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Renewed Hope for Carbon Capture, EOR Advances, Multi-State Study Says

A multi-state effort kicked off last year by the governors of Montana and Wyoming makes a case for a stepped up joint federal and state push for more carbon capture and carbon dioxide (CO2)-driven enhanced oil recovery (EOR) throughout the nation's fossil fuel producing regions.

A 14-state effort co-convened last year by Wyoming Gov. Matt Mead and Montana Gov. Steve Bullock identified "several opportunities" to increase the capture of CO2 and use in EOR processes. CO2 capture efforts applied to the EOR process are seen as a key to providing a long-term, low-carbon path to the production of fossil energy resources, according to a report released by Mead and Bullock.

"CO2-EOR is not a new technology, but is a technique that has been utilized for nearly a half-century, and it currently represents approximately 4% of domestic oil production," the report noted. "Industry has decades of commercial carbon capture experience across a myriad industrial sectors. In capturing CO2 from power plants, the first commercial-scale project was started last year in Canada, and two more are slated to begin operation in the United States in the next few months."

Mead used the completion of the report by representatives of 14 states, as well as industry leaders who collaborated on the review, to urge the U.S. Senate to pass the Carbon Capture, Utilization and Storage Act (S 3179) by the end of the year. The bill would improve and expand an existing tax credit for storage of CO2, known as "45Q."

"We have the resources in this country to become truly energy independent," Mead said. "I have advocated for an all-inclusive energy mix and believe that the responsible development of hydrocarbons is critically important. This report makes recommendations that will enhance our nation’s energy and economic security."

The report work group maintains that carbon capture utilization and storage (CCUS) "merits federal and state policy support to accelerate its commercial deployment, as has been done successfully for other energy technologies." As public policy and market conditions drive industry to look for ways to reduce emissions, "CCUS deserves equivalent support as a critical component of a broader, cost-effective portfolio of carbon mitigation options."

Among the proposed federal incentives for CO2-EOR identified in the report are:

  • Deploying a revenue neutral mechanism to stabilize CO2 purchase price; and
  • Options that would provide project proponents better opportunities for project financing.

Mead stressed the bipartisan cooperation underscoring the multi-state group’s recommendations, adding that he and Bullock will continue to work to implement the opportunities identified in the report.

"Over the past year, state officials from across the U.S. have signaled growing support for capturing CO2 from power plants and industrial facilities for use in EOR to increase domestic oil production while reducing overall emissions," the report said. "State officials have also endorsed the need for federal action to provide incentives to accelerate commercial deployment of CCUS."

Mead and Bullock jointly convened the State CO2-EOR Deployment Work Group as a follow-up to the June 2015 Western Governors' Association EOR policy resolution. The group began meeting in September 2015, with state officials joined by leading EOR, electric power, coal industry, regulatory and other experts in an effort to encourage policies that will accelerate deployment of CO2-EOR nationwide.

Fourteen states now participate in the work group: Arkansas, Colorado, Indiana, Kansas, Kentucky, Mississippi, Montana, New Mexico, Ohio, Oklahoma, Pennsylvania, Texas, Utah and Wyoming. Participation varies by state and includes governors’ staff, cabinet secretaries/deputy secretaries, utility commissioners and agency and commission staff.

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