By Noah Zahn
Wyoming Tribune Eagle
Via- Wyoming News Exchange

CHEYENNE — Wyoming lawmakers are taking steps to increase oil production in the state. To that end, elected officials are considering legislation to make Wyoming a more attractive place for enhanced oil recovery projects by stripping taxes for companies and offering more money than most other states for EOR operations.

EOR is a set of techniques used to extract more oil from an existing reservoir after primary and secondary methods have been used by pumping pressurized CO2 into the ground to extract the last remaining oil.

It is currently used in nine Wyoming oil reservoirs and accounted for 10% of Wyoming’s oil production between 2010 and 2020, according to the Enhanced Oil Recovery Institute.

A discussion on the topic was held Wednesday in Casper at the meeting of the Wyoming Legislature’s Minerals, Business & Economic Development Committee.

Initially, the discussions were supposed to primarily center around entering a compact with nearby states and some Canadian provinces to work together for the expansion of CO2 pipeline infrastructure.

However, the conversations instead focused on reviving two previous laws the Legislature had approved.

 

Tax credit incentives 

The first, Senate File 17, was approved earlier this year. It is intended to level the federal tax credits companies receive for both EOR and Carbon Capture, Utilization and Storage, called 45Q tax credits.

When the law was passed, capturers received $60 per ton of CO2 stored through EOR while CCUS capturers received $85 per ton captured and stored underground in geologic formations, instead of being repurposed for further oil recovery.

SF17 authorized the state to offer an additional $10 per ton captured through EOR to incentivize development and oil production.

However, the passage of the One Big Beautiful Bill Act earlier this month on the national level ordered the tax credits for EOR captures per ton be increased to $85, equal to CCUS, making SF17 null and void.

With the levels now equal across the nation, members of the committee discussed ways to further incentivize EOR development in the Cowboy State.

Sen. Chris Rothfuss, D-Laramie, moved to revive SF17 but instead offer an additional $5 for CO2 tons through EOR instead of the initial $10, giving Wyoming a $5 edge over other states that have not passed similar legislation.

“It provides an incentive through exactly the same mechanism we were using in SF17, costs us half as much money as we’re planning on spending on SF17 and provides all of the same structure,” he said.

Lon Whitman, director of the Enhanced Oil Recovery Institute, supported this idea.

“The fact of the matter is we have a unique situation in Wyoming where we have abundant CO2 being captured at Shute Creek, currently over 340 million tons a day provided for EOR,” he said, referencing Shute Creek, a carbon capture facility in Sweetwater County.  “New capture projects that potentially could provide CO2 are at such an expensive cost themselves. They need the $85 a ton for the project to move forward. If you want to incentivize, I would agree you actually need to put sale for EOR at a higher rate than dedicated storage.”

Sen. Tara Nethercott, R-Cheyenne, also approved of this move.

“I see this as a win-win, and giving a cutting-edge, competitive environment to our oil and gas industry here in Wyoming,” she said. “So I’m in full support of Sen. Rothfuss, the lone Democrat on the committee, for this effort to really empower our oil and gas industry in Wyoming.”

The committee unanimously approved the motion to draft a bill that would revive SF 17 with the change from $10 to $5.

 

Cut taxes for oil companies

The other law the committee sought to revive is also intended to draw more EOR customers to Wyoming: House Bill 54, which was approved in 2003. This piece of legislation gave developers seeking to create new EOR operations in Wyoming a break on severance tax for five years, from 2003 to 2008.

Severance taxes in Wyoming refer to the state fees imposed on companies that extract natural resources — like oil, gas, coal, trona and other minerals — from the land.

Currently, as was in 2003, those fees are fixed at 6% of the total revenue companies collect from oil production.

Whitman illustrated this incentive as an investment in the state, using 2003 as a case study.

After HB54 was passed, two new EOR developers invested in Wyoming: Patrick Draw Field and Salt Creek Field, which are now both major EOR fields.

When the Legislature approved those tax exemptions, the state lost a potential total of $29.4 million in tax revenue over those five years between the two operations.

However, according to data from Whitman, the fields produced a severance tax revenue of $236.3 million between 2009 and 2024 for a net profit of $206.9 million over 15 years.

When presented with these numbers, Nethercott voiced her support for this potential incentive measure.

“Those big coal, oil and gas companies got a deal. But in reality, that deal resulted in further growth and economic development for Wyoming, a net return on tax revenue to the state of $206 million,” she said. “That’s called good policy making, and you should be proud of your Wyoming Legislature and Wyoming government that has been focused and supportive on these industries for decades.”

Once again, the committee voted to unanimously pass the motion to draft a bill that replicates HB 54 for consideration.

As both motions were approved to draft, and the committee did not have time to consider the bills on Wednesday, the final day of the interim committee’s July meetings, elected officials expressed interest in requesting a third day to consider the items for final approval and potential recommendation to the Wyoming Legislature next year.

 

Regional compact

As for the item the group came together to discuss — the CO2 infrastructure regional compact – no action was taken.

The agreement would have set up a framework for expanding and connecting CO2 pipelines with North Dakota and Montana and the Canadian provinces of Saskatchewan and Alberta with the primary purpose of increasing EOR across the region.

Ultimately, the lawmakers did not vote to adopt the joint resolution, instead opting to just focus on communications with the governments of the states and provinces rather than a formal document.

“I don’t know that I view this resolution as necessary,” said Rep. Christopher Knapp, R-Gillette. “In reading it, it says ‘a joint resolution to encourage the establishment of an interstate compact for the development of regional and international carbon dioxide pipeline infrastructure and to request the governor of the state to take actions to establish a compact.’

“To me, it’s a little confusing. We have that ability now to start negotiations or start dialogue with other states and other countries about the pipeline infrastructure.”