Enhanced Oil and Natural Gas Production Through Carbon Dioxide Injection, 11557-11559 [06-2170]
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Federal Register / Vol. 71, No. 45 / Wednesday, March 8, 2006 / Proposed Rules
Issued in Renton, Washington, on February
28, 2006.
Kalene C. Yanamura,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
[FR Doc. E6–3264 Filed 3–7–06; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 40
[Docket Nos. RM06–8–000 and AD05–7–000]
Long-Term Firm Transmission Rights
in Organized Electricity Markets; LongTerm Transmission Rights in Markets
Operated by Regional Transmission
Organizations and Independent
System Operators; Notice of Extension
of Time
2006, in the above-docketed proceeding.
Long-Term Firm Transmission in
Organized Electricity Markets, 114 FERC
¶ 61,097 (2006). The motion states that
due to the complexity of the issues
addressed in the NOPR and the
substantive number of initial comments
that were filed in this docket, additional
time is needed to prepare reply
comments.
Upon consideration, notice is hereby
given that an extension of time for filing
reply comments is granted to and
including April 3, 2006, as requested by
APPA, NRECA and TAPS.
The Commission will publish a
separate notice in the Federal Register
announcing the extension of time to file
reply comments in this proceeding.
Magalie R. Salas,
Secretary.
[FR Doc. E6–3286 Filed 3–7–06; 8:45 am]
BILLING CODE 6717–01–P
March 2, 2006.
Federal Energy Regulatory
Commission, DOE.
ACTION: Notice of proposed rulemaking;
extension of comment period.
AGENCY:
On February 2, 2006, the
Commission issued a Notice of
Proposed Rulemaking which proposed
to amend its regulations to require
transmission organizations that are
public utilities with organized
electricity markets to make available
long-term firm transmission rights that
satisfy certain guidelines established in
this proceeding. 71 FR 6693 (Feb. 9,
2006). The Commission is extending the
date for filing reply comments on the
proposed rule at the request of the
American Public Power Association, the
National Rural Electric Cooperative
Association and the Transmission
Access Policy Study Group.
DATES: The comment period for the
proposed rule published at 71 FR 6693,
February 9, 2006, is extended to April
3, 2006.
FOR FURTHER INFORMATION CONTACT:
Jeffery S. Dennis (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426.
(202) 502–6027.
SUPPLEMENTARY INFORMATION: On
February 27, 2006, the American Public
Power Association (APPA), the National
Rural Electric Cooperative Association
(NRECA), and the Transmission Access
Policy Study Group (TAPS) filed a joint
motion for an extension of time to file
reply comments in response to the
Commission’s Notice of Proposed
Rulemaking (NOPR) issued February 2,
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3100
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SUMMARY:
VerDate Aug<31>2005
15:25 Mar 07, 2006
Jkt 208001
Minerals Management Service
30 CFR Part 203
11557
production incentives as described in
the Energy Policy Act of 2005.
DATES: We will accept comments and
suggestions on the advance notice of
proposed rulemaking until April 7,
2006.
You may submit comments
by any of the following methods listed
below. Federal rulemaking
portal: https://www.regulations.gov
(Follow the instructions for submitting
comments.) Internet e-mail:
comments_washington@blm.gov.
(Include ‘‘Attn: AD82’’) Mail: Director
(630), Bureau of Land Management,
Administrative Record, Room 401–LS,
Eastern States Office, 7450 Boston
Boulevard, Springfield, Virginia 22153.
Personal or messenger delivery: Room
401, 1620 L Street, NW., Washington,
DC 20036.
FOR FURTHER INFORMATION CONTACT: For
onshore, Thomas J. Zelenka at (202)
452–0334 and for offshore, Marshall
Rose at (703) 787–1536, as to the
substance of the advance notice, or Ted
Hudson at (202) 452–5042, as to
procedural matters. Persons who use a
telecommunications device for the deaf
(TDD) may call the Federal Information
Relay Service (FIRS) at 1–800–877–
8330, 24 hours a day, seven days a
week, to contact the above individuals.
SUPPLEMENTARY INFORMATION:
ADDRESSES:
I. Public Comment Procedures
II. Background
III. Description of Information Requested
[WO–310–06–1310–PP]
RIN 1004–AD82
Enhanced Oil and Natural Gas
Production Through Carbon Dioxide
Injection
I. Public Comment Procedures
Bureau of Land Management,
Minerals Management Service, Interior.
ACTION: Advance notice of proposed
rulemaking.
Your written comments should:
• Be specific;
• Explain the reason for your
comments and suggestions; and
• Be about the issues outlined in the
notice.
Comments and recommendations that
will be most useful and likely to
influence decisions on the content of
the proposed rule are:
• Those supported by quantitative
information or studies, and
• Those that include citations to and
analyses of any applicable laws and
regulations.
We are particularly interested in
receiving comments and suggestions
about the topics listed under Section III.
Description of Information Requested.
If you wish to comment, you may
submit your comments by any one of
several methods, in each case referring
to ‘‘1004–AD82’’.
• You may mail comments to Director
(630), Bureau of Land Management,
Administrative Record, Room 401 LS,
AGENCY:
SUMMARY: The Bureau of Land
Management (BLM) and the Minerals
Management Service (MMS) request
comments and suggestions to assist in
preparing a proposed rule governing
carbon dioxide injection for increased
production and recovery of oil and
natural gas. The rule would provide for
royalty relief incentives to promote the
capture, transportation, and injection of
produced carbon dioxide (CO2), natural
CO2, and other appropriate gases or
other matter for injection/sequestration
into oil and gas fields, to promote oil
and natural gas production from the
Outer Continental Shelf (OCS) and
onshore Federal leases. We encourage
members of the public to provide
comments and suggestions to help
clarify and define the requirements for
enhanced oil and natural gas recovery
PO 00000
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Fmt 4702
Sfmt 4702
A. How Do I Comment on the Advance
Notice of Proposed Rulemaking?
E:\FR\FM\08MRP1.SGM
08MRP1
11558
Federal Register / Vol. 71, No. 45 / Wednesday, March 8, 2006 / Proposed Rules
Eastern States Office, 7450 Boston
Boulevard, Springfield, Virginia 22153.
• You may deliver comments to
Room 401, 1620 L Street, NW.,
Washington, DC 20036.
• You may comment on the rule at
the Federal eRulemaking Portal: https://
www.regulations.gov following the
instructions at that link.
• You may also comment via e-mail
to: comments_washington@blm.gov.
BLM and MMS may not necessarily
consider or include in the
Administrative Record for the final rule
comments that BLM receives after the
close of the comment period (see DATES)
or comments delivered to an address
other than those listed above (see
ADDRESSES).
erjones on PROD1PC68 with PROPOSALS
B. May I Review Comments Submitted
by Others?
Comments, including names and
street addresses of respondents, will be
available for public review at the
address listed under ‘‘ADDRESSES:
Personal or messenger delivery’’ during
regular business hours (7:45 a.m. to 4:15
a.m.), Monday through Friday, except
holidays.
Individual respondents may request
confidentiality, which we will honor to
the extent allowable by law. If you wish
to withhold your name or address,
except for the city or town, you must
state this prominently at the beginning
of your comment. We will make all
submissions from organizations or
businesses, and from individuals
identifying themselves as
representatives or officials of
organizations or businesses, available
for public inspection in their entirety.
II. Background
A. Statutory: The Energy Policy Act of
2005 (EPAct), at Section 354, Enhanced
Oil and Natural Gas Production through
Carbon Dioxide Injection, is intended:
(1) To promote the capture,
transportation, and injection of
produced CO2, natural CO2, and other
appropriate gases or other substances for
sequestration into oil and gas fields; and
(2) to promote oil and natural gas
production from the OCS and onshore
Federal leases by providing royalty
incentives to use enhanced recovery
techniques using injection of substances
referred to above. The statute directs the
Secretary to undertake a rulemaking to
grant royalty relief ‘‘if the Secretary
determines that reduction of the royalty
under a Federal oil and gas lease * * *
is in the public interest and promotes
the purposes of this section * * *’’. The
EPAct, at Section 354(b)(2), also directs
the Secretary to issue an Advance
Notice of Proposed Rulemaking within
VerDate Aug<31>2005
15:25 Mar 07, 2006
Jkt 208001
180 days after the August 8, 2005, date
of its enactment.
B. Technical Review: Traditional
primary and secondary oil production
methods typically recover one third of
the oil in place in a field. This leaves
behind two thirds of the oil as a target
for enhanced oil recovery (EOR)
techniques. Thermal, chemical, and gas
flooding are three major EOR methods
which have been developed and utilized
for maximizing oil reserves recovery
from onshore fields.
EOR is fairly advanced in some
regions of the United States. Steam
flooding is used to enhance production
from many California fields because the
oil can be very viscous. CO2 flooding is
common in the fields in New Mexico,
West Texas, western Oklahoma, and
Wyoming because commercial pipelines
deliver the CO2 gas to these regions from
natural CO2 sources or from natural gas
processing plants. CO2 is also available
for some fields in Mississippi and
Louisiana. EOR operations are not
common in most of the rest of the nation
because steam is not needed or CO2 is
not available. Where CO2 from natural
sources is not available nearby, the use
of CO2 sequestration from gas
processing or other industrial plants
may be an alternative source.
Studies conducted by DOE and
industry estimate that 55 percent of oil
and 33 percent of gas remain stranded
offshore Louisiana using traditional
primary and secondary recovery
practices. Preliminary research suggests
that one-tenth to one-third of that
stranded resource could be recovered
using CO2 EOR technology. In Norway,
the target for original oil left behind in
place is about 45% and other new
offshore projects are attempting further
increases in the rate of recovery.
Domestically, incentives to spur new
technology may encourage additional
technologies and recovery efficiencies.
C. Ongoing Research and
Development Activities: The potential
for enhanced oil recovery through CO2
injection has been demonstrated to be a
viable technology for mature onshore oil
fields. Until recently, most of the CO2
used for EOR projects has come from
naturally-occurring reservoirs. New
technologies are being developed to
produce CO2 from industrial
applications such as natural gas
processing, fertilizer, ethanol, and
hydrogen plants in locations where
naturally-occurring CO2 reservoirs are
not available.
Large scale field expansion potential
for enhanced coal bed methane (ECBM)
gas recovery through CO2 and nitrogen
gas (N2) injection into coal bed natural
gas reservoirs has not yet been
PO 00000
Frm 00013
Fmt 4702
Sfmt 4702
demonstrated to be technically and
economically feasible. Until more pilot
performance testing can be successfully
performed and evaluated for large
project expansion, enhanced natural gas
production potential remains to be
realized.
III. Description of Information
Requested
We are committed to carrying out the
provisions of the EPAct. The diverse
enhanced recovery (ER) techniques
available for increasing oil and gas
recovery from the OCS and onshore
Federal lands suggest that a rule
providing for a flexible, case-by-case
assessment of each ER application for
royalty relief would be the most logical
approach to take.
The CO2 and other gases or matter
injection production incentive aims to
promote additional oil and natural gas
recovery from mature oil and natural gas
fields by providing a royalty suspension
volume of up to 5 million barrels of oil
equivalent for each eligible lease, the
maximum amount authorized under the
EPAct. A lease may be eligible if:
• It is a lease for the production of oil
and gas from the OCS or Federal
onshore lands;
• The injection of produced CO2,
natural CO2, and other appropriate gases
or matter will be used as an enhanced
recovery technique on such lease; and
• The Secretary determines the lease
contains oil or gas that would likely not
be produced without the royalty
reduction provided in the EPAct.
The royalty relief, if authorized under a
final rule and approved for an eligible
lease, would apply only to production
occurring on or after the date of
publication of this advance notice of
proposed rulemaking. Under Section
354(b)(4) of the EPAct, while relief is
retroactive to the date of the advance
notice of proposed rulemaking, lessees
must pay royalty on production that
occurs before publication of a final rule.
However, lessees may request a refund
of the royalties paid after publication of
a final rule. In addition, pursuant to
Section 354(b)(5) of the EPAct, royalty
relief may be subject to oil and natural
gas price threshold provisions or other
limitations based on market price.
We are interested in receiving
comments regarding incentive
provisions that would encourage
enhanced recovery techniques to
increase oil and gas production from
existing fields.
Topics we are considering for the
proposed regulations include, but are
not limited to, the following:
1. Is there an appropriate Federal role
in providing production incentives for
E:\FR\FM\08MRP1.SGM
08MRP1
erjones on PROD1PC68 with PROPOSALS
Federal Register / Vol. 71, No. 45 / Wednesday, March 8, 2006 / Proposed Rules
enhanced oil and gas recovery projects
or should such decisions be left to
market forces?
2. If the Secretary determines that
incentives are warranted, does the caseby-case assessment approach for
enhanced recovery project evaluation
provide the appropriate framework for
the intended production incentives?
3. Should existing enhanced oil
recovery (EOR) projects be considered to
qualify for production royalty relief to
promote additional oil recovery as the
project nears the end of its economic
life? If yes, how?
4. How should the assessment be
structured with regard to determining
whether royalty relief is needed? Is it
reasonable to expect that such
assessments can be consistently and
reliably completed for a wide variety of
projects? If the Secretary determines
that relief is warranted, how should the
amount of relief be calculated?
5. Should the relief awarded be
conditioned on market price? If yes,
how?
6. How should the production
incentive be applied to the enhanced
recovery projects to promote project
expansions and maximum oil and gas
recoveries?
7. Should this incentive be limited to
new technology? Should other gases and
matter be considered for EOR royalty
relief?
8. How should royalty relief be
structured for the additional production
resulting from enhanced recovery
methods?
9. How should production currently
using CO2 for recovery be differentiated
from new production which results
from an incentive?
10. How could we encourage the
capture, transportation, and
sequestration of CO2 and promote other
public interests in addition to enhanced
oil recovery?
11. In making the determination of
whether the royalty relief described in
Section 354 would be in the public
interest, how should the Secretary value
the benefit associated with the
sequestration of CO2 or other
appropriate gases used to increase oil
and gas production?
12. How, where, and when in the
process should the value of the CO2 (or
other gas) or the benefit of its
sequestration be measured: at its source
or upon its capture, transportation, or
sequestration on the lease?
13. Are there recommended
methodologies, economic models, or
other precedents that the Secretary
could consider in assessing the value of
sequestration?
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15:25 Mar 07, 2006
Jkt 208001
14. Can relief be structured to focus
on sequestering CO2 that would
otherwise be released into the
atmosphere or not used for productive
purposes?
15. Should this royalty relief take into
consideration any existing incentives
available for energy production?
16. Are there other issues that should
be considered?
Section 354(b)(1) of the EPAct
requires that the Secretary determine
that royalty reduction is in the public
interest and promotes the purposes of
the Act. Thus, the Secretary must
determine whether the anticipated
amount of additional production
justifies the level of Federal subsidies
that would be provided through such
royalty reduction. As a result of
comments received in response to this
Advance Notice of Proposed
Rulemaking, the Secretary may
determine that the production royalty
incentive provided for by Section 354 of
the EPAct is either unnecessary to
promote enhanced oil and gas recovery
or is insufficient to increase oil and gas
production through enhanced recovery.
Therefore, the Secretary is not yet
prepared to make the determination
under Section 354(b)(1) of the EPAct
that royalty relief for CO2 injection is in
the public interest and promotes the
purpose of that section of the Act.
However, if BLM and/or MMS adopt a
royalty relief rule it would be applicable
to any eligible production occurring on
or after the publication date of this
Advance Notice of Proposed
Rulemaking in the Federal Register.
Dated: February 1, 2006.
Johnnie Burton,
Acting Assistant Secretary of the Interior.
[FR Doc. 06–2170 Filed 3–7–06; 8:45 am]
BILLING CODE 4310–84–P; 4310–MR–P
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
11559
SUMMARY: The Bureau of Land
Management (BLM) and the Minerals
Management Service (MMS) request
comments and suggestions to assist in
the preparation of proposed regulations
governing Gas Hydrate Production
Incentives. The rule would provide
incentives to promote natural gas
production from the natural gas hydrate
resources on Federal lands in Alaska
and in Federal waters on the Outer
Continental Shelf. We encourage the
public to provide comments and
suggestions to help clarify and define
the requirements for Gas Hydrate
Production Incentives as described in
the Energy Policy Act of 2005.
DATES: We will accept comments and
suggestions on the advance notice of
proposed rulemaking until April 7,
2006.
ADDRESSES: You may submit comments
by any of the following methods listed
below.
Federal rulemaking portal: https://
www.regulations.gov (Follow the
instructions for submitting
comments.)
Internet e-mail:
comments_washington@blm.gov.
(Include ‘‘Attn: AD81’’).
Mail: Director (630), Bureau of Land
Management, Administrative Record,
Room 401–LS, Eastern States Office,
7450 Boston Boulevard, Springfield,
Virginia 22153. Personal or messenger
delivery: Room 401, 1620 L Street,
NW., Washington, DC 20036.
FOR FURTHER INFORMATION CONTACT: For
onshore, Thomas J. Zelenka at (202)
452–0334 and for offshore, Marshall
Rose at (703) 787–1536, as to the
substance of the advance notice, or Ted
Hudson at (202) 452–5042, as to
procedural matters. Persons who use a
telecommunications device for the deaf
(TDD) may call the Federal Information
Relay Service (FIRS) at 1–800–877–
8330, 24 hours a day, seven days a
week, to contact the above individuals.
SUPPLEMENTARY INFORMATION:
43 CFR Part 3100
I. Public Comment Procedures
II. Background
III. Description of Information Requested
Minerals Management Service
I. Public Comment Procedures
30 CFR Part 203
A. How Do I Ccomment on the Advance
Notice of Proposed Rulemaking?
Your written comments should:
• Be specific;
• Explain the reason for your
comments and suggestions; and
• Be about the issues outlined in the
notice.
Comments and recommendations that
will be most useful and likely to
influence decisions on the content of
the proposed rule are:
[WO–310–06–1310–24 1A]
RIN 1004–AD81
Gas Hydrate Production Incentives
Bureau of Land Management,
Minerals Management Service, Interior.
ACTION: Advance notice of proposed
rulemaking.
AGENCY:
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E:\FR\FM\08MRP1.SGM
08MRP1
Agencies
[Federal Register Volume 71, Number 45 (Wednesday, March 8, 2006)]
[Proposed Rules]
[Pages 11557-11559]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2170]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3100
Minerals Management Service
30 CFR Part 203
[WO-310-06-1310-PP]
RIN 1004-AD82
Enhanced Oil and Natural Gas Production Through Carbon Dioxide
Injection
AGENCY: Bureau of Land Management, Minerals Management Service,
Interior.
ACTION: Advance notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Land Management (BLM) and the Minerals
Management Service (MMS) request comments and suggestions to assist in
preparing a proposed rule governing carbon dioxide injection for
increased production and recovery of oil and natural gas. The rule
would provide for royalty relief incentives to promote the capture,
transportation, and injection of produced carbon dioxide
(CO2), natural CO2, and other appropriate gases
or other matter for injection/sequestration into oil and gas fields, to
promote oil and natural gas production from the Outer Continental Shelf
(OCS) and onshore Federal leases. We encourage members of the public to
provide comments and suggestions to help clarify and define the
requirements for enhanced oil and natural gas recovery production
incentives as described in the Energy Policy Act of 2005.
DATES: We will accept comments and suggestions on the advance notice of
proposed rulemaking until April 7, 2006.
ADDRESSES: You may submit comments by any of the following methods
listed below. Federal rulemaking portal: https://www.regulations.gov
(Follow the instructions for submitting comments.) Internet e-mail:
comments_washington@blm.gov. (Include ``Attn: AD82'') Mail: Director
(630), Bureau of Land Management, Administrative Record, Room 401-LS,
Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia
22153. Personal or messenger delivery: Room 401, 1620 L Street, NW.,
Washington, DC 20036.
FOR FURTHER INFORMATION CONTACT: For onshore, Thomas J. Zelenka at
(202) 452-0334 and for offshore, Marshall Rose at (703) 787-1536, as to
the substance of the advance notice, or Ted Hudson at (202) 452-5042,
as to procedural matters. Persons who use a telecommunications device
for the deaf (TDD) may call the Federal Information Relay Service
(FIRS) at 1-800-877-8330, 24 hours a day, seven days a week, to contact
the above individuals.
SUPPLEMENTARY INFORMATION:
I. Public Comment Procedures
II. Background
III. Description of Information Requested
I. Public Comment Procedures
A. How Do I Comment on the Advance Notice of Proposed Rulemaking?
Your written comments should:
Be specific;
Explain the reason for your comments and suggestions; and
Be about the issues outlined in the notice.
Comments and recommendations that will be most useful and likely to
influence decisions on the content of the proposed rule are:
Those supported by quantitative information or studies,
and
Those that include citations to and analyses of any
applicable laws and regulations.
We are particularly interested in receiving comments and
suggestions about the topics listed under Section III. Description of
Information Requested.
If you wish to comment, you may submit your comments by any one of
several methods, in each case referring to ``1004-AD82''.
You may mail comments to Director (630), Bureau of Land
Management, Administrative Record, Room 401 LS,
[[Page 11558]]
Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia
22153.
You may deliver comments to Room 401, 1620 L Street, NW.,
Washington, DC 20036.
You may comment on the rule at the Federal eRulemaking
Portal: https://www.regulations.gov following the instructions at that
link.
You may also comment via e-mail to: comments_
washington@blm.gov.
BLM and MMS may not necessarily consider or include in the
Administrative Record for the final rule comments that BLM receives
after the close of the comment period (see DATES) or comments delivered
to an address other than those listed above (see ADDRESSES).
B. May I Review Comments Submitted by Others?
Comments, including names and street addresses of respondents, will
be available for public review at the address listed under ``ADDRESSES:
Personal or messenger delivery'' during regular business hours (7:45
a.m. to 4:15 a.m.), Monday through Friday, except holidays.
Individual respondents may request confidentiality, which we will
honor to the extent allowable by law. If you wish to withhold your name
or address, except for the city or town, you must state this
prominently at the beginning of your comment. We will make all
submissions from organizations or businesses, and from individuals
identifying themselves as representatives or officials of organizations
or businesses, available for public inspection in their entirety.
II. Background
A. Statutory: The Energy Policy Act of 2005 (EPAct), at Section
354, Enhanced Oil and Natural Gas Production through Carbon Dioxide
Injection, is intended: (1) To promote the capture, transportation, and
injection of produced CO2, natural CO2, and other
appropriate gases or other substances for sequestration into oil and
gas fields; and (2) to promote oil and natural gas production from the
OCS and onshore Federal leases by providing royalty incentives to use
enhanced recovery techniques using injection of substances referred to
above. The statute directs the Secretary to undertake a rulemaking to
grant royalty relief ``if the Secretary determines that reduction of
the royalty under a Federal oil and gas lease * * * is in the public
interest and promotes the purposes of this section * * *''. The EPAct,
at Section 354(b)(2), also directs the Secretary to issue an Advance
Notice of Proposed Rulemaking within 180 days after the August 8, 2005,
date of its enactment.
B. Technical Review: Traditional primary and secondary oil
production methods typically recover one third of the oil in place in a
field. This leaves behind two thirds of the oil as a target for
enhanced oil recovery (EOR) techniques. Thermal, chemical, and gas
flooding are three major EOR methods which have been developed and
utilized for maximizing oil reserves recovery from onshore fields.
EOR is fairly advanced in some regions of the United States. Steam
flooding is used to enhance production from many California fields
because the oil can be very viscous. CO2 flooding is common
in the fields in New Mexico, West Texas, western Oklahoma, and Wyoming
because commercial pipelines deliver the CO2 gas to these
regions from natural CO2 sources or from natural gas
processing plants. CO2 is also available for some fields in
Mississippi and Louisiana. EOR operations are not common in most of the
rest of the nation because steam is not needed or CO2 is not
available. Where CO2 from natural sources is not available
nearby, the use of CO2 sequestration from gas processing or
other industrial plants may be an alternative source.
Studies conducted by DOE and industry estimate that 55 percent of
oil and 33 percent of gas remain stranded offshore Louisiana using
traditional primary and secondary recovery practices. Preliminary
research suggests that one-tenth to one-third of that stranded resource
could be recovered using CO2 EOR technology. In Norway, the
target for original oil left behind in place is about 45% and other new
offshore projects are attempting further increases in the rate of
recovery. Domestically, incentives to spur new technology may encourage
additional technologies and recovery efficiencies.
C. Ongoing Research and Development Activities: The potential for
enhanced oil recovery through CO2 injection has been
demonstrated to be a viable technology for mature onshore oil fields.
Until recently, most of the CO2 used for EOR projects has
come from naturally-occurring reservoirs. New technologies are being
developed to produce CO2 from industrial applications such
as natural gas processing, fertilizer, ethanol, and hydrogen plants in
locations where naturally-occurring CO2 reservoirs are not
available.
Large scale field expansion potential for enhanced coal bed methane
(ECBM) gas recovery through CO2 and nitrogen gas
(N2) injection into coal bed natural gas reservoirs has not
yet been demonstrated to be technically and economically feasible.
Until more pilot performance testing can be successfully performed and
evaluated for large project expansion, enhanced natural gas production
potential remains to be realized.
III. Description of Information Requested
We are committed to carrying out the provisions of the EPAct. The
diverse enhanced recovery (ER) techniques available for increasing oil
and gas recovery from the OCS and onshore Federal lands suggest that a
rule providing for a flexible, case-by-case assessment of each ER
application for royalty relief would be the most logical approach to
take.
The CO2 and other gases or matter injection production
incentive aims to promote additional oil and natural gas recovery from
mature oil and natural gas fields by providing a royalty suspension
volume of up to 5 million barrels of oil equivalent for each eligible
lease, the maximum amount authorized under the EPAct. A lease may be
eligible if:
It is a lease for the production of oil and gas from the
OCS or Federal onshore lands;
The injection of produced CO2, natural
CO2, and other appropriate gases or matter will be used as
an enhanced recovery technique on such lease; and
The Secretary determines the lease contains oil or gas
that would likely not be produced without the royalty reduction
provided in the EPAct.
The royalty relief, if authorized under a final rule and approved for
an eligible lease, would apply only to production occurring on or after
the date of publication of this advance notice of proposed rulemaking.
Under Section 354(b)(4) of the EPAct, while relief is retroactive to
the date of the advance notice of proposed rulemaking, lessees must pay
royalty on production that occurs before publication of a final rule.
However, lessees may request a refund of the royalties paid after
publication of a final rule. In addition, pursuant to Section 354(b)(5)
of the EPAct, royalty relief may be subject to oil and natural gas
price threshold provisions or other limitations based on market price.
We are interested in receiving comments regarding incentive
provisions that would encourage enhanced recovery techniques to
increase oil and gas production from existing fields.
Topics we are considering for the proposed regulations include, but
are not limited to, the following:
1. Is there an appropriate Federal role in providing production
incentives for
[[Page 11559]]
enhanced oil and gas recovery projects or should such decisions be left
to market forces?
2. If the Secretary determines that incentives are warranted, does
the case-by-case assessment approach for enhanced recovery project
evaluation provide the appropriate framework for the intended
production incentives?
3. Should existing enhanced oil recovery (EOR) projects be
considered to qualify for production royalty relief to promote
additional oil recovery as the project nears the end of its economic
life? If yes, how?
4. How should the assessment be structured with regard to
determining whether royalty relief is needed? Is it reasonable to
expect that such assessments can be consistently and reliably completed
for a wide variety of projects? If the Secretary determines that relief
is warranted, how should the amount of relief be calculated?
5. Should the relief awarded be conditioned on market price? If
yes, how?
6. How should the production incentive be applied to the enhanced
recovery projects to promote project expansions and maximum oil and gas
recoveries?
7. Should this incentive be limited to new technology? Should other
gases and matter be considered for EOR royalty relief?
8. How should royalty relief be structured for the additional
production resulting from enhanced recovery methods?
9. How should production currently using CO2 for
recovery be differentiated from new production which results from an
incentive?
10. How could we encourage the capture, transportation, and
sequestration of CO2 and promote other public interests in
addition to enhanced oil recovery?
11. In making the determination of whether the royalty relief
described in Section 354 would be in the public interest, how should
the Secretary value the benefit associated with the sequestration of
CO2 or other appropriate gases used to increase oil and gas
production?
12. How, where, and when in the process should the value of the
CO2 (or other gas) or the benefit of its sequestration be
measured: at its source or upon its capture, transportation, or
sequestration on the lease?
13. Are there recommended methodologies, economic models, or other
precedents that the Secretary could consider in assessing the value of
sequestration?
14. Can relief be structured to focus on sequestering
CO2 that would otherwise be released into the atmosphere or
not used for productive purposes?
15. Should this royalty relief take into consideration any existing
incentives available for energy production?
16. Are there other issues that should be considered?
Section 354(b)(1) of the EPAct requires that the Secretary
determine that royalty reduction is in the public interest and promotes
the purposes of the Act. Thus, the Secretary must determine whether the
anticipated amount of additional production justifies the level of
Federal subsidies that would be provided through such royalty
reduction. As a result of comments received in response to this Advance
Notice of Proposed Rulemaking, the Secretary may determine that the
production royalty incentive provided for by Section 354 of the EPAct
is either unnecessary to promote enhanced oil and gas recovery or is
insufficient to increase oil and gas production through enhanced
recovery. Therefore, the Secretary is not yet prepared to make the
determination under Section 354(b)(1) of the EPAct that royalty relief
for CO2 injection is in the public interest and promotes the
purpose of that section of the Act. However, if BLM and/or MMS adopt a
royalty relief rule it would be applicable to any eligible production
occurring on or after the publication date of this Advance Notice of
Proposed Rulemaking in the Federal Register.
Dated: February 1, 2006.
Johnnie Burton,
Acting Assistant Secretary of the Interior.
[FR Doc. 06-2170 Filed 3-7-06; 8:45 am]
BILLING CODE 4310-84-P; 4310-MR-P