Occidental (Oxy) and its carbon-focused subsidiary 1PointFive have partnered with XRG, ADNOC’s energy investment company, to build a large Direct Air Capture (DAC) facility in South Texas. XRG is considering an investment of up to $500 million to support the project. The proposed plant would pull 500,000 tonnes of CO₂ from the air every year.
Occidental and 1PointFive: Driving Low-Carbon Energy Solutions
The global energy leader has major operations in the United States, the Middle East, and North Africa. In the U.S., Oxy ranks among the top oil and gas producers, with strong operations in the Permian Basin, DJ Basin, and the Gulf of Mexico.
But the company isn’t just focused on fossil fuels. Through its subsidiary Oxy Low Carbon Ventures, Occidental is taking major steps toward a cleaner future. In 2020, it launched 1PointFive to develop and scale up carbon removal and storage technologies for industries that are hard to decarbonize.
1PointFive has a clear mission to reduce CO₂ in the atmosphere and help limit global warming to 1.5°C by 2050, in line with the Paris Agreement. To achieve this, the company focuses on Carbon Capture, Utilization, and Storage (CCUS) as a key tool in the fight against climate change.
Pioneering Direct Air Capture and Clean Fuels
One of 1PointFive’s flagship technologies is Direct Air Capture, developed with Carbon Engineering. It also offers AIR TO FUELS, a clean fuel solution made using captured CO₂. These technologies are backed by large-scale underground storage hubs that safely lock away carbon.
Furthermore, Occidental brings years of experience in CO₂ transportation, use, and storage, making it well prepared to lead low-carbon energy projects. Together, they aim to grow responsibly, cut emissions, and support global climate goals.
Supporting Oxy’s Net Zero Strategy
Oxy aims to reach net-zero emissions from its operations and energy use by 2040. A key part of this plan is led by Oxy Low Carbon Ventures, which follows a four-part strategy: revolutionize, reduce, reuse/recycle, and remove.
In 2023, 1PointFive made significant progress by signing agreements to sell direct air capture (DAC) carbon dioxide removal (CDR) credits to major global companies. These credits help organizations reduce their greenhouse gas (GHG) footprints.
DAC CDR credits are unique compared to other carbon credits because:
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They’re long-lasting: CO₂ is captured from the air and stored deep underground, where it stays safely for thousands of years.
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They’re trustworthy: These credits use strong monitoring, reporting, and verification standards to ensure transparency and effectiveness.
By developing high-integrity, science-backed solutions like DAC, Occidental and 1PointFive are paving the way toward a lower-carbon future.
Unlocking the Oxy-ADNOC Carbon Capture JV
Now talking about XRG, the global investment arm of ADNOC, based in Abu Dhabi, has a valuation of over $80 billion. It invests in lower-carbon energy and essential chemical solutions.
This potential joint venture exemplifies the fight against climate change using carbon capture technology. The press release revealed that the agreement was signed by Occidental CEO Vicki Hollub and ADNOC CEO Dr. Sultan Ahmed Al Jaber during a visit by former U.S. President Donald Trump to the UAE.
Vicki Hollub, President and Chief Executive Officer of Oxy said,
“We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals. Agreements like this, along with U.S. DOE support, demonstrate continued confidence in DAC as an investable technology that can create jobs and economic value in the United States and Texas.”
What’s DAC and Why South Texas?
Direct Air Capture (DAC) pulls CO₂ directly from the atmosphere, which can then be stored underground or reused. As per the IEA, so far, 27 DAC plants are running globally, capturing only about 0.01 million tonnes of CO₂ per year. However, more than 130 large-scale DAC projects (each designed to capture over 1,000 tonnes annually) are now in the pipeline.
If all proposed facilities move ahead, DAC could capture 65 million tonnes annually by 2030. This figure is close to the level needed under the Net Zero Emissions by 2050 scenario. DAC plants typically take 2 to 6 years to build, making this target possible with strong policy backing.
According to BloombergNEF, the global market for carbon capture and removal could reach $100 billion by 2030. This growth comes from stricter climate rules, net-zero goals, and rising investment in clean tech.
Currently, most projects are still in early planning stages and need market incentives to move forward. Supportive policies and pricing mechanisms will be key to making these carbon removal services viable.
U.S. Backs Big Direct Air Capture Projects
The IEA also highlighted that the United States has significantly invested in Direct Air Capture technology. Two large hubs in Texas and Louisiana will share $3.5 billion in federal funds and could pull 2 million tonnes of CO₂ from the air each year.
New incentives make these projects more attractive:
- The Inflation Reduction Act raised the 45Q tax credit to $180 per tonne of CO₂ stored through DAC.
- Projects as small as 1,000 tonnes per year can now qualify.
- A federal buying program promises long-term contracts to purchase the CO₂ that DAC plants capture.
These moves aim to boost deployment and build a strong market for carbon removal in the U.S.
Moving on, this South Texas Project is planned at King Ranch in Kleberg County, a site near Gulf Coast industrial zones and energy infrastructure. This location is ideal for transporting and storing CO₂.
- The hub has the potential to store up to 3 billion tonnes of carbon underground across 165 square miles.
Ongoing Progress and Support
- Occidental is already building a DAC facility called STRATOS in West Texas. It’s expected to begin operations in 2025.
- The U.S. Department of Energy has awarded Occidental up to $650 million to support DAC development in South Texas.
- The technology behind DAC is becoming more reliable and cost-effective.
Interestingly, Occidental and ADNOC have been working together since signing an MoU in 2023. They are exploring opportunities in carbon capture and storage across both the U.S. and the UAE. They also partner on major energy projects like Al Hosn Gas, one of the largest gas developments in the Middle East.
Khaled Salmeen, Chief Operating Officer, XRG, also commented on this JV,
“Our longstanding partnership with Occidental continues to drive scalable, high-growth and strategically attractive projects that create long-term sustainable value. The U.S. is a priority market for XRG and we look forward to building on this partnership as we continue to invest in strategic projects across the energy value chain.”
This partnership could mark a major step forward in the use of carbon capture to tackle climate change. With significant backing, ideal location, and proven collaboration, Occidental, 1PointFive, and XRG are aiming to scale up climate tech with South Texas as its base.
