Enhanced Oil Recovery Plan Draws Bipartisan Welcome in Congress
Consensus Recommendations from Industry, State and Nonprofit Leaders Benefit
Economy, Energy Security, and Environment
WASHINGTON, D.C. – A coalition of industry, state, environmental and labor leaders called today for federal and state incentives to stimulate the expansion of enhanced oil recovery using carbon dioxide (CO2) from power plants and industrial facilities. The proposed measures would boost domestic U.S. oil production while reducing the nation’s CO2 emissions.
The recommendations by the National Enhanced Oil Recovery Initiative (NEORI), convened by the Great Plains Institute (GPI) and the Center for Climate and Energy Solutions (C2ES), were released at an event on Capitol Hill.
Senator Kent Conrad (D-ND) and Congressman Mike Conaway (R-TX) were on hand to welcome the recommendations, and Senator Max Baucus (D-MT), Senator John Hoeven (R-ND), Senator Richard Lugar (R-IN), and Congressman Rick Berg (R-ND) offered written statements in support of the initiative.
In CO2-enhanced oil recovery (EOR), oil producers inject CO2 into wells to draw more oil to the surface. The practice, 6 percent of current U.S. domestic oil production, 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.
The centerpiece of the group’s recommendations is a proposed federal tax incentive focused on companies that capture and transport CO2, not oil companies. NEORI estimates that the tax credit would quadruple U.S. oil production from EOR, to 400 million barrels a year, while reducing CO2 emissions by 4 billion tons over the next 40 years. The U.S. Treasury Department would administer the competitively awarded tax credit.
NEORI calculates that the program would pay for itself within 10 years through increased federal revenues generated by boosting domestic oil production, with an estimated net return of $100 billion over 40 years. The incentive would reduce the trade deficit by saving the United States about $610 billion in expenditures on imported oil over the same period.
As an immediate measure, NEORI recommends that Congress or the Treasury Department modify the existing Section 45Q Tax Credit for Carbon Dioxide Sequestration to provide a more workable incentive to firms to capture and transport CO2.
At the state level, NEORI identified a range of existing state policies encouraging commercial deployment of CO2 capture technologies and projects and recommends that other states tailor and adopt them. The model state policies include tax credits, exemptions or abatements, and the inclusion of carbon capture-and-storage in electricity portfolio standards, among others.
“The EOR Initiative’s recommendations strike common ground among a diverse collection of interests and offer a realistic opportunity to increase U.S. oil supplies while reducing carbon emissions,” said C2ES President Eileen Claussen. “The proposal reflects practical solutions that deliver a win for our nation’s economic growth, energy security, and the climate.”
“Implementing these recommendations for EOR can create a virtuous circle of increasing benefits to our nation over time,” said Brad Crabtree, policy director for GPI. “Congress and state policymakers can expand American oil production, spur jobs, increase revenues, reduce the trade deficit and store significant CO2, all with incentives that pay for themselves.”
In total, an estimated 26 billion to 61 billion barrels of economically recoverable oil could be produced in the United States using currently available CO2-EOR technologies and practices, or potentially more than twice the country’s proved reserves. Expanded use of CO2-EOR also can advance the development of infrastructure needed for long-term capture, transportation and storage of carbon emissions.
NEORI participants include state officials from Illinois, Indiana, Michigan, Montana, New Mexico, Texas, West Virginia and representatives of:
- Air Products, Inc.
- Arch Coal, Inc.
- Archer Daniels Midland Co.
- Basin Electric Power Cooperative
- Clean Air Task Force
- Enhanced Oil Recovery Institute, University of Wyoming
- GE Energy
- Natural Resources Defense Council
- Ohio Environmental Council
- Southern Company
- Summit Power
- Tenaska Energy
- United Transportation Union
- Wyoming Outdoor Council
- Chaparral Energy LLC
- Core Energy, LLC
- Interstate Oil and Gas Compact Commission
- North American Carbon Capture and Storage Association
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.