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Research suggests a potential $9 billion tax implication for CO2 emissions from oil wells in North Dakota


North Dakota could potentially see an additional $9 billion in oil tax revenue over the next 10 years if oil companies begin implementing enhanced oil recovery techniques by injecting carbon dioxide into oil wells on a large scale, a recent analysis has revealed. This process, which involves increasing the amount of oil that a well can produce, has not been widely adopted in the state due to federal tax incentives favoring permanent underground storage of carbon dioxide over enhanced oil recovery.

North Dakota Tax Commissioner Brian Kroshus emphasized the importance of closing this incentive gap and called on the federal government to enact tax parity for CO2 projects. The potential tax impact of $9 billion is based solely on oil production and does not include potential increases in tax collection from other sources.

The report, based on information from the Energy and Environmental Research Center, estimates that injecting CO2 could add 5 billion to 8 billion barrels of oil from the Bakken Formation over the next few decades. Kroshus highlighted the need for major investments by the oil and gas industry in infrastructure buildout to support gas injection for enhanced oil recovery.

Governor Kelly Armstrong, chair of the Industrial Commission, noted that enhanced oil recovery has the potential to create a prosperous future for generations to come. Kroshus also pointed out that this technique could help stabilize the state’s oil industry, which has historically experienced boom-and-bust cycles.

Overall, North Dakota is looking to be an early adopter of enhanced oil recovery to maximize the benefits of existing oil wells and position itself as a leader in this technology. The state has already experienced significant success in oil production from the Bakken Formation and has collected $23 billion in oil tax revenue over the past decade.

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