Two planned Delaware Basin CO₂ projects are expected to supply Occidental’s enhanced oil recovery operations in the Permian Basin under long-term agreements the company announced Monday.
The companies behind the projects are expected to finance and construct the infrastructure needed to capture, move and deliver the gas. The supply is expected to come from existing and new third-party natural gas processing plants in the Delaware Basin.
Occidental estimates the projects will handle about 2 million metric tons of CO₂ a year in total. Their combined annual capacity could rise to 4 million metric tons. The announcement did not give a capacity figure for each project.
Plans include nearly 100 miles of pipeline connecting the projects to Occidental’s existing CO₂ network serving the Permian. The new pipelines are being designed to let additional facilities and other industrial CO₂ sources connect, the company said.
Occidental says dependable CO₂ supplies would help extend the life of producing fields and improve recovery from conventional and unconventional resources. The company is also pursuing supply from other third-party sources of carbon dioxide produced by human activity.
Occidental says injected CO₂ helps move hydrocarbons out of producing reservoirs, while some of the gas remains underground. Vishal Gupta, president and general manager of Occidental’s EOR Ventures, said federal 45Q incentives are an “important support” for the investments.
The Internal Revenue Service (IRS) says the carbon oxide sequestration credit may apply to captured carbon injected in qualifying oil or natural gas recovery projects, subject to requirements that include secure geological storage. Occidental has not said whether either project qualifies.
Initial deliveries are anticipated in 2029, contingent on final investment decisions. Occidental did not provide a timetable for those decisions or disclose the agreements’ financial terms, pipeline routes or individual project costs.
