ConocoPhillips 2025: Unveiling a DAC & AI Power Strategy
ConocoPhillips’ 2025 Data Center Power Play: How Direct Air Capture Is Key
Industry Adoption: How ConocoPhillips Is Integrating Direct Air Capture for Data Center Power
Between 2021 and 2024, ConocoPhillips identified a monumental opportunity: the exponential energy demand from AI and data centers. The company’s leadership, including CEO Ryan Lance, began publicly framing natural gas as the only reliable, 24/7 power source to support this digital infrastructure boom. The initial strategy focused on leveraging its core strengths in natural gas and LNG to meet this anticipated demand. A pivotal, yet then-nascent, move occurred in July 2023 with an $80 million Series A investment in Avnos, a Direct Air Capture (DAC) startup. This was more than a venture bet; it was an early signal of a sophisticated strategy. By investing in a novel DAC technology that captures both CO2 and water, ConocoPhillips showed it understood the dual constraints facing data centers—immense power consumption and high water usage—positioning itself not just as a fuel supplier but as a long-term solutions provider.
The period from 2025 to today marks a significant inflection point where this strategy crystallized and accelerated. The theoretical opportunity became a core commercial pillar. This is validated by the company’s partnership with GE Vernova to develop up to 4 GW of dedicated gas-fired power for data centers. The strategy shifted from simply supplying gas to the grid to actively enabling new, dedicated power generation. Concurrently, ConocoPhillips began aggressive portfolio optimization, divesting its Anadarko Basin assets for $1.3 billion to Stone Ridge Energy—a buyer that explicitly stated its intent to use the gas for AI data centers. This transaction brilliantly monetized non-core assets while validating the “gas-for-AI” thesis in the open market. The Avnos DAC investment is no longer a peripheral venture play; it is now an essential component of a bundled value proposition, offering ESG-conscious tech giants a credible decarbonization pathway for the reliable gas-fired power they require.
Table: ConocoPhillips’ Strategic Investments in Gas Supply and Low-Carbon Enablement
| Target / Investment | Time Frame | Details and Strategic Purpose | Source |
|---|---|---|---|
| Marathon Oil | May 2024 | Acquired for $22.5 billion to add over 2 billion barrels of low-cost U.S. unconventional inventory, directly strengthening its capacity to supply natural gas for domestic power generation, including for data centers. | Enverus |
| Surmont Oil Sands Project | October 2023 | Consolidated 100% ownership for ~$3 billion, securing a long-life production asset to support the company’s overall portfolio strength and cash flow for strategic investments. | ConocoPhillips |
| Avnos (HDAC Technology) | July 2023 | Participated in an $80 million Series A funding round for a novel Direct Air Capture technology that also produces water, a key early-stage investment to develop a decarbonization solution for gas-fired power. | CarbonCredits.com |
| Shell’s Permian Basin Assets | December 2021 | Acquired for $9.5 billion, this deal added significant acreage in a key basin for supplying natural gas to the U.S. grid, forming the resource base for the future data center power strategy. | ConocoPhillips |
Table: ConocoPhillips’ Key Partnerships for Data Center Enablement
| Partner / Project | Time Frame | Details and Strategic Purpose | Source |
|---|---|---|---|
| GE Vernova | July 2025 | Partnership to develop up to 4 GW of dedicated gas-fired power for data centers, marking a direct move into building the power infrastructure required by the AI boom. | Klover.ai |
| JERA Americas & Uniper | May 2025 | Partnered to develop a low-carbon hydrogen and ammonia facility on the US Gulf Coast, exploring future low-carbon power sources that could serve data centers and other industries. | Enki.ai |
| NextDecade (Rio Grande LNG) | September 2025 | Signed a 20-year offtake agreement for 1.0 MTPA, underpinning new LNG infrastructure that increases global gas supply and optionality for power generation. | NASDAQ |
| Sempra (Port Arthur LNG) | August 2025 | Finalized a 20-year, 4.0 MTPA offtake agreement, linking its gas supply to a major LNG export project that also includes plans for associated carbon capture facilities. | Hart Energy |
| Avnos | July 2023 | Strategic investment and partnership to accelerate the commercialization of Hybrid Direct Air Capture (HDAC) technology, creating a potential decarbonization tool. | Carbon Herald |
| Sempra Infrastructure | July 2022 | Acquired a 30% equity stake in the Port Arthur LNG project and established a collaboration on carbon capture projects, integrating low-carbon solutions with its core LNG business from an early stage. | ConocoPhillips |
Geography: The US Gulf Coast and Permian Basin Emerge as ConocoPhillips’ DAC and Data Center Power Hubs
Between 2021 and 2024, ConocoPhillips’ geographic focus was on consolidating world-class resource bases, exemplified by the $9.5 billion acquisition of Shell’s assets in the Permian Basin (Texas/New Mexico) and partnerships in massive international LNG projects like Qatar’s North Field South. The US Gulf Coast also emerged as a strategic nexus through the partnership with Sempra on the Port Arthur LNG project in Texas. This period established the foundational supply hubs. The investment in Los Angeles-based Avnos was a technology-scouting move, not yet tied to a specific operational geography.
From 2025 onward, the geographic strategy has become intensely focused on connecting these supply hubs to new domestic demand centers. The US Gulf Coast and the Permian Basin are now the epicenter of ConocoPhillips’ integrated strategy. The GE Vernova partnership to build 4 GW of power for data centers, the JERA/Uniper hydrogen project, and the Sempra/NextDecade LNG projects are all anchored to this region, which offers abundant gas supply and robust export and industrial infrastructure. The construction of the Big Kahuna Substation in the Delaware Basin (Texas) further demonstrates a commitment to building out power infrastructure directly within its production heartland. The divestiture of Oklahoma’s Anadarko Basin assets shows a deliberate geographic sharpening, prioritizing assets with the best logistical fit for serving the burgeoning power demand from data centers expected along the Gulf Coast and other US tech corridors.
Technology Maturity: ConocoPhillips’ Shift from Gas Dominance to Integrated DAC Solutions
In the 2021-2024 period, ConocoPhillips’ technology focus was primarily on optimizing its mature, commercial-scale operations. It deployed digital twins and AI/ML internally to enhance drilling and production efficiency. Its foray into clean technology was at an early, exploratory stage. The partnership with Sempra to develop carbon capture was in the planning and development phase. The investment in Avnos represented a venture-stage bet on a novel Hybrid Direct Air Capture (HDAC) technology still in pre-pilot development. The strategy was to use proven hydrocarbon technology while placing small, strategic bets on future decarbonization options.
By 2025, a clear technological stratification is evident. ConocoPhillips is now actively commercializing its own high-efficiency LNG technology, the Optimized Cascade® Process, licensing it to major projects like Monkey Island LNG. This proves its ability to scale and monetize proprietary process technology. While the core power generation for data centers will rely on mature gas turbine technology via its GE Vernova partnership, the strategic importance of the once-nascent DAC technology has soared. Though Avnos’s HDAC is still pre-commercial scale, it has shifted from a “venture” investment to a “strategic enabler” in ConocoPhillips’s marketing. The company is now promoting an integrated solution: commercially proven, reliable gas power today, coupled with a credible, albeit developing, decarbonization technology in DAC to meet future ESG demands. This shift from siloed tech bets to an integrated offering is the key validation point of the current period.
Table: SWOT Analysis: ConocoPhillips’ Evolving DAC and Data Center Strategy
| SWOT Category | 2021 – 2023 | 2024 – 2025 | What Changed / Resolved / Validated |
|---|---|---|---|
| Strengths | Massive low-cost gas reserves (e.g., from Shell’s Permian acquisition) and global LNG marketing expertise. Strong balance sheet to fund large projects. | Validated asset monetization model (Anadarko sale for $1.3B). Enhanced low-cost U.S. inventory via Marathon acquisition. Proprietary, high-efficiency LNG technology (Optimized Cascade®) licensed to third parties. | The strategy was validated by monetizing an asset (Anadarko) based on the data center thesis and proving its technology’s commercial appeal (Optimized Cascade®), shifting from being a resource holder to a strategic solutions provider. |
| Weaknesses | High exposure to commodity price volatility. Nascent low-carbon portfolio with limited operational clean tech projects. Perceived as a traditional fossil fuel company. | Heavy reliance on partner-operated projects (Sempra, NextDecade) reaching Final Investment Decision (FID). Decarbonization solutions like DAC (Avnos) are not yet at commercial scale, creating a gap between strategy and execution. | The weakness shifted from a lack of a low-carbon story to a dependency on executing a complex, multi-partner strategy. The commitment is now clear, but the execution risk is more defined and visible. |
| Opportunities | Identified emerging AI/data center electricity demand as a major growth vector for natural gas. Growing global demand for LNG as a coal replacement. | Explicitly targeting data centers via direct power partnerships (GE Vernova for 4 GW). Potential to bundle natural gas with DAC/CCS to create a premium, “transition-ready” energy product for ESG-conscious tech clients. | The opportunity crystallized from a general market trend into a specific, actionable commercial strategy, validated by the GE Vernova partnership aimed directly at the data center market. |
| Threats | Broad ESG pressure against fossil fuels. Risk of unfavorable climate policy. Competition from accelerating renewable energy and battery storage deployment. | Execution risk and cost-effectiveness of scaling DAC/CCS. Competition from rivals also targeting the data center market. Tech companies potentially developing their own captive power solutions, bypassing traditional energy firms. | Threats evolved from general market sentiment against fossil fuels to specific competitive and technological risks within the new data center power market. The key threat is now a failure to deliver the integrated “gas-plus-DAC” solution at a competitive cost. |
Forward-Looking Insights and Summary
The data from 2025 signals a clear acceleration of ConocoPhillips’ strategy to become an indispensable energy partner to the digital age. The year ahead will be defined by execution. The theoretical framework is in place; now, the market will demand tangible progress. Energy executives and investors should watch for the first announcement of a direct, behind-the-meter power supply agreement between ConocoPhillips and a hyperscale data center operator—a deal that would serve as the ultimate validation of this strategy.
Key signals that will dictate success in 2026 include positive Final Investment Decisions for the Sempra and NextDecade LNG projects, which are crucial for underpinning the long-term gas supply chain. Furthermore, concrete milestones from the GE Vernova partnership, such as site selection or permitting for the new gas-fired power plants, will be critical indicators of momentum. Perhaps most importantly, the market will be looking for the first deployment of an Avnos DAC pilot unit co-located with a power plant or industrial facility. This would move the decarbonization component of their strategy from a corporate presentation slide to a physical reality. As this complex interplay of gas supply, power generation, and clean technology unfolds, staying ahead of these crucial validation points will be essential for anyone navigating the new energy landscape.
Frequently Asked Questions
Why is ConocoPhillips targeting the data center market?
ConocoPhillips identified the exponential energy demand from AI and data centers as a monumental opportunity. The company’s leadership views natural gas as the only reliable, 24/7 power source capable of supporting this massive digital infrastructure boom, positioning itself as a key energy supplier for this new, high-growth sector.
What is the role of Direct Air Capture (DAC) in this strategy?
Direct Air Capture is positioned as an essential decarbonization tool. By investing in Avnos, a DAC company, ConocoPhillips can offer a bundled solution to ESG-conscious tech giants: reliable power from natural gas paired with a credible pathway to capture the resulting CO2 emissions. This addresses the dual challenge of needing dependable power while meeting climate goals.
How does the Avnos DAC technology specifically help with data centers?
The Avnos technology is particularly strategic because it captures both CO2 and water from the air. This addresses two of the biggest constraints for data centers: their immense power consumption (which gas can solve) and their high water usage for cooling (which the DAC technology helps mitigate), making it a comprehensive solution.
What is the significance of the partnership with GE Vernova?
The partnership with GE Vernova marks a major shift from theory to execution. It moves ConocoPhillips beyond just supplying natural gas to the grid and into actively developing up to 4 GW of new, dedicated gas-fired power plants specifically for data centers. It signifies a direct move to build the power infrastructure the AI industry needs.
How has ConocoPhillips’ strategy evolved since 2023?
The strategy has accelerated from foundational moves to a core commercial pillar. In 2023, the investment in Avnos was an early-stage venture bet. By 2025, it became an essential part of a bundled value proposition. The company also shifted from simply acquiring gas assets to actively building dedicated power partnerships (GE Vernova) and validating the ‘gas-for-AI’ thesis by selling specific assets to data center power developers.
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