By Sabrina Valle
HOUSTON (Reuters) -Occidental Petroleum Corp on Thursday said it agreed to sell emissions-offsetting carbon credits to jet-maker Airbus under a deal that advances the U.S. oil producer's budding energy transition business.
The four-year agreement sets the stage for Occidental (NYSE:OXY) to go ahead on an investment decision for what would be the world's largest plant designed to suck carbon dioxide (CO2) out of the air and bury it underground, helping to mitigate global warming.
The value of the agreement was not disclosed. Occidental has scheduled an investor update on its low carbon business for Wednesday.
Occidental said construction on its direct air capture (DAC) facility is expected to begin in the second half of this year in the Permian basin, the top U.S. shale oil field in western Texas and southeastern New Mexico. The plant's location has not been disclosed.
The plant is expected to have a carbon removal capacity 100 times bigger than all 19 DAC plants currently operating worldwide combined, according to the International Energy Agency.
The potential cost of the project has not been disclosed. Construction was expected to take around two years.
Occidental's direct air capture facility has a goal of removing 1 million tonnes of CO2 from the atmosphere per year, equivalent to emissions from almost 200,000 cars. A project in Iceland able to remove emissions from 790 cars https://www.reuters.com/business/environment/worlds-largest-plant-capturing-carbon-air-starts-iceland-2021-09-08 was considered the world's largest one year ago.
Airbus has pre-purchased the capture and permanent sequestration of 100,000 tonnes of CO2 from the atmosphere each year for four years, with an option to secure more volume in the future, Occidental said. The deal was signed by Occidental subsidiary 1PointFive.