This Warren Buffett stock has received votes of confidence from its major competitors. Is it a purchase?

At first glance, it reads like a press release put out by the public relations department when there was nothing more to say about the day.

There’s more SLB‘S (SLB 0.75%) However, the plan is to acquire 80% of Aker Carbon Capture, which is more than it appears on the surface. While the $400 million earmarked for the deal will only make a small dent in the oil and gas services giant’s current cash reserves of $7.8 billion, the decision itself quietly speaks volumes about where the energy business is ultimately headed. We’re even more vocal about our fellow oil and gas companies. Occidental Petroleum (Oxy 2.14%)It’s clear that it’s further along the carbon capture path than any other name in the industry.

But first things first.

What exactly is carbon capture?

If you’re not used to it, don’t sweat it. Most people probably don’t. Carbon capture is a relatively young science.

As the name suggests, carbon capture refers to the extraction of carbon dioxide gases that can enter the atmosphere and contribute to global warming. Sometimes this captured CO2 is dumped back into the ground where it does not cause any environmental problems. It can sometimes be utilized to create chemicals, make plastics, and even improve the production of oil and natural gas wells.

There are several ways to capture this carbon dioxide. Some of them are typically implemented right at the source, such as filtering all the material spewing out of a power plant’s smokestack. Another approach is simply to remove it from the surrounding air. They all operate at different levels. But as you can imagine, this technology isn’t cheap. That’s why it’s still relatively uncommon. But costs are coming down.

Enter Aker Carbon Capture. The Norwegian company’s “Just Catch” system can extract 95% of the CO2 found in industrial emissions – up to 400,000 metric tons of carbon dioxide per year – before it is released into the atmosphere.

There are two ways your company can monetize its technology. One of them is to sell Aker’s Just Catch and similar systems outright. Another option would be to allow Aker to extract the CO2 produced by certain facilities and pay the service provider based on the weight of carbon dioxide captured. Both business models are marketable and are becoming increasingly so as the world regulates its path to a zero-carbon future.

With this inevitability on the horizon, SLB (better known as Schlumberger) is now positioning itself to capitalize on a key part of the energy industry’s future.

Occidental’s Piece of the Carbon Capture Pie

great. But what does this have to do with Occidental? It’s simple. The company already has a carbon capture business. In fact, in 2010 it built what was at the time the world’s largest carbon capture facility, but closed that facility to build a much larger and more efficient direct air carbon capture facility in Ector County, Texas. The so-called STRATOS project could capture up to 500,000 metric tons of CO2 per year.

This is not much higher than the annual capture capacity of one of Aker’s largest carbon capture systems. But STRATOS is much more flexible in that it can extract carbon dioxide from the air, regardless of how or where the CO2 came from. This approach still meets the growing legal requirement that companies take responsibility for their carbon emissions by eliminating a significant portion of the carbon dioxide they ultimately produce.

In this context, Amazon, airbus, and several professional sports teams are already registered as future paying customers. When all is said and done, CEO Vicki Hollub believes Occidental could have as many as 1,000 carbon capture customers.

Occidental Petroleum’s potential as a carbon capture services provider grows through its efforts to find ways to do something constructive with this captured carbon dioxide gas. CO2 has been used to improve oil and gas well production since the 1980s. And in partnership with biotechnology company Cemvita, we are exploring using CO2 as a basis for creating industrial chemicals and polymers.

Two clear advantages

Occidental’s advantages for carbon dioxide removal are twofold. First (and most obviously), you can make money with this technology by selling carbon capture systems outright or performing work on behalf of companies that want to leave those duties to qualified professionals.

Because it is still in its infancy, the size and revenue potential of the carbon capture and carbon storage market remain unclear. As far as reasonable guesses go, Global Market Insights suggests that this $7 billion annual business will grow to an estimated $35 billion annual business by 2032. These figures are consistent with forecasts from Spherical Insights and Precedence Research. Environmentally conscious regulatory requirements will drive much of this growth.

Another advantage of Occidental Petroleum is less obvious until it is clearly pointed out. In other words, if the damage that fossil fuels can cause to the environment can be negated, the use of oil and natural gas can continue for the foreseeable future.

And that’s no small problem.

Despite all the efforts being made to create environmentally friendly renewable energy sources, these efforts still only account for a tiny fraction of the world’s total electricity production. The U.S. Energy Information Administration reports that oil still accounts for about a third of total U.S. electricity consumption, with natural gas accounting for another third. Moreover, Standard & Poor’s believes that oil will still be the world’s largest single source of energy by 2050.

The need is already great and still growing, but the world simply cannot afford to continue allowing CO2 from electricity generation to enter the atmosphere.

Buffett already sees the writing on the wall

Considering all of this, it suddenly makes a lot more sense that Warren Buffett has an ongoing interest in energy stocks, particularly Occidental Petroleum.

As Buffett explains Berkshire Hathaway“We particularly like its vast oil and gas reserves in the U.S. and its leadership on carbon capture initiatives,” Berkshire said of its 244 million share position in its most recent annual letter to shareholders. That’s a rather specific comment from someone who tends to focus on the bigger picture rather than the small details. The fact that Buffett pointed to Occidental’s work on the carbon capture front shows how important this technology is. If not now, at least it will happen soon. Underscoring Buffett’s message is the fact that SLB is now increasing its investments in the same areas.

So take a hint. Occidental clearly has something here.