Abstract

Louisiana has been one of the most prolific petroleum producing U.S. states for well over a century. Hydrocarbons are a mainstay of the economy and expertise runs deep. However, falling oil prices, declining reserves, and now the COVID–19 crisis have idled rigs across the state and caused thousands of job losses. At the same time, the consequences of increasing atmospheric carbon and the attendant climate change are becoming all too apparent. 100-year floods are no longer centennial events and Category 4 and 5 hurricanes are now a recurring threat. This very threat, however, may motivate a new industry that builds on the expertise in hydrocarbon extraction, repurposes existing infrastructure, and mitigates the threat of climate change.

Carbon Capture and Storage (CCS) is the practice of capturing CO₂ emissions from industrial point sources (e.g., liquified natural gas [LNG] trains, refineries, power plants, etc.) and sequestering it underground in the same type of reservoirs that produce oil and gas. Applied at scale, it has the potential to significantly reduce carbon emissions and indeed it is the only way to decarbonize certain industries, including steel, cement and petrochemicals. Combined with bio-fuels, it can even create net carbon-negative energy. Moreover, it draws on the same geoscience and engineering skills required for petroleum exploration and production.

A long series of successful pilot projects have proven the concept, and new tax incentives create an attractive business case; but the commercial industry is still in its infancy. A combination of factors makes Louisiana an attractive place to kickstart that industry. First, it has abundant industrial CO₂ emissions from Lake Charles to the Mississippi River industrial corridor, including very high purity streams that are relatively cheap to capture. Second, the long and prolific history of hydrocarbon production proves the high capacity of local seals and reservoirs, which is equally applicable to CO₂ sequestration as it is to hydrocarbon accumulation. Third, there is a huge amount of existing subsurface data, knowledge and production history, all of which pave the path to define and characterize subsurface storage opportunities. Fourth, Louisiana has a very mature process for permitting and regulating hydrocarbon production, and it is well along the path to creating something similar for CCS. Last, recent revision of the federal 45Q tax credits creates a viable business model for CCS that is in some cases more valuable than hydrocarbon production.