Wednesday, October 4, 2023

West says green push ‘does more than Tesla’

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Occidental Petroleum, a long-time titan of the US oil industry, says it is doing more than Tesla to reduce greenhouse gas emissions as it seeks to expand its carbon management business in response to investor demands in the face of climate change .

Vicki Hollub, CEO of Occidental, said the amount of CO2 the company was pumping underground in the process of extracting oil exceeded the electric carmaker’s contribution to decarbonizing the atmosphere by keeping people away from combustion engines.

“What we are sequestering today essentially removes about 4 million cars on an annual basis,” Ms. Hollub told the Financial Times. “It does more than what Tesla is doing now – although we need Tesla to continue what they are doing. It’ll take it all.

Ms. Hollub’s claims do not take into account the amount of carbon the West – one of America’s largest producers of fossil fuels – pumps into the atmosphere from its operations and the combustion of its oil. And although it injects around 20 million tonnes of CO2 back into the ground each year, it does so in order to make it easier to extract more oil.

Occidental produced around 1 million barrels of oil equivalent per day in 2019. In doing so, it emitted around 28 million tonnes of CO2 equivalent from its operations. The subsequent combustion of this oil by its customers in the form of gasoline and other fuels emitted an additional 103 million tonnes of CO2 equivalent – although the company said these so-called Scope 3 emissions were beyond its control.

Vicki Hollub: “ We are definitely going [on carbon management]. This is going to be huge for us’ © Kyle Grillot / Bloomberg

For its part, Tesla delivered around 500,000 electric vehicles in 2020, most of whom steered drivers away from carbon-spitting combustion engines, and said his cars have reduce American emissions of around 3.7 million tonnes to date. He did not respond to a request for comment.

Ms Hollub’s comments come as Occidental seeks to expand the part of its business focused on managing carbon emissions by capturing, reusing and storing them. By 2050, it says the volume of emissions it replaces will equal the volume it creates. It’s the only major US oil producer with the objective of reducing emissions to net zero both from its own operations and those of its customers.

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Occidental already has the largest carbon management operations in the world and plans to build the first large-scale direct air capture plant by 2023, which will extract carbon from the atmosphere to be pumped underground.

Carbon management will generate as much revenue for the company as its chemical operations within 15 years, Ms. Hollub said. By 2050, it said it would represent more revenue than its oil, gas and chemicals business combined.

West’s shift in approach comes as he attempts to carve his own niche in the changing landscape of oil production after its disastrous purchase of Anadarko for $ 56 billion in 2019, a deal that racked up billions of dollars in debt, slashed its share price, and entangled it in a dead end with activist investor Carl Icahn.

His problems were compounded by the coronavirus-induced drop in oil prices last year, which forced him to heavy depreciation book. The company’s shares have fallen more than 60% since the start of 2019.

Investors have pressured oil producers to eliminate their contribution to climate change by reducing their emissions.

West’s carbon management response contrasts with the approaches taken by many of its rivals. European oil majors such as BP and Shell have signaled a shift towards renewables. Other US producers such as ConocoPhilips remain focused on oil but have pledged to reduce emissions from their own operations to net zero – but not those from burning their oil. ExxonMobil is double on oil production.

“We are definitely all going in [on carbon management]Ms. Hollub said. “This is going to be huge for us.”

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