Energy giants Occidental and Abu Dhabi-based ADNOC announced a new agreement to evaluate the launch of a new joint venture to develop a Direct Air Capture (DAC) carbon removal facility in South Texas, with ADNOC’s investment company XRG considering investing up to $500 million for the new facility.
The new proposed project would be among the largest DAC facilities to date, designed to capture 500,000 tonnes of carbon dioxide per year.
The new agreement, announced during U.S. President Trump’s visit to the UAE, was signed by Oxy President and CEO Vicki Hollub and ADNOC Group CEO Dr. Sultan Ahmed Al Jaber.
DAC technology, listed by the IEA as a key carbon removal option in the transition to a net-zero energy system, extracts CO2 directly from the atmosphere for use as a raw material or permanently removed when combined with storage. According to the Intergovernmental Panel on Climate Change (IPCC), scenarios that limit warming to 1.5°C include carbon dioxide removal methods scaling to billions of tons of removal annually over the coming decades, with DAC positioned to potentially account for a significant portion of the total.
The agreement follows an MOU signed between Oxy and ADNOC companies in August 2023 to jointly explore carbon capture, utilization and storage (CCUS) projects in the U.S. and the UAE. In October 2023, the companies also announced an agreement to launch an engineering study aimed at assessing the feasibility of building a new 1 million tonne-per-year DAC facility in the UAE.
Khaled Salmeen, Chief Operating Officer, XRG, said:
“Our longstanding partnership with Occidental continues to drive scalable, high-growth and strategically attractive projects that create long-term sustainable value. The U.S. is a priority market for XRG and we look forward to building on this partnership as we continue to invest in strategic projects across the energy value chain.”
Oxy has invested significantly in direct air capture, including through the $1.1 billion acquisition in 2023 of DAC technology company Carbon Engineering, and the acquisition earlier this year of DAC company Holocene. Oxy, through its DAC subsidiary 1PointFive is currently developing a series of carbon removal and sequestration projects in the U.S., including STRATOS in Texas, which it expects to be the largest DAC facility in the world to date, designed to capture 500,000 tonnes of CO2 per year when fully operational.
Oxy has also been awarded up to $650 million from the U.S. Department of Energy (DOE) to support the development of a large-scale DAC hub in Southern Texas. According to Oxy, the South Texas DAC Hub, located on the King Ranch in Kleberg County, Texas, comprises approximately 165 square miles of acreage with the potential to store up to 3 billion tonnes of CO2. The hub will be close to industrial facilities and energy infrastructure along the U.S. Gulf Coast, where CO2 can be transported for use or securely stored in geologic formations.
Hollub said:
“We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals. Agreements like this, along with U.S. DOE support, demonstrate continued confidence in DAC as an investable technology that can create jobs and economic value in the United States and Texas.”
