Louisiana Considers CO2 Injection Fee
A New Load on Economics
๐๐๐๐ฉ ๐๐๐ช๐๐๐ฉ ๐ข๐ฎ ๐๐ฉ๐ฉ๐๐ฃ๐ฉ๐๐ค๐ฃ? Discussion of a CO2 injection fee as high as $8/t in Louisiana following a meeting in Allen Parish to hear about a proposed project (the 300 Mt Magnolia Sequestration Hub targeting the Frio formation) from Occidental Petroleumโs subsidiary 1PointFive.
๐๐๐ฎ ๐๐ฉ ๐ข๐๐ฉ๐ฉ๐๐ง๐จ? A CO2 injection fee, similar to a severance tax, would increase costs and raise the economic hurdle for CCUS projects.
The purpose of this fee is to ensure regions above CO2 injection sites share in the economic benefits of these projects. For instance, despite being situated above the proposed storage pore space, Allen Parish cannot derive value from the project through lease agreements. Additionally, it is unlikely to benefit significantly from traditional local property taxes, as the parish lacks much of the equipment, surface and well infrastructure, or delivery pipelines typically subject to such taxes.
To address this, the proposed injection fee could be tied to the total CO2 storage area, allowing the parish to capture economic value from the resource utilized for injection.
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