Press Release
September 20, 2012

Contact:  Laura Rehrmann, C2ES, 703-516-0621, rehrmannl@c2es.org
Brad Crabtree, GPI, 701-647-2041, bcrabtree@gpisd.net

NEORI Welcomes Bipartisan Legislation to Encourage American Oil Production Using Carbon Dioxide

The National Enhanced Oil Recovery Initiative (NEORI) welcomed today’s introduction of a bill to stimulate the expansion of enhanced oil recovery using carbon dioxide (CO₂-EOR). CO₂-EOR takes CO₂ captured from power plants and industrial facilities and puts it to productive use yielding additional oil from existing wells, while storing that CO₂ safely underground.  Introduced by Sens. Kent Conrad (D-ND), Mike Enzi (R-WY), and Jay Rockefeller (D-WV), this bill makes important modifications to the existing Section 45Q Tax Credit for Carbon Dioxide Sequestration and is a key step toward expanding CO₂-EOR in the United States.

The bill adopts NEORI’s consensus recommendations to modify the existing 45Q tax credit program, which provides a $10 credit per metric ton for CO₂ stored through EOR operations and a $20 credit per metric ton for CO₂ stored in deep saline formations (see NEORI’s 45Q Recommendations). The bill would make modest, functional improvements to 45Q that result in little or no additional fiscal cost. It would help several significant CO₂-EOR projects nationwide secure private sector financing and move forward to commercial operation in the near term. The 45Q tax credit program is authorized to provide credit for up to 75 million metric tons of CO₂.

NEORI was formed to help realize CO₂-EOR’s full potential as a national energy security, economic, and environmental strategy.  Organized by the Center for Climate and Energy Solutions (C2ES) and the Great Plains Institute (GPI), the Initiative brings together a broad and unusual coalition of industry executives; state officials, legislators and regulators; and environmental and labor representatives (NEORI participant list).

In early 2012, NEORI released its consensus recommendations to boost American oil production and reduce CO₂ emissions through the expanded use of EOR. Sen. Kent Conrad (D-ND) and Rep. Mike Conaway (R-TX) welcomed the group’s recommendations at an event on Capitol Hill. Sens. Max Baucus (D-MT), John Hoeven (R-ND), Richard Lugar (R-IN), and Congressman Rick Berg (R-ND) released statements of support.

Through CO₂-EOR, oil producers inject CO₂ into wells to draw more oil to the surface. CO₂-EOR accounts for 6 percent of current U.S. domestic oil production. It helps sustain production in otherwise declining oil fields, but limited supplies of CO₂ constrain the expansion of EOR. NEORI’s recommendations would encourage the capture of CO₂ from industrial and power facilities for use in EOR. Expanded use of CO₂-EOR also can advance the development of infrastructure needed for the long-term capture, transportation, and storage of CO₂ emissions.

Senator Kent Conrad (D-ND) was joined by Brad Crabtree, Policy Director of the Great Plains Institute, and NEORI participants representing Basin Electric Power Cooperative and C12, to discuss the exciting opportunity that CO₂-EOR represents at an event in North Dakota.

Earlier this year, Senator Conrad and other members of Congress welcomed recommendations from NEORI to make improvements to the existing Section 45Q Tax Credit for Carbon Dioxide Sequestration that would support expanded CO₂-EOR using CO₂ captured from power plants and industrial sources. In early August, Senator Conrad was joined by Senators Enzi (R-WY) and Rockefeller (D-WV) in introducing an amendment on Section 45Q in the Senate Finance Committee.  A press release from Senator Conrad states that the amendment would, “Improve an existing incentive to capture carbon dioxide.  The proposed amendment reflects the recommendations of the NEORI for spurring new enhanced oil recovery projects. “

Crabtree remarked, “CO₂-EOR and the policy recommendations made by the National Enhanced Oil Recovery Initiative offer our nation a win-win-win opportunity to increase domestic oil production, create jobs and spur investment here at home, and address important environmental concerns.”

Crabtree thanked Senator Conrad for his leadership on CO₂-EOR and his recognition of the extraordinary opportunity CO₂-EOR presents to: increase production of American oil; reduce our trade deficit and strengthen our nation’s national security by lessening our dependence on imported oil; create new jobs and increase investment across the country; and reduce CO₂ emissions from a range of industrial sources—all at the same time.

The Great Plains Institute co-convenes NEORI with the Center for Climate and Energy Solutions (C2ES).

To read the full press release from Senator Conrad, please click here.

To learn more about NEORI’s recommendations on the Section 45Q Tax Credit for Carbon Sequestration, please click here.

Brad Crabtree, Policy Director of the Great Plains Institute, a co-convenor of the National Enhanced Oil Recovery Initiative (NEORI) with the Center for Climate and Energy Solutions, is a panelist today at the Coal-Gen 2012 Conference in Louisville, KY.

Crabtree will discuss NEORI and CO₂-EOR as part of a panel discussion titled, “CO₂-Enhanced Oil Recovery: Show Me the Money,” and described as follows:

“Enhanced oil recovery is heavily promoted as the first viable, economic offtake of CO₂ from power generation facilities. This panel session will discuss the many aspects that must converge for this process to become a reality.”

Other panelists include:

• Darrick Eugene, General Counsel, Texas Carbon Capture and Storage Association
• Steven Carpenter, Vice President, Advanced Resources International
• Vanessa Nunez Lopez, Research Scientist Associate, Gulf Coast Carbon Center, Bureau of Economic Geology

Dwight Peters, North American Business Manager of Schlumberger Carbon Services, and Norman Shilling, P.E., Carbon Leader GE Gasification, GE Energy will co-chair the panel.

Click here for the full presentation.

Click here to learn more about the National Enhanced Oil Recovery Initiative.

Richard Garrett, Energy and Legislative Advocate for the Wyoming Outdoor Council and NEORI participant, discussed the Council’s perspective on CO₂-EOR and NEORI as part of a panel at the University of Wyoming Enhanced Oil Recovery Institute’s 6th Annual CO₂ Conference.

Below are two excerpts of Mr. Garrett’s remarks.  Click here for the entirety of the remarks.

“…the National Enhanced Oil Recovery Initiative saw an opportunity. C2ES and the Great Plains Institute brought together a diverse universe of stakeholders including industry leaders, decision-makers, academics, regulators, and yes, even environmentalists. Some examples include Arch Coal, AFL-CIO, Tenaska Energy, state legislators (Texas and Montana for example), General Electric, the Clean Air Task Force, West Virginia Public Service Commission and of course the Wyoming Outdoor Council —and by the way, you can learn more about all of this including our accomplishments to date, white papers, and participants at www.neori.org.

The initiative kicked off in earnest last year about this time with an intense two day meeting in Washington D.C. There, we (about 40 folks), worked through the broad outline of what an initiative might look like and how in a polarized world we could work collaboratively to craft a policy which, if adopted on a national scale, would encourage the further development and deployment of CO₂-EOR.

We identified these objectives:

• Capture CO₂ from industrial sources.
• Ship the CO₂ through an expanded infrastructure.
• Use the CO₂ to recover an otherwise stranded resource in existing brownfields.
• Store —dare I say, sequester—the CO₂ permanently.
• And do all this with the creation of, for a limited time frame, a tax structure that could jump-start the opportunity.”

“The initiative’s participants have met two more times since that first meeting in D.C. and we have had weekly conference calls to continue to craft the policy initiative.

As you might imagine, there have been stumbles along the way, but we are glad to report that we have completed Phase I of the initiative and are now well underway with Phase II where we are at the point where key members of Congress—supporters of the initiative—almost/nearly/maybe/certainly will craft legislation that will support the public/private partnership that the initiative has championed.

Still to be fully fleshed out are 45Q tax issues, something that my fellow panelist Mike Moore referred to and not my realm of expertise but a crucial component for the success of the initiative.

As I close, I want to ask upon everyone here today one thing (much in the same way I embrace the many benefits of energy development). I ask that you embrace the value of our organization’s mission—namely, good stewardship with the goal of offering our children the same gift given to us. To me one of the key components of that will be to trust but verify the key components of the policy initiative, namely:

CO₂-EOR must capture, use and store industrially produced CO₂. I ask you to collaborate with us on these objectives. I pledge our organization’s continued involvement and point to an example of our good faith about which you may, or may not know.”

A Global CCS Institute Community blog post features an in-depth conversation with Eileen Claussen and Judi Greenwald of C2ES (read parts one and two) on the promise of carbon capture, utilization, and storage and CO_2-EOR.  Below is an excerpt:

“This [NEORI's] approach shifts the CCS problem from a largely public cost, into one where the private sector has incentive to invest. How do NEORI’s participants prioritize these benefits?

Eileen Claussen: NEORI’s participants agree that energy security, domestic investment, and environmental protection are important. But different participants would prioritize these goals differently. We all agree on the solution – incentivizing the use of captured CO₂ in enhanced oil recovery – but we don’t necessarily agree on which reasons for doing that are most important. For some, the highest priority is increasing our nation’s energy security by reducing dependence on foreign oil, including oil that is imported from unstable and hostile nations. CO₂-EOR potential in the United States equals 26-61 billion barrels of oil with existing technology. With next-generation techniques, the potential rises to 67 to around 140 billion barrels. Current US proven reserves are estimated to be 20 billion barrels, so we are talking about at least doubling US. oil potential. That’s huge.

For others, the highest priority that CO₂-EOR addresses is creating economic opportunity. If we do this right, it will create jobs, boost tax revenues, and reduce the US trade deficit. We can put dollars we now spend on oil imports to work right here in the US economy.

How much money are we talking about? One estimate, from Advanced Resources International, projects that the reduction in oil imports associated with CO₂-EOR would add up, year by year, to US$600 billion by 2030. (For further details on economic impacts, NEORI: Economic Benefits of CO₂-EOR.)

And for still others, the priority addressed by CO₂-EOR is protecting the environment. Capturing and storing CO₂ from industrial facilities and power plants will reduce US greenhouse gas emissions, while getting more American crude from areas already developed for oil and gas production. By fully developing American reserves that are amenable to this practice, we could reduce CO₂ emissions by 10-19 billion tons, an amount equal to 10-20 years of emissions from personal vehicle use in this country.

And the bonus is that it can help us further the commercial deployment of the CCS industry in this country – not just with coal and natural gas power plants, but with other domestic industries such as natural gas processing, ethanol and ammonia production, and steel and cement manufacturing. Driving innovation in CCS technology will allow us both to take advantage of our nation’s vast fossil fuel resources and achieve much larger CO₂ emission reductions.

I have worked on the climate issue for many years now, and I assure you this is a big deal. Reducing US CO₂ emissions by up to 19 billion tons while also advancing CCS technology would be a major achievement.

Can you put this in context? Relative to the other climate and energy solutions on the table, from renewables, to EVs, to greener buildings, how does CO_2-EOR stack up?

Judi Greenwald: Of the many solutions to our climate and energy challenges we are working on here at C2ES, CO₂-EOR is perhaps the option with the greatest near to mid- term potential, but the one about which policy makers know the least. CO₂-EOR is an important strategy for deploying CCS, which will be needed to keep coal (and natural gas) as part of our electricity generation portfolio while reducing CO₂ emissions across economic sectors. But public and policymaker awareness of the potential of CO₂-EOR is limited, despite its diverse benefits. CO₂-EOR offers the opportunity to enhance national security, decrease foreign trade deficits, and create domestic jobs and economic opportunity. What’s more, tax incentives given for CO₂-EOR are likely to pay for themselves as federal and state governments receive revenues from increased EOR oil production.

What’s the problem with the current federal treatment of CO₂ and how does NEORI propose to change them?

Eileen Claussen: Today, the major hurdle preventing the growth of EOR is there’s not enough readily-available CO₂. And this is why our organization joined with the Great Plains Institute to convene the NEORI.

NEORI’s centerpiece recommendation is a competitively awarded, revenue-positive federal production tax credit for capturing and transporting CO₂ to stimulate CO₂-EOR expansion. This federal tax credit would more than pay for itself because it will lead to additional oil production subject to existing tax treatment (see below a chart forecasting cost of such an incentive, along with the increased tax revenues generated by increased oil output). The new incentive will enable a variety of industry sectors to market new sources of CO₂ to the oil industry, and to reduce their carbon footprints. It will drive innovation and cost reduction in CO₂ capture and compression, and help build out a national CO₂ pipeline system.

For the near term and until the broader credit is in place, NEORI also recommends specific ‘good government’ changes to improve the workability of the existing carbon capture and storage credit known as Section 45Q.

Of course, states also have an important role to play in fostering CO₂-EOR deployment. This is why NEORI identifies existing state policies that should serve as models for policymakers in other states to adopt and tailor to their particular needs. These policies include cost recovery for CCS power projects, long-term off-take agreements for CCS power, severance tax reductions for oil produced by CO₂-EOR, and others.

Blog Post: Submitted by Judi Greenwald | 05/03/2012

I spent the last few days at the eleventh annual Carbon Capture Utilization & Sequestration Conference (CCUS) in Pittsburgh.

The eleventh annual CCUS Conference in Pittsburgh, PA features a discussion on the NEORI recommendations and how the recommendations provide a path forward for carbon capture, utilization, and storage (CCUS).

Judi Greenwald, VP for Technology and Innovation at C2ES, a co-convener of NEORI with GPI, will moderate the panel discussion.  Panelists include:

• Greg Kunkel, Vice President, Environmental Affairs, Tenaska
• Steve Melzer, President, Melzer Consulting
• Kurt Waltzer, Carbon Storage Development Coordinator, Clean Air Task Force
• Doug Scott, Chair, Illinois Commerce Commission

The theme of this year’s CCUS conference is, “Building a Business Case for Carbon Capture, Utilization & Sequestration…Good for the Economy & the Environment.”

For more information on the NEORI recommendations, click here.

For more information on the annual CCUS conference, click here.

The Permian Basin CCUS Center is conducting an interactive forum this week on: “Putting the business elements together for CO₂-EOR using captured carbon.”  Judi Greenwald, Center for Climate and Energy Solutions, a convening organization of NEORI with the Great Plains Institute, is a featured speaker and will discuss how NEORI is further putting the pieces in place for expanded CO₂ capture and EOR.

The 2-day Interactive Forum also features:

• Closely Watched (Gasification) Trains: The Texas Clean Energy Project and CCUS for the Permian Basin, Eric Redman, President, Summit Power Group LLC – a West Texas IGCC plant is being built by Summit – learn what pieces had to come together for this project to happen.
• Producers – those who have the EOR experience and are putting CO₂-EOR projects together today.

For more information about the Permian Basin CCUS Center, please click here: http://www.permianbasinccs.org

February 28, 2012

STATEMENTS OF SUPPORT

Members of Congress welcome the National Enhanced Oil Recovery Initiative’s recommendations

Senator Max Baucus (D-MT)
“I applaud the National Enhanced Oil Recovery Initiative for bringing together such a diverse group of stakeholders and presenting this set of policy recommendations. Enhanced oil recovery is a critical element of our broad, all-of-the-above approach to pursuing energy independence for America. It is also a clear example of American ingenuity that is re-invigorating oil fields. Along with bringing on more domestic oil and reducing carbon emissions, it brings more jobs and economic development to rural areas of our country. From a CO₂ pipeline and injection project under development in the Bell Creek oil field in southeastern Montana to an innovative public-private carbon sequestration project in the Kevin Dome in Toole County, Montana is helping to lead the way. I look forward to working with members of the Initiative to make the existing federal incentives work better to promote a safer, cleaner and more prosperous American economy.”

Senator Kent Conrad (D-ND)
“The Department of Energy has estimated that standard oil recovery techniques leave as much as 80 percent of the original oil in place. As a result, our country has tens of billions of barrels of oil in existing oil fields that, until now, has been out of reach. ” Senator Conrad said.  “Using CO₂ enhanced oil recovery significantly increases the efficiency of oil recovery, resulting in a win-win situation that would increase domestic oil production while reducing our greenhouse gas emissions in a fiscally responsible manner.”

Senator John Hoeven (R-ND)
“Enhanced oil recovery is an important resource to get us to North American energy independence.  As home to one of the world’s only commercial scale carbon sequestration operation, North Dakota is uniquely poised as a leader in energy production.  Expanding all areas of domestic energy production will help lower gas prices and make our country more secure.”

Senator Richard Lugar (R-IN)
“Americans today struggle with high oil prices, and our economy is vulnerable to massive price spikes.  Producing more domestic oil through enhanced oil recovery is a win for fiscal responsibility, a win for energy security, and a win for environmental stewardship. Addiction to foreign oil from unfriendly nations imperils United States’ national security and makes our economy more vulnerable to conflict, terrorist activity, and natural disasters far outside the United States. My Practical Energy Plan would enable 1.8 million barrels of new domestic oil production each day through enhanced oil recovery and earn an estimated $170 billion in federal revenue.  Industries and utilities using Indiana’s coal would be able to sell their emissions, enabling a valuable economic boost in Indiana.  I commend members of the National Enhanced Oil Recovery Initiative for taking up this opportunity and thank them for their recommendations.”

Congressman Rick Berg (R-ND)
“As the need for our nation’s energy independence increases, it’s important that we continue working to find ways to increase domestic oil production.  In North Dakota alone, more than 250 million incremental barrels of oil could be produced from already discovered, currently producing conventional oil fields through carbon dioxide enhanced oil recovery.  Using technology like this to expand our domestic energy production holds great potential to help lower energy costs for consumers as well as breaking our dependence on foreign oil.”

Congressman K. Michael Conaway (R-TX)
“I want to thank all the participants in the National Enhanced Oil Recovery Initiative for their hard work over the past eight months.  This project has yielded many new relationships, some surprising common ground, and a couple of good recommendations for Members of Congress to consider.  I have no doubt that the groundwork NEORI has laid will pay dividends long into the future.

“Finding new ways to access the resources we have already found will continue to be an important piece of our domestic energy strategy for years to come.  EOR is a critical tool that allows us to do just that – it breathes new life into old fields.  Expanding our domestic energy production remains a top priority for me and many of my colleagues.  We all look to a time when our nation will import less oil, create more jobs, and has a growing economy, thanks in part to EOR and increased production of domestic energy.”

State officials welcome the National Enhanced Oil Recovery Initiative’s recommendations

Texas State Representative Myra Crownover, Vice-Chair, Energy Resources Committee (R)
“Increasing domestic energy production is essential to our national interest.  Enhanced oil recovery combined with carbon capture and storage technology is one of the most promising developments for increasing the energy security of the United States.  The work of the National Enhanced Oil Recovery Initiative has been a valuable first step in the conversation regarding this important policy area, and I want to commend all of the members of the Initiative for their hard work.”

Doug Scott, Chairman, Illinois Commerce Commission
“The National Enhanced Oil Recovery Initiative (NEORI) addresses a number of concerns about energy policy, the economy and the environment. In Illinois, we have been exploring a number of carbon capture and sequestration (CCS) projects, such as Future Gen, a CCS demonstration by a major manufacturer, and several power generating facilities with CCS as part of their plans. These kinds of projects are all very expensive, and enhanced oil recovery (EOR) could provide economic incentives that would benefit them. Illinois is a major coal producer and coal user. Understanding how EOR works can help us to understand what role coal-fired generation can have in our state going forward.

“If successfully implemented on a larger scale, EOR would help reduce our dependence on foreign sources of oil, thereby strengthening our opportunity for energy independence. EOR can provide good-paying power- and manufacturing-sector jobs in this country and more tax revenue to governments. From an environmental perspective, EOR not only captures and reduces CO₂ emissions, but it also more fully utilizes already-developed oil and gas fields.

“I have found that collaborative policy initiatives, involving many states, the federal government, the private sector and the non-governmental organizations can help to provide solutions to complex issues. The NEORI is just such a collaborative. I look forward to working with other states, to share best practices, and to work with NEORI and federal policy makers to insure that EOR policies make sense for the private sector, the states and the federal government. Having a federal policy will help to advance EOR technology to provide benefits in many areas.”

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About C2ES
The Center for Climate and Energy Solutions (C2ES) is an independent non-profit, non-partisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in November 2011, C2ES is the successor to the Pew Center on Global Climate Change, long recognized in the United States and abroad as an influential and pragmatic voice on climate issues. C2ES is led by Eileen Claussen, who previously led the Pew Center and is the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

About the Great Plains Institute
The Great Plains Institute is a non-partisan, non-profit organization dedicated to transforming how we produce, distribute, and consume energy to be both environmentally and economically sustainable. Through research and analysis, consensus policy development, and technology acceleration, we are helping to advance clean, efficient and secure energy. Our collaborative efforts with public and private leaders focus on energy efficiency, renewable and low-carbon electricity and fuels, enhanced oil recovery, energy storage, smart grid and transmission.