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Louisiana and Texas Lay the Groundwork for Enhanced Oil Recovery Through Carbon Sequestration: A Possible Win-Win for Energy and the Environment
Boyd A. Bryan and Michael A. Chernekoff
Jones Walker Environmental & Toxic Torts E*Lert
April 28, 2009

Carbon dioxide injection has been used as a method of increasing the recovery of oil in depleted or high viscosity fields for more than 40 years. In general terms, carbon dioxide is flooded into an oil field through a number of injection wells drilled around a producing well and the carbon dioxide and oil mix to form a liquid that more easily flows to the production well. Reports indicate that state-of-the-art enhanced oil recovery ("EOR") could significantly increase the recoverable oil resources of the U.S. According to a 2006 report by the U.S. Department of Energy ("DOE"), National Energy Technology Laboratory, 89 billion barrels of oil or more could eventually be added to the then-proven U.S. reserves of 21.4 billion barrels.
 
Carbon dioxide, of course, is a greenhouse gas that is believed to contribute to climate change. Companies are looking for methods to capture and sequester carbon dioxide rather than emit it to the atmosphere. Only recently has the potential for carbon dioxide EOR as a method of carbon sequestration been realized and investigated. The geological structures that originally contained the oil and natural gas could also permanently contain the injected carbon dioxide, as long as the integrity of the structures is maintained. And considering the widespread distribution of depleted and operating oil and gas fields, it is likely that a field is located near a carbon dioxide source.

Most carbon dioxide that is used for EOR, however, is extracted from naturally-occurring deposits; only approximately 25% is anthropogenic, i.e. produced by human activities such as oil refining or fertilizer manufacturing. Use of anthropogenic carbon dioxide for EOR has many potential advantages. As stated, it could significantly increase oil production from otherwise depleted fields and thereby help decrease the U.S.'s dependence on foreign oil. At the same time, it could benefit the environment by providing for the permanent underground storage of carbon dioxide that would otherwise be emitted to the atmosphere. And it could also create valuable carbon offsets in the emerging greenhouse gas markets.

These advantages are not lost on state legislatures. Louisiana and Texas are both laying the regulatory groundwork for the injection and underground storage of carbon dioxide to reduce carbon dioxide emissions and also as a method of EOR.

Louisiana. In 2008, the Louisiana legislature amended state law to authorize the injection, storage, and withdrawal of carbon dioxide in and from underground reservoirs and salt domes (La. R.S. 30:22-23), and to authorize the state to lease state land for the injection and storage of carbon dioxide (La. R.S. 30:148.2-148.8) and enter into operating agreements whereby it receives a share of the revenues from the surface or underground storage of carbon dioxide (La. R.S. 30:209(4)(e)).

In addition, on April 16, 2009, House Bill 661 was introduced for consideration in the 2009 legislative session. If enacted, the bill would grant private entities engaged in the business of underground storage of carbon dioxide the right to expropriate property needed for such purposes. It would also enact the "Louisiana Geologic Sequestration of Carbon Dioxide Act" which, among other things, would grant the Department of Natural Resources, Office of Conservation jurisdiction over and the authority to regulate and issue permits for the geologic storage and subsequent withdrawal of carbon dioxide and related pipelines and facilities; address the liability of owners and operators of such storage facilities; create the "Carbon Dioxide Geologic Storage Trust Fund" to be funded by fees, penalties, and other sources and provide funds for the long-term testing and monitoring of sites, remediation of mechanical problems with wells and surface infrastructure, and related matters; and authorize the use of site-specific trust accounts to provide for long-term maintenance and restoration of storage facilities when transferred from one party to another. 

Texas. In April 2009, the Texas Senate passed Senate Bill 1387, offered by Sen. Kel Seliger, which bill would provide the first regulatory framework for capturing and sequestering carbon dioxide. It would also set the stage for the regulation of storage of carbon dioxide in Texas as well as enhancing the commercial applications associated with carbon dioxide. The bill splits authority for regulating underground storage of carbon dioxide between the Texas Railroad Commission and the Texas Commission on Environmental Quality ("TCEQ"). The Railroad Commission, which has had authority over enhanced oil recovery since the 1970s, would have authority over permitting and inspection. The TCEQ would be authorized to adopt rules for making sure that any captured and sequestered carbon dioxide would not be a threat to underground water supplies or present other environmental hazards.

The bill still must clear the Texas House but signals that energy producers and environmental activists are working on ways to address both the capture and commercialization of carbon dioxide, and sets the stage for new opportunities and technical innovation.

Several hurdles—such as the legal obstacles and cost of capturing and transporting anthropogenic carbon dioxide from sources such as power generating facilities to oil and gas fields—must be crossed. The states, however, are taking action to make EOR through carbon sequestration a reality.

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Sources: 

"Carbon Sequestration Through Enhanced Oil Recovery." U.S. Department of Energy, Office of Fossil Energy, National Energy Technology Laboratory (April 2008).

"New CO2 Enhanced Recovery Technology Could Greatly Boost U.S. Oil." U.S. Department of Energy press release (March 3, 2006).