1PointFive’s South Texas Direct Air Capture Hub Awarded U.S. Department of Energy Funding

Rhea-AI Summary

1PointFive, a subsidiary of Occidental (OXY), has been awarded up to $500 million by the U.S. Department of Energy to support the development of the South Texas Direct Air Capture (DAC) Hub. This funding marks a significant milestone in advancing commercial-scale DAC technology in the United States. The initial $50 million award will support ongoing work at the hub, including engineering, permitting, and equipment procurement.

The South Texas DAC Hub, located on the King Ranch in Kleberg County, will have an initial CO2 removal capacity of 500,000 metric tons per year, with plans to expand to over 1 million metric tons annually. The site has the potential to scale up to 30 million metric tons of CO2 removal per year and can securely store up to 3 billion metric tons of CO2 in saline formations.

Positive

• Secured up to $500 million in government funding for the South Texas DAC Hub
• Initial CO2 removal capacity of 500,000 metric tons per year, with plans to expand to over 1 million metric tons
• Potential to scale up to 30 million metric tons of CO2 removal per year
• Capacity to store up to 3 billion metric tons of CO2 in saline formations
• Advancing community benefits plan for the South Texas region

Negative

• None.

Insights

Financial Analyst

The $500 million DOE funding for 1PointFive's South Texas DAC Hub is a significant boost for Occidental's subsidiary. This $50 million initial tranche will accelerate the project's development, potentially leading to increased revenue streams from carbon removal services. The scalability to 30 million metric tons of CO2 removal annually represents a substantial long-term opportunity.

However, investors should note that large-scale DAC projects often face technological and economic challenges. The phased funding approach suggests a cautious stance from the DOE, linking further support to project milestones. While this validates the technology, it also implies ongoing scrutiny and potential risks to full funding realization.

The project's success could position Occidental as a leader in the emerging carbon management market, potentially driving future growth and diversifying revenue sources beyond traditional oil and gas operations.

Environmental Policy Expert

This $500 million DOE investment in 1PointFive's DAC hub marks a pivotal moment in U.S. climate policy. It signals strong federal support for negative emissions technologies, aligning with global efforts to achieve net-zero goals. The project's potential to remove 1 million metric tons of CO2 annually is significant, though still a fraction of global emissions.

The Community Benefits Plan is crucial, addressing the social dimension of climate solutions. However, the effectiveness of DAC in mitigating climate change remains debated. Critics argue that resources might be better spent on emissions reduction rather than removal.

This project could serve as a testbed for DAC scalability and efficiency, potentially influencing future climate policies and investments. Its success or failure will likely shape the trajectory of DAC technology in the U.S. and globally.

Energy Sector Analyst

The DOE's backing of 1PointFive's DAC hub represents a significant shift in the energy landscape. This $500 million investment underscores the growing importance of carbon management in the sector. For Occidental, it's a strategic move to diversify beyond traditional oil and gas, positioning the company at the forefront of the energy transition.

The project's scalability to 30 million metric tons of CO2 removal annually is ambitious and could reshape the carbon offset market. However, the economic viability of large-scale DAC remains uncertain. The success of this project could determine whether DAC becomes a major player in emissions reduction strategies or remains a niche technology.

Investors should watch for technological advancements, operational efficiencies and policy developments that could impact the project's long-term profitability and Occidental's market position in this emerging field.

HOUSTON, Sept. 12, 2024 (GLOBE NEWSWIRE) -- 1PointFive, a wholly owned subsidiary of Occidental, announced today that the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) will provide up to $500 million to support the development of the South Texas Direct Air Capture (DAC) Hub. The award is a milestone in furthering commercial-scale DAC in the United States and validation of Occidental and 1PointFive’s ability to use their decades-long expertise in carbon management to accelerate the vital climate technology.

The funding will be provided in multiple tranches. The initial award of $50 million will advance 1PointFive’s ongoing work at the South Texas DAC Hub. Upcoming activities include engineering, permitting, the procurement of long-lead equipment and continued community engagement to further 1PointFive’s community benefits plan. The total award value for the South Texas DAC Hub is expected to be up to $500 million for the initial DAC facility at the site, and potentially increased up to $650 million for the development of an expanded regional carbon network in South Texas.

“Large-scale Direct Air Capture is one of the most important technologies that will help organizations and society achieve their net zero goals,” said President and CEO Vicki Hollub, Occidental. “This award demonstrates how the U.S. Department of Energy is committed to realizing the full potential of DAC and its confidence in the South Texas DAC Hub to deliver CO₂ removal at a climate-relevant scale.”

1PointFive’s South Texas DAC Hub, located on the King Ranch in Kleberg County, Texas, will host a DAC facility with an initial removal capacity of 500,000 metric tons of CO₂ per year with a plan to develop a build-out to over 1 million metric tons per year in the future. The site has the capacity to expand up to 30 million metric tons of CO₂ removal per year through DAC and securely store up to 3 billion metric tons of CO₂ in saline formations.

As a part of the hub’s development, 1PointFive is also advancing programs to support the South Texas region through its Community Benefits Plan. The plan is focused on providing opportunities for local hiring, workforce development and educational initiatives.

About Occidental

Occidental is an international energy company with assets primarily in the United States, the Middle East and North Africa. We are one of the largest oil producers in the U.S., including a leading producer in the Permian and DJ basins, and offshore Gulf of Mexico. Our midstream and marketing segment provides flow assurance and maximizes the value of our oil and gas. Our chemical subsidiary OxyChem manufactures the building blocks for life-enhancing products. Our Oxy Low Carbon Ventures subsidiary is advancing leading-edge technologies and business solutions that economically grow our business while reducing emissions. We are committed to using our global leadership in carbon management to advance a lower-carbon world. Visit oxy.com for more information.

About 1PointFive

1PointFive is a Carbon Capture, Utilization and Sequestration (CCUS) platform that is working to help curb global temperature rise to 1.5°C by 2050 through the deployment of decarbonization solutions, including Carbon Engineering's Direct Air Capture (DAC) and AIR TO FUELS™ technologies alongside geologic sequestration hubs. More at 1PointFive.com.

AIR TO FUELS™ is a registered trademark of Carbon Engineering ULC.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including those relating to the DOE funding’s benefits, Occidental’s and 1PointFive’s deployment and use of DAC technology and the related impact on carbon emissions and net zero goals and project-related community benefits, which are based on Occidental’s current expectations, beliefs, plans, estimates, and forecasts. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws. Words such as “believe,” “will,” “may,” “expect,” “plan,” “potential,” or similar expressions that convey the prospective nature of events or outcomes are generally indicative of forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, Occidental does not undertake any obligation to update, modify, or withdraw any forward-looking statements as a result of new information, future events, or otherwise.

These statements are not guarantees of future performance as they involve assumptions that may prove to be incorrect and risks and uncertainties, including those that are beyond Occidental’s control. Factors that may cause actual results to differ materially from forward-looking statements include Occidental’s and 1PointFive’s ability to access necessary technology, to develop and employ existing or new technology on a commercial scale, to access capital, to collaborate with third parties and customers, and to receive approvals from regulatory bodies, as well as market conditions, geopolitical events, and scientific developments. Additional factors that may affect Occidental’s and 1PointFive’s ability to deploy DAC technology can be found in Occidental’s public disclosure and its filings with the U.S. Securities and Exchange Commission (SEC), which may be accessed at Occidental’s website at oxy.com or the SEC’s website at sec.gov. Information included herein is not necessarily material to an investor in Occidental’s securities.

Contacts

Occidental Media	Occidental Investors
Eric Moses 713-497-2017 eric_moses@oxy.com	R. Jordan Tanner 713-552-8811 investors@oxy.com

FAQ

How much funding did 1PointFive receive for the South Texas DAC Hub from the U.S. Department of Energy?

1PointFive received an initial award of $50 million, with a total expected award of up to $500 million for the South Texas Direct Air Capture Hub. The funding could potentially increase to $650 million for the development of an expanded regional carbon network in South Texas.

What is the initial CO2 removal capacity of the South Texas DAC Hub?

The South Texas DAC Hub will have an initial removal capacity of 500,000 metric tons of CO2 per year, with plans to expand to over 1 million metric tons per year in the future.

Where is the South Texas DAC Hub located?

The South Texas Direct Air Capture Hub is located on the King Ranch in Kleberg County, Texas.

What is the maximum CO2 removal and storage capacity of the South Texas DAC Hub?

The site has the capacity to expand up to 30 million metric tons of CO2 removal per year through DAC and can securely store up to 3 billion metric tons of CO2 in saline formations.