No. of Recommendations: 18
Indirectly this is on topic. DAC is OXY's big bet on their future in CO2 capture, storage, and reuse in EOR. So competitive activities impact OXY and thus Berkshire. It's a long post, so fair warning. Skip if this isn't an area of interest for you.
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Darren Woods, CEO of XOM, has recently mentioned more than once in public presentations/interviews that XOM has started a pilot plant in Baytown Texas to test out new technology in this area. I'm an old Exxon hand, and I can attest that this is highly unusual for its CEO to talk about such an event at this extremely early point in a project. My take is that he is wanting to point out that XOM is not only currently investing in CCS (carbon capture and storage) but also in long range technology developments. (Memo: O&G is a very competitive industry. So maybe competing for share of society's minds with OXY and other? I'm grinning.)
He recently spoke on CNN about this subject. Below is a summation of his points - organized again with the help of CoPilot AI. Remarkable technology.
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Current Unaffordability:
Exxon is actively working on technology to remove carbon dioxide emissions directly from the atmosphere. However, the current cost of CO2 removal using this technology is between $600 to $1,000 per ton. At this price point, it is unaffordable at scale for widespread adoption.
Long-Term Potential:
Despite the high costs, Woods believes that direct air capture holds significant long-term potential as a tool to combat climate change. The challenge lies in making the technology more broadly applicable and affordable for society. Exxon has launched a pilot project in Baytown, Texas, to test the feasibility of its proprietary direct air capture process. The goal is to demonstrate the value of the concept and drive further development by reducing costs. He stated the goal of the XOM pilot plant is to reduce current costs by 50% using proprietary technology. If this can be demonstrated, it still will not be sufficient for large scale commercial use. However, it will provide needed evidence to further develop the technology.
Cost Reduction Target:
Woods emphasized that the price needs to come down to somewhere around $100 per ton of carbon captured for the technology to become a viable tool in the fight against climate change Achieving this goal would make direct air capture more accessible and impactful.
In summary, while direct air capture technology faces cost challenges, Exxon Mobil is actively exploring ways to make it more affordable and scalable for global use.
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Woods estimate of the current costs of $600-$1000 per ton of CO2 is from DAC projects currently in operation. In a 2018 paper, the people who developed the process that OXY is now attempting to operate on a commercial scale estimated lower costs. OXY has estimated circa $400 a ton of CO2 for its 500,000 ton/year plant now under construction in West Texas. It further estimates reducing this to circa $120 a ton with future improvements in "n" plants, "n" being unspecified.
Woods was asked about this in the last question at last weeks XOM earnings report. He said that some people are now willing to pay very high prices for CO2 reduction credits but that society cannot afford such prices. He stated XOM's estimate that circa $100 per ton is needed.
As I've posted before, I'm very skeptical that the OXY process can achieve its projected costs. I'm particularly skeptical that it can do so on the time scale (100 commercial plants by 2035) that is OXY's aspiration. I've also admired the skill with which their CEO is mostly using other people's money (customers and the government) until they learn if their DAC process will be commercially successful.
Given XOM's announcements and interviews, I can assure you that far better XOM engineers than myself have examined the OXY process in depth. Yet they press forward on alternate R&D. Draw your own conclusions.
Since this area interests me, I've tried to speculate what technology XOM is trying. They only say that it is proprietary.
However, I found one hint in an employee/retiree overview. It's only shown as a one step process versus the multi-step process OXY is progressing. Some four decades ago, XOM corporate research was developing specialty amines tailored to the selective removal of H2S and/or CO2 from higher concentration streams - e.g. natural gas, plant emissions. Some of these have been commercialized for many years. I also read of new developments in technology for making extremely high surface area substrates - e.g. a sugar cube size particle would have the surface area of a football field. So one guess is that XOM is working on a combination of these technologies.
In any case, OXY's claims of being uniquely positioned in the CCS and DAC arenas doesn't stand up to scrutiny. XOM has stated that it's objectives in carbon reduction extend beyond using only its own technology. It has a huge project development organization, worldwide distribution chains, and multi-customer relationships around the world. If someone else develops breakthrough technology they see themselves as potential good partners in applying such on a commercial basis.
