The Department of Energy estimates that standard oil production techniques leave as much as 80 percent of the original oil in place.
Basin Electric Power Cooperative
- August 23, 2012
|Curtis Jabs (left), Basin Electric senior legislative
representative, and U.S. Sen. Kent Conrad.
U.S. Sen. Kent Conrad (D-ND) met with energy industry leaders from across North Dakota Aug. 22 at Roughrider Electric Cooperative headquarters in Dickinson, ND, to discuss carbon capture concepts that could put billions of barrels of oil on the market.
The group discussed the potential of using carbon dioxide (CO2) produced from industrial sources to increase the amount of economically recoverable oil in the United States. Conrad also spoke of newly proposed legislation to encourage that development.
The Department of Energy estimates that standard oil production techniques leave as much as 80 percent of the original oil in place. Employing CO2 in enhanced oil recovery (EOR) could lead to a potential 67 billion barrels of economically recoverable oil – an increase of 45 billion barrels from the 22 billion barrels of current U.S. proven oil reserves, according to the National Energy Technology Lab.
Conrad rolled out new legislation in early August to encourage employment of CO2 in EOR. The legislation was co-sponsored by U.S. Sen. Mike Enzi (R-WY) and U.S. Sen. Jay Rockefeller (R-WV).
According to Curtis Jabs, Basin Electric senior legislative representative, the legislation aims to amend and address shortfalls in a tax incentive, IRC 45Q, which was passed in 2008. The intent of the tax incentive was to provide a tax credit for CO2 capture and storage in either EOR or geological formations.
The rule and guidance developed by the U.S. Treasury Department was so onerous, however, that no taxpayer has been able to take advantage of the credit, Jabs said.
To develop changes that would help make 45Q more useful to the energy industry, the Great Plains Institute and the Center for Climate and Energy Solutions cofounded the National Enhanced Oil Recovery Initiative (NEORI), a working group of almost 30 energy industry members, state regulators and environmental group members.
The new legislation, which reflects recommendations of the NEORI, proposed changes to 45Q that include an incentive of $10 per ton of CO2 for EOR and $20 per ton for geological storage, Jabs said. Basin Electric was part of the NEORI group and advocated for the tax credit to be transferable to the taxpayer who did the secure storage of the CO2. The transferability language was accepted as part of the revisions.
Jabs spoke with Conrad at the Aug. 22 meeting in Dickinson.
“I thanked Senator Conrad for his work on revising 45Q, his leadership and for standing with us on coal, domestic oil production, EOR, being a leader on the farm bill, a fiscal hawk who worked on a bi-partisan basis to try and come up with solutions to the national debt and fiscal problem, and his support of cooperatives,” Jabs said.