Occidental Petroleum shares climb after winning DOE grant for carbon capture project

Key takeaways

Occidental Petroleum has been chosen by the Department of Energy for a $1.2 billion carbon capture project.
A subsidiary and its partners will develop a facility in Texas that captures carbon dioxide from the air.
CEO Vicki Hollub said the decision shows Occidental is ready to advance carbon capture technology.

Stocks of Occidental Petroleum (OXY) rose 3.3% on Friday after the US Department of Energy (DOE) selected the company to receive hundreds of millions of dollars in grants for a climate change project.

The DOE said it would spend up to $1.2 billion developing two commercial-scale direct air capture (DAC) facilities in Texas and Louisiana. The South Texas DAC hub in Kleberg County, Texas will be operated by Occidental's subsidiary, 1PointFive, and its partners. The plant will be designed to remove up to 1 million metric tons of carbon dioxide (CO2) each year and will have an associated saline geological CO2 storage site.

The second parish site of Calcasieu, Louisiana, will be managed by the nonprofit science and technology company Battelle and two others.

Energy Secretary Jennifer Granholm explained that reducing CO2 emissions alone will not reverse the effects of climate change and that it is essential to eliminate what is is already in the atmosphere to achieve the goal of a net zero global economy by 2050.

Occidental CEO Vicki Hollub said the DOE's decision “validates our readiness, technical maturity and ability to utilize Oxy's expertise in large projects and carbon management to advance technology.

Money for the projects is from the $1.2 Trillion Infrastructure Investment and Jobs Act of 2021.

Occidental Petroleum shares have jumped to their highest level since February following the announcement.