Warren Buffett-backed Occidental Petroleum Corp. agreed to buy Canadian startup Carbon Engineering Ltd. for $1.1 billion, as the oil producer expanded its position as a leader in removing carbon dioxide from the atmosphere.
Houston-based Occidental said Tuesday it will pay in cash and expects the deal to close by the end of the year, pending regulatory approval. The US oil producer has been working with Carbon Engineering for the past four years, using its technology for the Stratos project in West Texas, which is expected to be the world’s largest direct air capture plant by 2025.
“We expect the acquisition of Carbon Engineering to deliver value to our shareholders by enhancing the drive for technological innovation and accelerating DAC cost reduction,” CEO Vicki Hollub said in a statement.
Buffett praised Hollub’s stewardship of Occidental earlier this year and recently raised his stake in the company to 25 percent, making Berkshire Hathaway the company’s largest shareholder.
Carbon capture and storage is one of the climate solutions most favored by oil majors, and the real momentum is building now as the companies posted record profits last year and won generous tax breaks for the technology through the Inflation Reduction Act. . The acquisition is the second major oil CCS deal in recent weeks. Exxon Mobil last month agreed to buy CO2 pipeline operator Denbury Inc. for $4.9 billion.
In addition to Stratos, Occidental plans to use Carbon Engineering’s technology at its King Ranch DAC center in south Texas, which received financial support from the Energy Department last week.
read more: Occidental begins construction of world’s largest carbon removal plant
Carbon Engineering was founded in Calgary by a Harvard professor david keith, who pioneered methods for removing large amounts of carbon dioxide directly from the air, allowing it to be buried underground or used for various industrial purposes.early investors include Bill Gates, Chevron Corporation, BHP Billiton Group Ltd, Occidental Petroleum Corporation and various family offices.
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