Occidental Petroleum Corp. subsidiary 1PointFive's direct air capture (DAC) hub has secured up to $500 million in funding from the U.S. Department of Energy (DOE), marking a milestone for the planned commercial-scale facility in South Texas.

The funding, which will be doled out in segments, could increase to $650 million to further expand the regional carbon network. The initial award is for $50 million, Occidental said Sept. 12 in a news release. Engineering, permitting and procurement of long-lead equipment are among the upcoming activities for the project.

“Large-scale direct air capture is one of the most important technologies that will help organizations and society achieve their net zero goals,” said Occidental CEO Vicki Hollub. “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.”

DAC technologies can pull CO2 directly from the atmosphere anywhere, avoiding the need to be near the point of emissions. It is seen as a route to lower emissions, but the energy-intensive process must overcome challenges, which include costs. Federal funding—such as from the Bipartisan Infrastructure Law that enabled 1PointFive’s award, and incentives offered in the Inflation Reduction Act’s carbon sequestration tax credit—are expected to help improve project’s economics.

Located in Kleberg County, Texas, the South Texas Direct Air Capture facility will initially be capable of removing and storing 500,000 metric tons of CO2 per year. But plans are in place to increase that to more than 1 million tons per year in the future, Occidental said.

“The 1PointFive system draws air into its facility using large fans, where a chemical solution then selectively binds CO2 molecules from the air, creating a CO2-rich solution,” the DOE said in its award announcement. “The solution is then processed through a series of reactions to separate, purify and compress it for transportation and permanent storage.”

South Texas DAC partners include Carbon Engineering and Worley.

The site, which is on 106,000 acres of surface land leased from privately-held agricultural company King Ranch, has the capacity to expand up to 30 million metric tons of CO2 removal per year and store up to 3 billion metric tons of CO2 in saline formations.

Oxy has said the site is large enough to support up to 30 DAC plants.

South Texas DAC was one of two projects that the DOE said in August 2023 was selected to receive up $1.2 billion in funding. The other project, led by Battelle, is located in Calcasieu Parish, Louisiana. At the time, the award negotiations were not complete.

Oxy is also developing a large DAC project called Stratos, which is set to startup in 2025. The commercial-scale facility located on a 65-acre site in Ector County, Texas, is designed to capture up to 500,000 metric tons of CO2 annually when it reaches full operations.

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