The objective of the complete paper is to highlight the effects of tax credits on business operations for midstream companies in the Permian Basin in the US. Incentives have created an environment where midstream companies are actively changing how they process treated gas to optimize CO2 storage. The Permian has a 20-year history of CO2 storage in conjunction with disposal of hydrogen sulfate (H2S) with entrained CO2 into acid-gas disposal (AGI) wells. These wells can qualify for 45Q tax credits for the portion of their treated acid gas comprised of CO2 because the CO2 is going into storage.
Introduction
The 45Q tax credit, established under the Energy Improvement and Extension Act of 2008, originally was designed to incentivize the capture and storage of CO2 from industrial sources and power plants. Initially, the credit offered $10 per metric ton of CO2 used for enhanced oil recovery (EOR) and $20 per ton for geologic storage, with a cap of 75 million metric tons.
