.
“You can decrease your technical risk by really understanding the geology and where the plume is going,” he said.
To date, storage has mostly been successful in small-scale operations, with the notable exception of the Sleipner project offshore Norway, he added.
And once emitters believe a project can handle the scale of emissions reliably, there’s still the transport issue, he said.
“You want enough emitters that can be convinced that the whole CCS (carbon capture and sequestration) business model is favorable for them, so they can actually make money on this with a reasonable amount of risk,” he said.
Right now, Findlay said, everyone is trying to understand how to make CCS and storage projects feasible without opening up unforeseen future risks.
“To some extent, there’s some similarities there in the early days of shale production in that the risks seemed manageable, but people were determining the level and order of magnitude of risks as they level,” he said.
At some point, there is the potential that carbon may be stored in shale plays, he said, although it’s most likely it will be stored in depleted oil and gas wells.
“In the U.S., we see some areas where there’s contingent or close to storage, not usually in the shale, but in depleted oil and gas wells that are near the shale,” he said.
More CCS projects needed
Carbon capture projects are critical to meet net-zero emissions goals by 2050. According to Wood Mackenzie, 7 billion tonnes per annum (btpa) of CO2 capacity is required to meet those goals. However, the world is only on track to meet a base case scenario of 2 btpa by 2050, which would result in global warming of 2.5 C, well above the goal of limiting the temperature increase to 1.5 C.
In October, Wood Mackenzie said globally planned CCUS capacity was at 1.4 btpa of CO2 across capture, transport and storage projects. The U.S. leads in planned activity with 33% of all projects.
In 2020, Occidental Petroleum’s venture capital arm, Oxy Low Carbon Ventures, joined with Rusheen Capital Management to form 1PointFive. The new company licensed Carbon Engineering’s DAC technology to build a DAC plant in the Permian Basin. Since then, Occidental’s DAC focus has thrust that technology into headlines. Occidental later acquired Carbon Engineering for $1.1 billion.
“Oxy is going all in on DAC as a way of offsetting the carbon from its upstream portfolio,” Dighe said. “I think the big issue—or the big hurdle—for DAC is cost and making sure that it’s cost competitive, especially compared to other point source emission abatement.”
While there has been some pressure not to use DAC merely to justify continuing oil and gas emissions, he said the main issue is that DAC is “just fundamentally expensive” compared to other carbon capture methods.
Richard Jackson, Occidental’s president for operations, U.S. onshore resources and carbon management, said during the company’s third-quarter earnings call that DAC is both a necessary and valuable technology.
“Near term, we believe our DAC technology can provide carbon dioxide removal credits for CDRs (carbon dioxide removal) at a lower cost and a larger scale than other product solutions,” he said.
DAC technology
1PointFive’s planned DAC facilities will use Carbon Engineering’s carbon removal technology. The first step uses fans to pull large volumes of air into an air contractor, which is a large structure modeled on industrial cooling towers. Once the fan pulls air into the contractor, it passes over a surface with a potassium hydroxide solution flowing over it. The potassium hydroxide solution chemically binds with the CO2 molecules, trapping them in the liquid as a carbonate salt.
The carbonate salt is concentrated, purified and compressed so it can be delivered in gas form for storage or use. This process separates the salt out of the solution, forms the salt into small pellets and heats the pellets to release the CO2 in pure gas form.
“Carbon Engineering created a unique and innovative large-scale carbon removal process that has a strong fit to our OxyChem capabilities. This process uses equipment and materials that are ready to deploy at scale,” Jackson said.
Stratos underway
1PointFive broke ground in April 2023 on its first DAC facility, known as Stratos, in Ector County, Texas. Construction is more than 30% complete. Start-up is planned for mid-2025, and that facility is expected to capture up to 500,000 metric tonnes of CO2 per year.
Mike Avery, president and general manager of 1PointFive, said during the earnings call that Stratos’s net capacity is 65% to 70% sold out through 2030. Behind that, a pipeline of earlier stage negotiations will take Stratos up to about 85% net capacity sold out through 2030, he said.
“I think there’s also growing recognition that direct air capture is not sitting out in the future. It’s a technology that’s ready to go now at commercial scales and that it’s actually more affordable than people think when placed next to some of the other alternatives out there,” he said.
Occidental said Carbon Engineering is adapting Stratos’s FEED study for a DAC plant to be built at King Ranch in Kleberg County, Texas. The U.S. Department of Energy’s Office of Clean Energy Demonstrations in August announced the Kleberg County facility would receive a grant of as much as $600 million as part of the South Texas DAC Hub.
“The acquisition of Carbon Engineering comes at a time where the need to accelerate DAC innovation is critical,” Jackson said, adding Oxy will work to rapidly integrate Carbon Engineering’s innovations into the DAC plants.
Jackson said the next phase of the company’s DAC strategy will focus on accelerating cost reduction and expanding partnerships. Some improvements to air contactor design might reduce the number of air contactors required per facility, he said. Air contactor fan motors that consume less power are under development.
1PointFive has said it envisions deploying more than 100 DAC facilities worldwide by 2035 under current compliance and market scenarios, but during the quarterly earnings call, Jackson said market demand and the ability to reduce costs will influence the pace at which the company develops future DAC facilities.
“If the CDR market develops slower than expected, we will have the flexibility to refocus our efforts on R&D, with the goal of bringing costs down faster,” he said. “If the CDR market develops in line with the medium or high cases we’ve laid out, then we intend to continue executing on our cost-down plan and to be positioned to secure development partners for this.”
Where planned and operating projects are located. (Source: Wood Mackenzie)
