Mike Avery: Hi, Paul. This is Mike Avery here. So I’ll give an update on the sales process and progress that we’ve made for STRATOS. And so, what we’re getting here is a lot of momentum building in the market with a strong sort of pipeline of buyers that are growing now. We attribute this to the market beginning to realize the importance of how Direct Air Capture is going to fit within their portfolios. I think there’s also a growing recognition that direct air capture is not sitting out in the future. It’s a technology that’s ready to go now at commercial scales, and that it’s actually more affordable than people think when placed next to some of the other alternatives out there. I think the market’s also been moving toward these higher integrity solutions as the carbon markets have been maturing.
And so, to date, we’ve announced deals with Airbus, Amazon, ANA, TD Bank, Next Gen, the Houston Astros and the Texans. There’s a range of terms on the CDR sales, they range from 1 year to 10 years. They are fixed price agreements. And so, if we look at the deals that we’ve announced to date and we couple that together with the mature negotiations where we have got price volume and term agreed, STRATOS net capacity is sold out about 65% to 70% to 2030. And then there’s a strong pipeline behind that, of earlier stage negotiations that’s also growing. That takes us up to about 85% net capacity sold out to 2030.
Operator: Our next question will come from Douglas Leggate with Bank of America.
Douglas Leggate: Vicki, I wonder if I could ask you about the business plan or the strategy for DAC going forward. Clearly, you’ve given up some working interest now, which I think you’d signaled before. But I think, I don’t want to misquote Richard here, but I think you said our first partner in STRATOS. Where do you see your working interest? How do you see it in DAC 2? And where does license revenue fit into the capital efficiency of the DAC strategy? And I’ve got a follow-up, please.
Vicki Hollub: Well, we have a lot of confidence in this technology and a lot of confidence that it fits very well with our strategy on a go forward basis. Not only are we going to benefit from the sale of carbon reduction credits as a part of this technology and our strategy. Ultimately, we also while we’re continuing to provide sequestration and saline reservoirs for our customers. We also want to provide CO2 as a product to customers to convert to sustainable aviation fluids. So that’s another part of the revenue, potential revenue stream. Then the other thing that we want to do with the CO2 that we extract out of the air is use it in our enhanced oil recovery reservoirs because that’s the truest form of emission free on a net basis, oil that can then deliver the fuels that maritime and aviation need.
Sustainable aviation fluids, as Richard said, is a necessary thing that we have to develop. The world needs it, and we’re going to support developing it, of providing products and then potentially doing it through one of our investments that we made. So that’s important, but it’s really the thing that’s going to change the whole cost curve for the climate transition is for people to ultimately understand that you can use CO2 to generate net zero oil. And the way that happens is you inject more CO2 into the reservoir than the incremental oil created or produced by that, CO2 will emit when used. That’s critically important because that generates a net zero oil that then can be converted into jet fuel and maritime fuels. The thing that’s so important about that is not only is it emission negative or, on a net basis or, emission, equal.
What it does is that it, in and of itself is a lower impact also on the supply chain perspective, because you’re getting more oil out of reservoirs that exist today, so you’re using existing infrastructure, which also reduces the emissions that are associated with the upstream part of the supply chain. Then the other part of that is that, in using existing infrastructure, that’s a lower cost. So, what the world needs. To use the highest intensity fuel at the lowest cost and the lowest emission level is the way that the world ultimately will need to solve this climate transition. Otherwise, the world cannot afford to cap global warming at 1.5 or 2 degrees. So this is very much needed. And when you look at all of those options, the revenue streams that we will be bringing into our business will come from all of those options.
So having partners in the beginning is critically important for us to move further down the road faster to get this technology to a point where we are comfortable that not only we could build it, but we could license the building to others as well. And then once we get to that point, then we’re these, instead of, expecting to build a 100 of these, then we can start to get into the 100s of them and essentially the 1000s that are going to be needed to be built, but we would benefit from all of that. And it’s you know — sometimes we get to — we get criticized for the fact that we’re building a business. But without making this commercial, it’s not sustainable. And if it’s not sustainable, then the world has no other better solution. And again, the world cannot afford the plans as they’ve been laid out by the UN and others right now.
And so we think we have the best solution to move forward, the best kind of business model to make it happen. And, it’ll create significant value for our shareholders. We’re just going to build the partnerships, to make this happen at a pace that’s much faster than what we could do just ourselves.
