By Carrie Haderlie
Wyoming Tribune Eagle
Via- Wyoming News Exchange
CHEYENNE — State senators have thrown their support behind two measures designed to incentivize enhanced oil recovery production in Wyoming.
On Friday, the Senate Minerals, Business and Economic Development Committee approved both Senate File 17, “Carbon dioxide- enhanced oil recovery stimulus,” and Senate File 18, “Enhanced oil recovery-severance tax exemption.”
SF 17 would appropriate $10 million from the Legislative Stabilization Reserve Account (LSRA, also known as the state’s “rainy-day fund”) for the use of carbon dioxide in enhanced oil recovery.
SF 18 would provide a tax exemption for the crude oil and natural gas produced through enhanced oil recovery techniques using Wyoming carbon dioxide.
“(These bills) get at trying to bolster our EOR production in Wyoming, and they each get at it from a different way,” Pete Obermueller, president of the Petroleum Association of Wyoming, told the committee Friday.
SF 17 takes severance tax money earned from the incremental production of enhanced oil recovery and reinvests it as a payment to CO2 owners, not to enhanced oil producers, Obermueller said.
Currently, the federal 45Q tax credit program provides monetary credit for carbon dioxide used in enhanced oil recovery, available to companies that can demonstrate emissions reductions. The idea proposed in SF 17 would be to equalize the 45Q credit so that permanent sequestration and enhanced oil recovery have similar appeal.
“Why do we want to do that? Because the way the federal government has imposed itself on capturing and distribution of CO2 has tipped the scales in favor of permanent sequestration,” Obermueller said. “For Wyoming’s purposes and Wyoming’s enhanced oil recovery producers, we would prefer to level the playing field for CO2 to be sent for enhanced oil recovery.”
Rather than a reinvestment of funds, SF 18 includes a simple 3% severance tax reduction on crude oil and natural gas production resulting from oil and gas produced by means of enhanced oil and gas recovery.
“In either case, the general idea is to try to reduce the price of CO2 in order to stimulate more EOR production in Wyoming,” Obermueller said.
Sen. Chris Rothfuss, D-Laramie, said that SF 17 emerged at the recommendation of the University of Wyoming’s Center for Economic Analysis. Under SF 17, the state would initially go into a deficit, but the return on investment would be 30%.
“It is important to realize we are not spending $10 million, but we are committing $10 million” that will come back to state coffers in about seven years, Rothfuss said, adding that he favors SF 17 over SF 18. He called the latter a “blunt instrument” while the other more appropriately addresses issues facing the industry.
“I am not convinced (SF 18) leads to new projects … in the same way the other does,” Rothfuss said.