Below is a column from Louisiana Oil & Gas Association President Mike Moncla, published in the Advocate newspaper.
BATON ROUGE, LA (October 11, 2022) - There has been lots of back and forth lately about Carbon Capture, Usage, & Storage (CCUS). Sadly, two parishes recently passed moratoriums on future CCUS projects. In defense of these parish’s decisions, CCUS sounds like something new to them. They don’t believe the injection process is proven, don’t believe the parishes will be compensated, and have been told that properties can be taken by eminent domain.
To the contrary, injection wells and storage wells have been commonplace for decades in Louisiana. The highly publicized Strategic Petroleum Reserve (SPR) is not a huge tank farm storing oil, but underground storage of the oil in geologic formations. Less known but no less important are the many natural gas storage facilities where billions of cubic feet of natural gas are stored annually in underground geologic formations. Without the storage of natural gas in these reservoirs, the price of natural gas would fluctuate wildly with the changing of the seasons, wrecking the U.S. economy. There are injection wells all over the state that present no issues to the public. Certainly, more education is needed to help these parishes get an understanding of this process. There is fear-mongering and misinformation on this subject that we hope this letter will assist in easing concerns.
Companies plan on spending millions and even billions on these projects. Parishes will cash in on Ad Valorem taxes, sales taxes, and local spending from project vendors. The facilities will also create high paying, full-time, local jobs.
These projects will go through an extensive and time-consuming process to be approved and will be highly regulated. As for eminent domain, expropriation can only happen after obtaining permits and a certificate of public convenience & necessity from the Commissioner of Conservation. To obtain that certificate, the Commissioner has to hold a hearing in the parish where the project is located and make certain findings. To expropriate, Conservation would have to approve the project. In most instances, if expropriation would take place, the land itself (i.e., the surface) would not be expropriated, but rather a servitude or right to store at certain depths under the ground.
The Carbon Sequestration Act and the right under the act to use eminent domain for carbon sequestration projects is not new. The Carbon Sequestration Act (which included eminent domain rights) was first passed in 2009 and signed by Governor Jindal. Since then, the act was amended in 2021 and 2022 with minor changes. During the Trump administration carbon sequestration was not a high priority, but has now become a bigger deal with the 45Q tax credits.
CCUS will be taking place all over the country, and Louisiana is in a great position to take advantage of these projects. We have perfect geology and an oil & gas workforce ready to step up to the challenge. With the state’s industrial plants fully committed to meeting ESG goals, if CCUS is denied here, these plants will be forced to spend billions and create thousands of jobs across the business-friendly border of Texas.