Spiritus, a company originally built to pull carbon dioxide from the sky and lock it underground, now plans to sell that captured gas to oil drillers instead. The pivot signals a broader scramble across the direct air capture sector as federal support evaporates and corporate buyers retreat.
The Los Alamos, New Mexico startup has signed preliminary agreements with three oil and gas producers operating in the Rockies, Midwest, and Gulf Coast. Under the deals, Spiritus would deliver more than 3 million tons of CO2 annually for enhanced oil recovery, a method that pumps carbon dioxide into depleted wells to force out remaining crude. Chief Executive Charles Cadieu said the arrangement could unlock upwards of 70 million extra barrels of oil.
“There’s no way to get around it. The removal market is challenged right now,” Cadieu said. “The pull is just great in the EOR space.”
The turbulence started last year when the Trump administration scrapped Energy Department funding for roughly half of the 21 direct air capture hubs inherited from the Biden era. Meanwhile, Microsoft slashed its carbon removal purchases by about 80 percent in the first half of this year, redirecting capital toward artificial intelligence spending.
Those shocks forced painful recalculations. Startup Noya shut down completely. CarbonCapture subsidiary True North Carbon moved its first pilot to Canada. In Europe, consolidation followed as policy uncertainty grew. Cadieu declined to name the producers involved or disclose pricing terms, though he said rates would match what oil companies already pay for CO2.
Spiritus expects to launch its first commercial plant within two years at a fossil fuel operator’s site. The company currently runs a pilot facility near Santa Fe but has yet to deliver any removal credits.
Cadieu acknowledged the tension. “I recognize some are going to want to end fossil fuels. We just disagree with that.”
The decision places Spiritus among a growing group of direct air capture firms courting oil revenue. Occidental Petroleum’s 1PointFive, for instance, designed its flagship plant so captured carbon can flow either to permanent storage or enhanced oil recovery. Still, a peer-reviewed study published last year found that pairing direct air capture with oil extraction does not yield carbon-neutral crude.
Scientists project the world must remove several billion tons of CO2 annually by mid-century to meet climate targets. Redirecting removal technology toward fossil fuel production, some researchers warn, extends the very industry driving emissions. Spiritus, for its part, sees commercial survival as the immediate priority.
