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Wyoming Senate approves $10 million enhanced oil recovery stimulus
Wyoming Senate approves $10 million enhanced oil recovery stimulus

Yahoo

time30-01-2025

  • Business
  • Yahoo

Wyoming Senate approves $10 million enhanced oil recovery stimulus

CHEYENNE — The state Senate has approved a $10 million stimulus program for enhanced oil recovery projects in Wyoming. The measure will move on to the House of Representatives for debate in the second chamber. Sen. Chris Rothfuss, D-Laramie, explained on Monday that Senate File 17, 'Carbon dioxide-enhanced oil recovery stimulus,' would mitigate a federal bias in the market toward permanent sequestration of carbon dioxide, or CO2, over use in an enhanced oil project. A current federal tax credit commonly called '45Q,' referring to carbon sequestration, is structured to favor permanent storage over enhanced oil projects, Rothfuss said. SF 17 aims to balance the playing field in Wyoming, he said. Sen. Chris Rothfuss, D-Laramie, on Senate floor Sen. Chris Rothfuss, D-Laramie, speaks during the morning session of the 68th Wyoming Legislature on Tuesday in the Senate chamber. Carbon capture and sequestration technologies are 'intended to reduce CO2 emissions from fossil fuel-fired power plants, as well as other large industrial sources,' according to the federal Congressional Research Service. The federal 45Q tax credit for carbon sequestration is designed to incentivize investment in carbon capture and sequestration. 'There is an $85 (credit) for a ton of CO2 that is captured and sequestered in permanent geological sequestration. There is $60 of 45Q credit available if it is used for enhanced oil recovery,' Rothfuss said. That market bias is important, he continued, because 'we in the state of Wyoming want that CO2 to be available for use in enhanced oil recovery.' According to the U.S. Department of Energy, enhanced oil recovery is the practice of extracting oil from a well that has already gone through the primary and secondary stages of oil recovery. It can include a variety of methods, including gas injection, which involves injecting carbon dioxide, nitrogen or natural gas to push oil to a production well. 'That leads to tremendous yield in oil production for the state of Wyoming, but with the federal market bias in place, the market would push (owners) to permanent sequestration, and raise the price in such a way that it precludes enhanced oil recovery,' Rothfuss said. SF 17 would appropriate $10 million from the Legislative Stabilization Reserve Account (LSRA, also known as the state's 'rainy-day fund') to equalize that 45Q tax credit for the use of carbon dioxide in enhanced oil recovery in Wyoming. SF 17 would take severance tax money earned from the incremental production of enhanced oil recovery and reinvest it as a payment to CO2 owners, not to enhanced oil producers. Sen. Jim Anderson, R-Casper, said that there are 75 operational oil fields in operation that could benefit from the stimulus created by SF 17. Sen. Bill Landen, R-Casper, pointed out that the stimulus provided under SF 17 would be more like a loan than a grant, as the state's coffers will be paid back additional severance tax dollars following enhanced oil production. 'I don't think the average public out there realizes this is a loan program,' Landen said. Sen. Ed Cooper, R-Ten Sleep, agreed, saying that one field in Wyoming went from producing 17 barrels a day to 7,000 barrels a day using enhanced oil recovery. Sen. Ed Cooper, R-Ten Sleep (2025) Sen. Ed Cooper, R-Ten Sleep 'That 7,000 barrels a day is generating $10.5 million a year for the state of Wyoming in severance tax,' Cooper said, adding that though that project would be exempt from the stimulus, future enhanced oil projects would benefit. 'Those kinds of success stories are out there,' Cooper said. 'The return is not fast, but it is massive when it gets here. This is looking past next week. This is looking well into the future, and what it will do for the state of Wyoming into the next 20, 30 years.' A second-reading amendment brought by Sen. Brian Boner, R-Douglas, stipulates that if the federal government makes changes to the 45Q tax credit, the state will not have to make up the difference at $15 per ton of CO2, and could adjust down accordingly. On Monday, the Senate voted down Senate File 18, 'Enhanced oil recovery-severance tax exemption,' which, rather than a stimulus that will be paid back, would have offered a 50% reduction in severance taxes on enhanced oil production. The Senate Minerals, Business & Economic Development Committee never intended for both bills to pass, Rothfuss said, adding that he favored SF 17 over SF 18.

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