On March 22, SK Trading International (SKTI) announced an agreement with Occidental (OXY) for the first net-zero oil created by combining crude oil together with environmental attributes generated from the sequestration of atmospheric carbon dioxide (CO2) captured via 1PointFive’s planned large-scale Direct Air Capture (DAC) facility and sequestered in OXY’s enhanced oil recovery (EOR) reservoirs in the U.S. Permian Basin.
SKTI expects to convert the net-zero oil into net-zero products. This is one step both companies are taking together in furtherance of their net-zero ambitions and commitments to address climate change.
The term “net-zero oil” indicates crude oil combined together with environmental attributes generated through the removal and sequestration of atmospheric CO2 through an EOR process in an amount equivalent to the CO2 associated with the production, delivery and refining of the crude oil and the use of the resulting product.
Under the agreement, OXY may provide SKTI with an opportunity to purchase up to 200,000 barrels of net-zero oil per year for five years. To produce the environmental attributes that are utilized for the net-zero oil for this agreement, OXY plans to inject approximately 100,000 tonnes of captured atmospheric CO2 volumes per year, which is equal to the expected CO2 emissions from the entire crude oil lifecycle, including extraction, transportation, storage, shipping, refining, subsequent use, and combustion.
Net-zero oil, which is compatible with existing refinery infrastructure, can help hard-to-abate industries advance their net-zero commitments by providing an affordable, scalable fuel option that does not contribute to additional atmospheric CO2.
1PointFive’s first DAC facility, which is expected to be online in late 2024 and also will include pure sequestration, is in the process of being deployed using Carbon Engineering’s industrial-scale DAC solution.
The facility will extract atmospheric CO2 and permanently store it deep underground in geologic formations delivering permanent and verifiable carbon dioxide removal.
SKTI, along with SK Innovation, has declared its 2050 Net Zero Journey and is actively developing its action plans to become net zero and even accomplish it earlier than planned.
Under its “Carbon to Green” strategy, the company is transforming its overall portfolio with an emphasis on low-carbon business, and is also pursuing measures to manage Scope 3 carbon emission intensity.
The introduction of net-zero oil is well aligned with the company’s net-zero commitments and is expected to not only tackle climate change but also accelerate the company’s sustainable growth.
“We are pleased to be a part of the world’s first carbon emission reduction initiative that is underpinned by processing net-zero oil on a life-cycle analysis basis. We are also thrilled to team up with OXY, one of the most respected energy companies in the world,” said Suh Sokwon, CEO of SKTI and President of SK Energy R&S CIC.
He added, “In the midst of energy transition, one of the biggest changes in our time, the sustainable business ecosystem built around net-zero oil and low carbon products will contribute to Global Net Zero efforts in a new way.”
“Net-zero oil is an important component of the energy transition and provides a critical bridge as society moves to a net-zero economy. As OXY advances our pathway to Net Zero, we are excited to partner with SKTI and leverage our licensed direct air capture technology and EOR experience to create a new solution for the transportation sector,” said Richard Jackson, President, U.S. Onshore Resources and Carbon Management, Operations, OXY.
