House Panel Discusses Tax Reduction for Enhanced Oil Recovery

The House Energy and Technology Committee took testimony Tuesday on legislation aimed to encourage enhanced oil recovery techniques, specifically those involving liquid CO2. Supporters argue that doing so will make the state more competitive in oil recovery while at the same time reducing the amount of carbon dioxide in the atmosphere.

The first bill (HB 4885) would reduce the severance tax on oil and gas production that utilizes liquid carbon dioxide from 6.6 to 3.3 percent.

The enhanced recovery process involves pumping liquid carbon dioxide into previously capped wells in order to push previously unattainable oil to the surface. The CO2 would be stored underground rather than released into the atmosphere.

State Representative Aric Nesbitt (R-Lawton), the bill’s sponsor and Committee Chair, argued that the tax cut would encourage investment in Michigan by cutting capital costs while supplying tax revenue to either the Natural Resources Trust Fund or the State Parks Fund.

The other bills (HB 5254, HB 5255) sponsored by Representative Rick Outman (R-Six Lakes) and Representative Thomas Stallworth III (D-Detroit), would update the definition of a pipeline to include transportation of carbon dioxide. HB 5255 requires Public Service Commission oversight for the use of carbon dioxide in fuel recovery and clarifies the rules and regulations for transportation, allowing the use of eminent domain in constructing pipelines.

Representative David Nathan (D-Detroit) praised the legislation for supporting state recreational funds. He said that the funds could be used to maintain Belle Isle in Detroit, which was recently taken over by the state.

The Department of Environmental Quality (DEQ) also supports the legislation.

posted by PAA Online , Friday, January 31, 2014 11:04 AM
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