September 20, 2012
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.