Occidental CEO Vicki Hollub on the Company’s Future as a “Carbon Management Company;” Its Strategy in Direct Air Capture of CO2; Expectations for More Industry Consolidation and Why It Will Be Hard for U.S. Oil Output to Return to pre-Pandemic Highs
Occidental President and CEO Vicki Hollub says that “there has to be a lot more consolidation” among U.S. upstream producers as industry seeks to restore the economies of scale necessary for shale developments in the latest edition CERAWeek Conversations. The market downturn combined with the global pandemic brought the “industry to its knees,” she says, and a renewed focus on full-cycle returns will make it difficult for U.S. oil output to return to its pre-COVID levels.
In a conversation with Daniel Yergin, vice chairman, IHS Markit (NYSE: INFO), Hollub discusses Occidental’s new model for shale projects, public concerns and misconceptions over hydraulic fracturing, the company’s major investments in enhanced oil recovery and direct air capture and how those technological processes are transitioning Occidental towards a future as a “carbon management company.”
The complete video is available at: www.ceraweek.com/conversations
Interview Recorded Wednesday, November 18, 2020
(Edited slightly for brevity only)
On the evolution of Occidental’s integrated carbon strategy and its future as a “carbon management company:”
“We had been in CO2 enhanced oil recovery for about 40 years. We were trying to figure out a way to ensure the sustainability of our enhanced oil recovery using CO2, not only the sustainability, but how do we lower the cost? Ten years ago, we started thinking about trying to move away from organic CO2 for those projects to anthropogenic CO2.
“As we got to the point where we realized that there was no way to cap global warming at two degrees without a significant amount of carbon capture we then realized that there was an opportunity for us to go further with our anthropogenic plan and make it into a business. We saw that there were other industries that need a way to lower their carbon footprint, and without some way to purchase CO2 credits or to partner in a sequestration or a CO2 use project, they can’t otherwise do it. We saw a lot of opportunities to not only become carbon neutral ourselves but to help others do the same thing.
“Where we got the idea of ‘green oil’ was the fact that it takes more CO2 injected into the reservoir than the barrel of oil that is produced from that CO2 emits when burned. The fact that more injected and less burned means that you are either carbon neutral or negative. It depends on the reservoir as to how much CO2 offset difference there is between the injection and the emission.