Big Oil’s Big Bet on Direct Air Capture

Occidental’s Stratos plant enters its final startup phase in Texas, transforming unproven carbon capture into a commercial reality

9 Mar 2026

In the scrublands of Ector County, Texas, a series of giant fans is preparing to perform a trick that has long been better in theory than in practice. Stratos, a facility built by Occidental through its subsidiary 1PointFive, is entering its final startup phase. By the second quarter of 2026, it aims to do what no plant has done at this scale: pull 500,000 tonnes of carbon dioxide directly from the sky each year.

The engineering is straightforward but energy-intensive. Atmospheric air is pulled across a chemical solution that binds with the greenhouse gas. The captured carbon is then injected into deep saline formations underground. For years, direct air capture (DAC) was dismissed as a costly distraction from the harder work of cutting emissions at the source. Yet as the world falls behind its climate targets, the logic of "removal" is becoming harder to ignore.

Occidental is betting that scale will solve the problem of cost. By acquiring Holocene, a startup focused on low-temperature capture, and merging it with existing technology, the firm hopes to find a more efficient way to process the gas. The goal is to move beyond the experimental phase. Success at Stratos would provide the blueprint for a planned "hub" in South Texas and a global fleet of 100 similar plants by 2035.

The market seems ready to buy what Occidental is selling. JPMorganChase has already signed a ten-year deal for 50,000 tonnes of removal credits, while Palo Alto Networks has secured 10,000. These contracts provide the "revenue certainty" that investors crave.

However, the transition from a demonstration project to a replicable infrastructure model remains a steep climb. Relying on carbon removal creates a moral hazard: the risk that firms will continue to burn fossil fuels under the assumption that they can simply vacuum up the mess later. For now, the Texas facility represents a significant test of the American carbon storage framework. If Stratos succeeds, it will prove that DAC is technically possible at scale. Whether it can ever be cheap enough to matter is a question that remains up in the air.