Occidental secures 2 million tons of annual CO2 for Permian recovery

Under the arrangements, the two developers will cover construction costs and build the necessary systems to capture, transport and hand over the gas to Occidental, pulling from a mix of current and upcoming gas processing sites. If fully scaled, the joint output of these projects might eventually climb to 4 million metric tons annually.

Neither project has reached a final investment decision yet, and Occidental anticipates the earliest CO2 shipments will arrive in 2029. The buildout calls for close to 100 miles of fresh CO2 pipeline across the Delaware Basin, linking into the pipeline grid already serving the Permian Basin, with extra capacity designed in to absorb future volumes from other industrial suppliers.

According to Occidental, this added supply will diversify where it sources CO2 and strengthen its enhanced oil recovery operations – a method of pumping carbon dioxide into aging wells to boost extraction. Vishal Gupta, who leads EOR Ventures as President and General Manager at Occidental, noted that dependable, long-term CO2 access underpins the firm’s approach to stretching out the productive years of its oil fields.

Gupta further indicated the deals would help bring down CO2 supply costs and establish infrastructure that could eventually connect to other carbon capture ventures. The firm pointed out that Section 45Q federal tax incentives are anticipated to help finance the project, and confirmed it continues negotiating additional CO2 supply contracts with other outside providers.

From a market perspective, locking in affordable CO2 supply for enhanced oil recovery helps sustain output from aging Permian Basin wells over the long run – a dynamic that carries implications for WTI crude supply and for Occidental’s broader production trajectory.

Source: Trend (business)