(Bloomberg) — Occidental Petroleum Corp. plans to sell what it calls “net-zero oil” to the trading division of South Korea’s biggest refiner once a new facility that captures carbon dioxide is up and running in late 2024.
The idea of carbon-free fossil fuels has been a pain point for the energy sector, since even if explorers cut emissions from their own operations and suppliers, oil still releases green-house gases once it’s burned by end-users — so-called scope three emissions. Houston-based Occidental has said it’s found a way to potentially solve that.
The company says the amount of carbon removed from the atmosphere through its planned direct air capture facility in the Permian Basin will be enough to offset all the emissions associated with that crude’s life cycle from extraction to consumption.
Under the deal, SK Trading International, a division of Seoul-based SK Innovation Co., will be offered an option to buy as much as 200,000 barrels of the oil a year for five years, which it will then convert into net-zero products , Occidental said in a statement Tuesday.
READ: Occidental to Catch Carbon From the Air and Use It to Pump Oil
Occidental sees direct air capture, seen by some as a prohibitively expensive way of removing carbon from the atmosphere, as an essential tool in reducing, or even eliminating, the emissions that come from its crude. Analysts at Citigroup Inc. said this is the “ most exciting part” of Occidental’s business and could make up a large part of the company’s stock valuation over the next decade.
Occidental’s facility will inject 100,000 tonnes of carbon dioxide into the ground each year. It already has backing from companies including United Airlines Holdings Inc., which plan to use the facility to offset their own emissions.
Occidental is hosting an analyst day Wednesday to discuss its low-carbon strategy.
©2022 Bloomberg LP