Occidental Petroleum, a leader in carbon capture and storage (CCS) technologies, has quietly abandoned its largest CCS plant, the Century, as per a report by Bloomberg. The plant, which was designed to be the largest carbon capture plant in the world, underperformed due to economic concerns, leading to Occidental’s decision to divest. Despite the success of the carbon capture technology, the Century plant never operated at more than a third of its capacity. The oil giant sold the plant last year for a fraction of its construction cost. Occidental is now focusing on building a new carbon capture plant called Stratos in Texas.
Stratos is the second major investment by Occidental in CCS technology. It is located 100 miles away from the Century plant and will use a different carbon capture technology called Direct Air Capture (DAC). In contrast, Century pulled carbon from a specific source of emissions. The Century plant was built into a natural gas processing plant, making the carbon capture process cheaper and more established than the DAC technology used in Stratos. However, Century failed to deliver the expected results, and limited gas supply was identified as the biggest challenge.
Satellite data revealed that only one of Century’s two engines capable of capturing CO2 was operational, and it never functioned beyond half its capacity. Occidental quietly sold the struggling plant in January 2022 for about $200 million, despite having invested more than four times that amount in its construction. The company cited a lack of gas supply as the reason for selling the plant to the Mitchell Group. However, Occidental claims that it will continue to use all the CO2 captured by the old plant.
The underperformance of the Century plant raises concerns about the economic viability of large-scale CCS projects. Carbon capture technology is considered essential for achieving net zero emissions targets, as stated by the International Energy Agency. It plays a crucial role in handling emissions from existing energy sources, providing an abatement solution for hard-to-abate sectors, serving as a platform for green hydrogen production, and removing CO2 from the air. The upcoming climate change conference COP28, hosted by the United Arab Emirates, will focus on carbon capture, particularly DAC technology.
Despite its challenges, Occidental is investing in a new billion-dollar DAC plant called Stratos, which aims to rapidly scale carbon capture by absorbing up to 500,000 metric tons of CO2 each year. This would make Stratos the largest DAC plant in the world. The carbon captured by the plant generates carbon removal credits, which have already been pre-purchased by tech giants, aviation leaders, and other major companies such as Amazon, Shopify, Airbus, Houston Astros, and Houston Texans. The US government is also providing significant financial support for the technology.
Although Stratos is currently more expensive than Century’s technology, Occidental expects the costs of DAC to decrease as they gain more experience and develop the technology further. As more corporations commit to net zero targets, the market for carbon removal credits is projected to reach hundreds of billions of dollars. The challenges faced by Occidental’s Century plant emphasize the complexities involved in running large-scale CCS projects. However, the potential of carbon capture technology remains crucial in achieving net zero emissions, highlighting the need for continued innovation and development in the field to address economic and operational challenges.