Overview
S&P Global quoted Hunter Johnston in a February 26 article titled "Carbon Capture Advocates Call Dem's Critique on Bill Over Oil Recovery 'Miscast.'" The article discusses how new legislation being discussed by the US House would benefit projects like Mississippi Power Co.'s carbon capture plant. The bill largely met bipartisan support from the committee, with several Republicans touting its potential to become law. But some of their Democratic counterparts focused on how oil companies may benefit from using captured carbon to pump more oil, extending the life of some of their fields through a process called enhanced oil recovery, or EOR.
Johnston says that a project developer would have to determine whether EOR or non-EOR storage, such as into a saline formation, makes the most economic sense for a project. He states that EOR could be an uncertain investment due to the current and projected low price per barrel compared with the mid-2010s, which may make other sources of oil production more competitive comparatively. Non-EOR saline storage provides a higher-value tax credit that may make better economic sense.
"In sum, the extent to which carbon capture incentives will increase EOR production is hard to predict with any certainty," Johnston says. "While it is reasonable to assume that some oil companies will benefit from subsidies for carbon capture with disposal into EOR, it is unreasonable to overgeneralize that EOR is the primary focus of carbon capture."
The full article can be read at S&P Global.
