Occidental Petroleum Corporation's (NYSE:OXY) subsidiary, 1PointFive, disclosed that the U.S. Department of Energy's Office of Clean Energy Demonstrations (OCED) will provide up to $500 million to support the development of the South Texas Direct Air Capture (DAC) Hub.
1PointFive's South Texas DAC Hub, located on the King Ranch in Texas, will start with a capacity to remove 500,000 metric tons of CO2 annually, with plans to scale to over 1 million metric tons.
The site could expand to remove 30 million metric tons per year and securely store up to 3 billion metric tons in saline formations.
The funding will be provided in multiple phases, starting with an initial award of $50 million to advance 1PointFive's work at the South Texas DAC Hub.
This will support engineering, permitting, procurement of long-lead equipment, and continued community engagement to enhance the community benefits plan.
The total award for the South Texas DAC Hub is expected to reach up to $500 million for the initial DAC facility, with potential to increase to $650 million for expanding a regional carbon network in South Texas.
President and CEO Vicki Hollub, Occidental, said, "This award demonstrates how the U.S. Department of Energy is committed to realizing the full potential of DAC and its confidence in the South Texas DAC Hub to deliver CO2 removal at a climate-relevant scale."
In August, the company disclosed a $3 billion reduction in principal debt in the third quarter of 2024, driven by strong organic cash flow and proceeds from divestitures.
Following the anticipated closing of the $818 million Barilla Draw divestment, Occidental plans to use the proceeds for debt repayments.
Investors can gain exposure to the OXY stock via Texas Capital Funds Trust Texas Capital Texas Oil Index ETF (NYSE:OILT) and First Trust Nasdaq Oil & Gas ETF (NASDAQ:FTXN).
Price Action: OXY shares are up 0.80% at $51.40 premarket at the last check Friday.
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