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Carbon Engineering to be acquired by Occidental for $1.5B

B.C. carbon-capture technology company to be part of Occidental's subsidiary 1PointFive

Carbon Engineering’s direct air capture pilot plant in Squamish, B.C. (Courtesy Carbon Engineering Ltd.)

Houston-based hydrocarbon explorer and producer Occidental Petroleum Corp. (OXY-N) has an agreement to acquire Squamish, B.C.-based Carbon Engineering Ltd. for approximately $1.5 billion to accelerate its direct air carbon capture (DAC) capabilities.

Carbon Engineering is one of the largest Canadian carbon-capture companies. Its DAC technology uses intake fans to draw carbon dioxide from the atmosphere and stores it in rock formations.

Occidental has been developing its own carbon-capture expertise through its subsidiary 1PointFive and has a partnership with Carbon Engineering dating back to 2019. 1PointFive and Carbon Engineering unveiled a partnership in June 2022 to build a chain of at least 70 DAC sites by 2035.

As per the agreement, Occidental would acquire Carbon Engineering for about $1.5 billion in three approximately equivalent annual payments and fold Carbon Engineering into its subsidiary Oxy Low Carbon Ventures.

The transaction is expected to close before the end of 2023. Carbon Engineering’s research and development staff and innovation centre will remain in Squamish.

In a release, Carbon Engineering CEO Daniel Friedmann said: “Carbon Engineering and Occidental have been working increasingly close together for the past five years to address the CO2 (carbon dioxide) problem, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey.”

Expanding its DAC ambitions

The acquisition offers 1PointFive a catalyst for DAC technology innovations and an opportunity to accelerate deployment of DAC as a large-scale, cost-effective climate solution, the release states.

1PointFive is building the world’s largest DAC plant in Ector County, Tex., named Stratos. Expected to be commercially operational in mid-2025, Occidental and Carbon Engineering are adapting Stratos’ front-end engineering and design study for a DAC plant which is to be built at Kleberg County, Tex.

The Kleberg County project is part of a South Texas DAC Hub that will receive a grant from the U.S. Department of Energy’s Office of Clean Energy Demonstrations.

Occidental estimates the South Texas DAC Hub will be able to remove and store up to 30 million tonnes of carbon dioxide per year.

Carbon capture has received significant funding to boost its potential as a solution for global warming caused by increased carbon dioxide emissions. Canada offered billions in investment tax credits for carbon-capture projects this year, as did the U.S. in 2022 through the Inflation Reduction Act.

“At the core of this deeper relationship is the commitment to invest in the development of our technology here in Canada, and the global reach to accelerate implementation of DAC-based climate solutions in the U.S. and around the world,” Friedmann said.

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