Occidental Petroleum’s Direct Air Capture Strategy in 2025: From Concept to Commercialization

Occidental’s Direct Air Capture Projects Advance from Pilots to Commercial Scale

Occidental Petroleum has transitioned its Direct Air Capture strategy from technology acquisition and pilot projects to the construction of commercial-scale facilities and the establishment of a viable market for carbon removal credits.

• Between 2021 and 2024, Occidental’s strategy centered on acquiring foundational technology, marked by the $1.1 billion purchase of Carbon Engineering in 2023, and securing initial government support and major offtake partners like Microsoft.
• The period from January 2025 to today demonstrates a clear shift toward execution and market creation, evidenced by new carbon removal credit agreements with companies like JPMorgan Chase and Palo Alto Networks.
• The acquisition of Holocene Carbon in April 2025 for its liquid sorbent technology indicates Occidental is now building a diversified technology portfolio to optimize future large-scale deployments beyond its initial plant designs.
• Progress on the flagship Stratos plant, which is designed to capture 500, 000 tons of CO₂ annually and is scheduled for a mid-2026 launch, represents the physical manifestation of this move to commercial operations.

Occidental Secures Billions in Capital to Fund Direct Air Capture Ambitions

Occidental Petroleum has systematically secured billions of dollars in capital from corporate divestitures, private equity, and government grants, creating a financial foundation to de-risk its capital-intensive Direct Air Capture development.

• The most significant financial event in 2025 was the definitive agreement to sell its Oxy Chem unit to Berkshire Hathaway for $9.7 billion in cash, a strategic divestment that directly funds its debt reduction and low-carbon venture growth.
• Private capital validation was established in 2023 when Black Rock committed $550 million to a joint venture for the Stratos DAC plant, signaling investor confidence in the project’s financial model.
• The U.S. Department of Energy provided substantial public funding, selecting Occidental’s projects for up to $1.2 billion in program funding in 2023 and an additional award of up to $650 million in September 2024 to accelerate future facilities.
• The $1.1 billion acquisition of Carbon Engineering in 2023 was a major capital outlay that secured ownership of the core technology, underpinning its entire DAC deployment strategy.

Table: Key Investments in Occidental’s Low-Carbon Ventures

Occidental’s Partnership Ecosystem Creates a Market for Carbon Removal

Occidental Petroleum has established a network of strategic partnerships designed to secure technology, funding, and guaranteed offtake markets, effectively building a commercial ecosystem for its Direct Air Capture business.

• In 2025, Occidental secured crucial offtake agreements with corporate buyers, including a deal with JPMorgan Chase for 50, 000 metric tons of CO 2 removal and a separate agreement with Palo Alto Networks, which validates market demand for its carbon credits.
• The company is attracting significant international capital, highlighted by the May 2025 agreement with ADNOC to evaluate a joint venture for a Texas DAC hub, with ADNOC’s investment firm considering an investment of up to $500 million.
• To ensure its energy-intensive DAC operations are low-carbon, Occidental joined the Texas Nuclear Alliance as a founding member in February 2025, signaling a long-term strategy to use nuclear power for its facilities.
• A landmark agreement in 2024 with Microsoft to purchase 500, 000 metric tons of carbon removal credits established a direct link between the energy needs of the AI industry and Occidental’s DAC solution.

Table: Occidental’s Key Clean Technology Partnerships (2024-2025)

Occidental’s Geographic Strategy Centers on Texas with Expansion to the Middle East

Occidental Petroleum anchors its Direct Air Capture deployment in the U.S. Gulf Coast, primarily Texas, to leverage its existing operational footprint and favorable geology, while using strategic partnerships to initiate its global expansion into the Middle East.

Texas Basins: The Heart of Occidental’s Operations

This map shows significant well activity in the Delaware, Midland, and Eagle Ford basins, which are central to Occidental’s U.S. operational footprint. These are the key Texas regions where the company leverages its existing infrastructure for DAC development.

(Source: TGS)

• From 2021 to 2024, all major DAC development activities were concentrated in the United States, including the engineering and construction of the Stratos plant in the Permian Basin and the selection of a South Texas site for a DOE-funded DAC hub.
• This Texas-centric focus continued in 2025 with the evaluation of another South Texas DAC facility in partnership with ADNOC, reinforcing the region as the core of its deployment strategy.
• The company’s first major international initiative was formalized through its partnership with ADNOC, which includes a joint engineering study for a megaton-scale DAC project in the United Arab Emirates.
• While its technology has North American roots with the acquisition of Canada-based Carbon Engineering, the physical deployment and capital investment remain firmly centered on the U.S. Gulf Coast and Permian Basin.

Occidental’s DAC Technology Matures to Commercial Scale with Market Validation

Occidental Petroleum’s Direct Air Capture technology has rapidly progressed from an acquired, pre-commercial concept to a validated, commercial-scale solution, proven by the construction of its first plant and the execution of legally binding offtake agreements.

• The period between 2021 and 2024 was defined by technology acquisition and validation, beginning with partnerships with biotech firms like Cemvita Factory and culminating in the $1.1 billion purchase of Carbon Engineering in 2023.
• By 2025, the technology has moved firmly into the commercialization phase with the ongoing construction of the Stratos plant, which is designed to capture 500, 000 tonnes of CO₂ annually and is scheduled for a mid-2026 startup.
• The commercial viability of the technology was validated in 2025 through offtake agreements with JPMorgan Chase and Palo Alto Networks, which create the first revenue streams for the captured carbon and demonstrate market acceptance.
• The 2025 acquisition of Holocene Carbon shows a strategic move to build a multi-technology platform, indicating Occidental is looking beyond its first-generation plants to optimize cost and efficiency for its long-term goal of building over 100 DAC facilities.

SWOT Analysis of Occidental Petroleum’s Direct Air Capture Strategy

Occidental Petroleum has successfully leveraged its legacy strengths in subsurface management and large-scale project execution to establish a leading position in Direct Air Capture, though its strategy remains exposed to significant financial and market risks inherent in a nascent industry.

Occidental’s Revenue Mix Funds DAC Expansion

This chart details Occidental’s revenue by segment, highlighting the financial strength of its core Oil & Gas and Chemical businesses. This existing revenue base is crucial for funding capital-intensive ventures like Direct Air Capture.

(Source: MacroMicro)

• Strengths in project management and strategic partnerships have been validated by securing capital from firms like Black Rock and offtake deals with Microsoft.
• A key Weakness is the high capital cost and reliance on a business model that an Occidental executive acknowledged in September 2025 is not yet “bankable, ” a risk now partially mitigated by the $9.7 billion Oxy Chem sale.
• Opportunities in the potential $5 trillion CCUS market are materializing as the AI sector’s energy demand drives the need for carbon removal credits.
• Threats remain from technological scaling challenges and the reliance on a stable carbon credit market and policy support.

Table: SWOT Analysis for Occidental Petroleum’s DAC Business

Occidental’s 2026 Outlook: Proving the Commercial Viability of Direct Air Capture

Occidental Petroleum’s foremost strategic imperative in the next 18 months is to prove the commercial viability of its Direct Air Capture model by bringing the Stratos plant online and converting its pipeline of potential partnerships into a backlog of bankable, long-term revenue contracts.

• The successful commissioning of the Stratos DAC plant by its mid-2026 target is the most critical milestone, as it will serve as the operational and financial proof-of-concept for Occidental’s entire low-carbon strategy.
• A key indicator of success will be converting the 2025 joint venture evaluation with ADNOC into a definitive, funded project, which would validate its international expansion model and attract further global capital.
• The company must build on its 2025 successes with JPMorgan Chase and Palo Alto Networks by securing additional multi-year, large-volume carbon removal agreements to create a predictable and financeable revenue stream.
• Progress on integrating the newly acquired liquid sorbent technology from Holocene Carbon and advancing the fusion energy collaboration with TAE Technologies will be essential to demonstrating a clear path toward long-term cost reductions for future DAC facilities.

Frequently Asked Questions

How is Occidental funding its expensive Direct Air Capture (DAC) projects?

Occidental is using a multi-pronged financial strategy. The most significant move in 2025 was the agreement to sell its Oxy Chem unit to Berkshire Hathaway for $9.7 billion in cash. This is supplemented by private capital, such as a $550 million investment from BlackRock, and substantial government funding, including up to $1.85 billion in potential grants from the U.S. Department of Energy awarded in 2023 and 2024.

Who is buying the carbon removal credits from Occidental’s DAC plants?

Occidental has secured several major corporate buyers to create a market for its carbon credits. Notable customers include Microsoft, which agreed to purchase 500,000 metric tons of removal credits, as well as JPMorgan Chase (50,000 metric tons) and Palo Alto Networks, who both signed offtake agreements in 2025.

What is the Stratos plant and when will it be operational?

Stratos is Occidental’s flagship commercial-scale Direct Air Capture plant located in the Permian Basin, Texas. It is designed to capture 500,000 tons of CO₂ per year and represents the company’s first major step into commercial operations. The plant is scheduled for a mid-2026 launch.

What technology is Occidental using for its DAC facilities?

Occidental’s foundational technology is from its $1.1 billion acquisition of Carbon Engineering in 2023. In 2025, it diversified its technology portfolio by acquiring Holocene Carbon to add its liquid sorbent technology. This suggests a strategy to use multiple technologies to optimize future DAC deployments.

How has Occidental’s DAC strategy evolved in 2025?

In 2025, Occidental’s strategy clearly shifted from technology acquisition and pilot projects to commercial execution and market creation. This is evidenced by the physical construction of the Stratos plant, securing new offtake agreements with corporate buyers like JPMorgan Chase, and planning for international expansion with partners like ADNOC.