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LETTER: Governors support use of enhanced oil recovery

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November 30, 2016

Honorable Paul Ryan
Speaker of the House
U.S. House of Representatives
H-232 U.S. Capitol
Washington, D.C. 20515

Honorable Mitch McConnell
Majority Leader
U.S. Senate
S-230 U.S. Capitol
Washington, D.C. 20510

Honorable Nancy Pelosi
Minority Leader
U.S. House of Representatives
H-204 U.S. Capitol
Washington, D.C. 20515

Honorable Harry Reid
Minority Leader
U.S. Senate
S-221 U.S. Capitol
Washington, D.C. 20510

Dear Senators McConnell and Reid, and Representatives Ryan and Pelosi:

Western Governors support the responsible use of enhanced oil recovery (EOR) using carbon dioxide (CO2) and appreciate efforts to develop federal policy aimed at spurring deployment of this technology. Language contained in the bipartisan Carbon Capture Utilization and Storage Act (S. 3179) would help increase the use of EOR technology by extending and expanding the availability and increasing the value and financial certainty of the Carbon Dioxide Sequestration Credit, created by section 45Q of the Internal Revenue Code of 1986. Governors understand that tax treatment of carbon capture and sequestration projects is unlikely to receive consideration as stand-alone legislation during the final weeks of this Congress. They request, however, that S. 3179 be considered as a potential amendment to any appropriate legislation subject to adoption by Congress.

Given the importance of EOR to western states, the Governors enacted Western Governors’ Association (WGA) Policy Resolution 2015-06, Enhanced Oil Recovery, in June of 2015. This resolution (attached for your reference) reads in part:

In recognition of the environmental and economic benefits of EOR, Western Governors support policies and incentives that advance investment in EOR projects, infrastructure, technology, and research.

Further, in order to expand deployment of CO2 capture at power plants and other industrial sources, the President and Congress should enact federal incentives to increase CO2 supply available for the oil industry to purchase and use in EOR. Federal incentives have the potential to leverage private and state investment, harness the ingenuity of entrepreneurs and capitalize on billions of dollars’ worth of DOE sponsored research and development to enable new commercial carbon capture and pipeline projects.

The use of CO2 for EOR was pioneered in the United States in the 1970s. Since that time, this technology has proven to be a safe and effective way to increase domestic oil production while sequestering millions of tons of CO2. Many western states have demonstrated their commitment to CO2-EOR by proactively addressing then-existing regulatory barriers, establishing tax incentives, and providing financial assistance.

Western states look forward to helping provide for the energy needs of the United States through the continued efficient and responsible development of our natural resources. Western Governors stand behind federal policies – including S. 3179 – that enable development of new commercial carbon capture and pipeline projects in a cost-effective manner.

Sincerely,

James D. Ogsbury
Executive Director

cc: Honorable Heidi Heitkamp, U.S. Senate