Having an essentially limitless and “free” (perhaps even negative cost?) source of direct-capture CO2 would drastically improve EOR economics, thereby reducing the economic limit (production rate at which a well, or field became uneconomic). A lower CO2 operating cost would allow OXY to expand into new areas where CO2 EOR could be implemented.
The cost of direct-capture CO2 has been estimated by the company doing the demonstration to be somewhere between $100 to $300 a ton based on pilot plant data and engineering estimates at a commercial scale. I doubt they were conservative. Prior estimates were up to $600 ton some years earlier. So there’s nothing “free” about direct-capture C02. This is far higher than they’re paying now for CO2 produced from natural deposits. The only question is who is going to pay for that cost of direct-capture CO2. It isn’t up to the rest of us to provide OXY with “free” CO2. Or any other O&G company for that matter.
Whoever does - be it OXY or government incentives - this is going to be very expensive oil without major technology breakthroughs. To claim it NOW as an incentive for buying OXY is disingenuous.
Use some common sense people. The lower the concentration of CO2 in a stream, the more expensive it’s going to be to remove and recover it. Right now the most concentrated streams are from hydrogen manufacture from natural gas ranging from 65 to 90%. Ethanol also produces high concentration CO2. Recovered CO1 costs are estimated around $50-60 a ton based on NPC estimates as of 2019. These are high concentration streams - not the parts per million present in air.
Also recall that recovering and reusing CO2 from non-anthropogenic sources does nothing to combat global warming. It has to be removed from sources generating CO2 from fossil fuels to have any impact.
Refineries, natural gas and coal electricity, cement plants, steel manufacture, etc. CCS costs are all well over $100 a ton ranging up to $300 a ton based on size and other factors. There are numerous regulatory and political issues to be worked to make these possible - as well as technical advances to lower costs. These are all covered in the recently released report by the National Petroleum Council available via Google.
It is true that recovering more oil from anthropogenic sources can generate more oil. And, in the first one to two decades, that can sequester more CO2 than that generated by the oil. But this changes over time. That timing can be important in meeting 2050 goals. But the source of the C02 is all important.
As for the OXY CEO’s engineering background contributing to this as a new idea, she was 12 years old when the first C02 EOR process was tried in the Permian in 1972. I don’t know of any O&G companies that don’t have good engineers, and they’ve been at it for a long time in the Permian.
Right now I admire Hollub more for her promotional skills than her engineering skills. She got very, very lucky when pandemic vaccines bailed her out from her bet on acquiring Anadarko. OXY could easily have gone bankrupt with their debt load had the pandemic persisted to destroy demand. Look at China demand today. Buffett wasn’t hanging on to the stock back then.
I very much hope, and believe, that Buffett and Munger are basing their reasons for buying OXY on the existing O&G outlook - not on a highly uncertain future for cheap oil from CO2.