Delaware Basin gas plants will feed captured CO₂ to Occidental's Permian oil fields

Occidental CO2 offtake agreements announced in Houston on November 9, 2026, would send carbon dioxide captured at Delaware Basin gas processing plants to its Permian oil fields. Two unnamed developers would build the capture and pipelines, with first deliveries expected in 2029 if the projects reach a final investment decision.

Key points

• Occidental says it has signed long-term agreements with two companies to buy CO₂ captured at third-party natural gas processing plants in the Delaware Basin.
• The two projects together are expected to deliver about 2 million metric tons of CO₂ a year, which Occidental says could grow to 4 million.
• The developers, not Occidental, would pay for and build the capture equipment and close to 100 miles of new CO₂ pipeline tied into the existing Permian network.
• Neither project has reached a final investment decision, and Occidental expects the first shipments in 2029.
• The release does not name the developers, the gas plants, the contract length or the price Occidental will pay for the CO₂.

What do the Occidental CO2 offtake agreements cover?

Occidental agreed to be the buyer for CO₂ that two other companies plan to capture and deliver. According to the company, the gas would come from both existing and new processing plants in the Delaware Basin and be injected into Occidental's enhanced oil recovery (EOR) fields. The developers carry the construction: capture units at the plants and nearly 100 miles of pipe connecting to the CO₂ network that already serves the Permian. Occidental says the lines are being sized with spare room so other gas plants and industrial emitters can join later, and that it is talking to further outside CO₂ sources.

Deal term	What the release says
Buyer	Occidental, for its Permian EOR operations
Sellers	Two developers, not named
CO₂ source	Existing and new gas processing plants in the Delaware Basin
Volume	About 2 million metric tons a year, possibly up to 4 million
New pipeline	Nearly 100 miles, funded and built by the developers
First delivery	Anticipated in 2029, subject to final investment decisions
Contract length and price	Not disclosed

"Securing reliable, long-term sources of CO₂ supports Occidental’s advanced recovery strategy to extend the productive life of existing fields and enhance recovery across our conventional and unconventional resource base,"

— Vishal Gupta, President and General Manager, EOR Ventures, Occidental

How large is Occidental's Permian CO₂ flooding business?

Large enough that new supply matters: Occidental's annual report for 2025 says its Permian EOR unit runs 34 active CO₂ floods on 1.4 million net acres and produced from about 11,900 gross wells that year. The same filing says the company has more than 50 years of CO₂ flooding experience, that flooding can lift a reservoir's ultimate oil recovery by 10% to 25%, and that it has an inventory of future CO₂ projects it could develop over the next 20 years. It lists CO₂ fields and pipeline systems in Texas, New Mexico and Colorado with 2.8 Bcf/d of capacity. Those are the company's own figures, filed with the SEC.

Where does CO2 for Permian enhanced oil recovery come from?

Historically, mostly from naturally occurring underground CO₂ reservoirs, which is what makes captured gas-plant CO₂ a change of supply. The U.S. Department of Energy says CO₂ injection was first tried in 1972 in Scurry County, Texas, has been used throughout the Permian Basin since, and that until recently most CO₂ for EOR came from naturally occurring reservoirs, with industrial sources such as natural gas processing now being developed. The same DOE page puts the stakes in numbers: primary recovery typically yields about 10 percent of a reservoir's original oil, water or gas injection brings that to 20 to 40 percent, and tertiary methods such as CO₂ flooding offer 30 to 60 percent or more. For background on capture itself, see our roundup of technologies reducing the impact of fossil fuels.

How does 45Q apply to enhanced oil recovery?

The federal 45Q credit pays per metric ton of captured carbon oxide, including CO₂ injected in an EOR project, which is why Vishal Gupta, who leads Occidental's EOR Ventures, calls it "an important support for these investments." Under the current text of 26 U.S.C. 45Q, the base amount for tax years beginning in 2025 and 2026 is $17 a ton, five times that ($85) for projects meeting the law's prevailing-wage and apprenticeship rules, and inflation-adjusted after 2026. Credits run for 12 years from when capture equipment enters service, and a facility qualifies only if construction begins before January 1, 2033. The release does not say which party will claim the credit. Policy shifts of this kind are a recurring theme in our experts' views on regulation and energy innovation.

What does this mean for Permian operators?

Our analysis: the deal is a supply contract, not yet a project, and its economics rest on a line in the tax code. The credit pays only for carbon dioxide captured from an industrial source that would otherwise reach the atmosphere (26 U.S.C. 45Q(c)), so CO₂ produced from natural underground reservoirs, the Permian's traditional supply, earns nothing, while CO₂ captured at a gas plant can. That gives the developers a credit stream to set against the cost of capture and pipe, and gives Occidental new supply it does not have to build. Timing matters too: a facility qualifies only if its construction begins before January 1, 2033, so the investment decisions the release says are still pending run against that date. Nothing ships before 2029, and the release lists permits and investment decisions among its risks. Operators weighing their own CO₂ flood plans should watch for the developers' names, the decision dates and on what terms other gas plants and emitters could connect to the new lines.

Frequently asked questions

Who are Occidental's CO2 offtake partners?

The release does not name them. It says only that two separate project developers will fund and build the capture and transport infrastructure.

How much CO2 will the Delaware Basin projects supply?

Occidental expects about 2 million metric tons a year combined, with the potential to grow to 4 million metric tons a year.

When will the CO2 start flowing?

Occidental anticipates initial shipments in 2029, and both projects are still subject to final investment decisions.

What will the CO2 be used for?

Occidental says it will inject the CO₂ in its enhanced oil recovery operations in the Permian Basin to extend the life of existing fields.

What is the 45Q credit?

It is a federal tax credit per metric ton of captured carbon oxide that is stored underground or used in enhanced oil recovery, set out in 26 U.S.C. 45Q.

Sources

• Occidental's announcement of its CO₂ offtake agreements: press release from Occidental via GlobeNewswire, 9 November 2026.
• 26 U.S. Code § 45Q, Credit for carbon oxide sequestration: the federal statute, from Cornell Law School's Legal Information Institute.
• Enhanced Oil Recovery: U.S. Department of Energy, Office of Fossil Energy and Carbon Management.
• Occidental annual report on Form 10-K for 2025: filed with the U.S. Securities and Exchange Commission, 18 February 2026.
• Occidental: the company's website.