Occidental buys Canadian startup Carbon Engineering for $1.1 billion

Occidental will pay cash for the deal and expect it to close before the end of the year.

The American oil producer has been working with Carbon Engineering for the past four years, using its technology for its Stratos project in West Texas, which is set to become the world's largest direct air capture plant by 2025.

“We expect the acquisition of Carbon Engineering will benefit our shareholders through improved commitment to technology innovation and accelerated cost reduction,” CEO Vicki Hollub said in a statement.

Carbon capture and sequestration, one of the big oil companies' favorite climate solutions, is gaining momentum, after the companies achieved record profits last year and received generous tax breaks for the technology under the Inflation Reduction Act.

Carbon Engineering was founded in Calgary by Harvard University professor David Keith, who pioneered methods for removing large volumes of CO2 directly from the air, allowing it to either be buried underground or used for various industrial purposes. Early investors included Bill Gates, Chevron Corp., BHP Group Ltd., Occidental and several family offices.