Occidental Petroleum Corp. (Oxy) and White Energy are evaluating the economic feasibility of a carbon capture project in West Texas that could help Oxy produce more Permian Basin oil.

The companies, which announced the proposal on Tuesday, said they plan to conduct an engineering study to consider the feasibility for carbon capture, utilization and storage projects at White’s ethanol facilities in Hereford and Plainview. The carbon dioxide (CO2) produced could be transported to the Permian for use in Oxy’s ongoing enhanced oil recovery (EOR) operations.

Early last year, the U.S. Environmental Protection Agency approved Oxy’s second monitoring, reporting and verification plan to inject and store CO2 in the basin.

During the next six months the joint engineering study would break down the costs of building a carbon capture plant. If the partners sanction the projects, construction could be completed by 2021.

The economics of the proposed project are said to be boosted by federal and state credits, including the bipartisan bill signed into law earlier this year, the Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions Act, aka the FUTURE Act. It amended the Internal Revenue Code “to improve, expand, and extend the credit for carbon dioxide sequestration.”

Oxy CEO Vicki Hollub said the proposed White project is “a critical first step in cross-industry collaboration to make these efforts economic, practicable and scalable.” White CEO Greg Thompson said his company, which also has facilities in Kansas, is committed to advancing more renewable fuels, and “this project would enable us to capture the CO2 produced at our plants and redeploy it in an environmentally responsible way.”

Separately on Tuesday, governors from six states formed a partnership to support the development and deployment of more carbon capture. The effort, led by Govs. Matt Mead of Wyoming and Steve Bullock of Montana, also includes the governors from Kansas, Louisiana, Oklahoma and Utah.

The state partnership was formally launched at the CO2NNECT 2018 conference in Jackson Hole, WY, and would be coordinated and staffed by a working group on carbon capture involving 15 states to review and propose federal and state policies.

Initial funding is to come from a series of grants including from the MacArthur, Hewlett and Energy foundations, the Spitzer Charitable Trust and private sector donors.

“There is tremendous promise in the work taking place with CO2,” Mead said. “I am eager to continue to learn and support innovative ideas with my colleagues around the United States.” There is a lot of “untapped potential” and more to be done.