In a significant development, BlackRock has revealed its plan to inject a staggering $550 million into a DAC facility in Texas, a project spearheaded by the renowned U.S. oil and gas producer Occidental Petroleum.
Named the Stratos project, this venture stands as the largest DAC undertaking on a global scale, with an ambitious goal of annually extracting 500,000 tonnes of carbon dioxide from the Earth's atmosphere once it reaches full operational capacity.
On a recent Tuesday, BlackRock, in partnership with Occidental subsidiary 1PointFive, made a groundbreaking announcement. Together, they unveiled a joint venture to advance the Permian Basin project. This venture, which is currently approximately 30% completed, is poised to reshape the landscape of DAC technology.
"Everything is bigger in Texas - and now that includes direct air capture," BlackRock CEO and chairman Larry Fink wrote on LinkedIn as the deal was unveiled.
"For the past few months, we've been working with Occidental Petroleum, finalising a partnership to help build Stratos, the world's largest direct air capture (DAC) facility in Ector County, Texas," he added. "We'll be investing $550m on behalf of our clients to develop it - a job that will employ 1,000 workers and should be finished by mid-2025."
Fink elaborated further, "For the past few months, we've been working closely with Occidental Petroleum, finalizing a robust partnership to help bring Stratos to life. It is set to become the world's largest direct air capture (DAC) facility, nestled in Ector County, Texas."
Initially projected to cost between $800 million and $1 billion, Occidental recently revised its cost estimates to $1.3 billion. This revision comes as the projected start date for commercial operations is shifted by a year to 2025, according to reports from Reuters.
Vicki Hollub, Occidental's chief executive, said the deal marked a major milestone in the commercialisation of DAC technology, which is currently limited to a handful of small-scale pilots that are mainly planning to monetise projects by selling carbon credits.
"This joint venture demonstrates that direct air capture is becoming an investable technology," she said. "BlackRock's commitment in Stratos underscores its importance and potential for the world."
Hollub stressed the importance of BlackRock's commitment to Stratos, emphasizing its potential impact on the global stage.
Nonetheless, Occidental's DAC project has garnered controversy due to its potential use of captured carbon in enhancing oil recovery drilling projects in the region, a move that could potentially bolster fossil fuel production.
Earlier this summer, Occidental Petroleum announced its plans to establish 100 DAC plants. This announcement coincided with its acquisition of technology supplier Carbon Engineering Ltd for a substantial $1.1 billion.
Interestingly, this development came shortly after a Bloomberg investigation uncovered Occidental's quiet divestment of its flagship Texas carbon capture and storage (CCS) plant. Once hailed as the largest facility of its kind globally, this plant, constructed in 2010, was dedicated to capturing CO2 from a fossil gas processing plant and using the reclaimed gas as a tool to facilitate increased oil production.
In January 2022, the oil and gas giant sold this struggling asset to Mitchell Group for approximately $200 million after the plant's economics failed to align with limited fossil gas supply, as reported by Bloomberg. Occidental had invested more than $1 billion in constructing the plant.
According to Bloomberg's findings, the Century project never operated beyond one-third of its projected capacity since its activation.
In a statement provided to the news agency, Occidental said the Century plant "continues to operate as designed" and argued it would be a "mischaracterisation" and "false narrative" to use the plant as an example of CCS project performance.