Carbon capture and sequestration (CCS) is the process of capturing carbon dioxide (CO2) and permanently storing it deep below the earth’s surface to ensure that it will not be released into the atmosphere.

For more than two decades carbon capture has been in use for limited applications. Legacy CCS projects include capturing and storing carbon generated by coal-fired power plants and repurposing CO2 for use in enhanced oil recovery (EOR) projects.

But today, CCS is making new headlines as a must-have climate action whose implementation will make a significant improvement to the environment. Climate researchers and government policy makers are in agreement that increasing access to carbon capture solutions and the infrastructure that supports them will be paramount to meeting climate change targets going forward.

Natural gas production in the Northeastern Delaware Basin has historically contained high concentrations of CO2. Energy producers in the region now have an opportunity to permanently prevent this naturally occurring CO2 from entering the atmosphere or affecting the climate. 

Piñon Midstream’s Dark Horse facility removes the CO2 from the natural gas and permanently sequesters it more than 17,000 feet below the surface in geologic formations that are highly suitable for this purpose. The carbon dioxide never has to enter pipelines for further transport once it enters the Dark Horse facility for geologic sequestration.

Geologic Sequestration of Carbon: Piñon’s Independence AGI #1 and Independence AGI #2

Piñon geologically sequesters the harmful gases with its Independence AGI #1, a new acid gas injection well located within the Dark Horse Sour Gas Treating and Carbon Capture Facility in Lea County, New Mexico. This well has been designed to safely and permanently sequester H2S and CO2 in deep, Devonian-era rock formations. With respect to permitted single-well injection capacity, the Independence AGI #1 ranks as one of the largest-capacity sequestration wells in the entire Permian Basin. The well is, in fact, the deepest and largest-capacity acid gas injection well in New Mexico.

Specialized acid gas compressors are used to inject the gases into the well where they will be permanently sequestered in a deep saline reservoir within an interval that runs from 16,200 feet to 17,900 feet below the earth’s surface. The well is able to sequester up to 12 million cubic feet of acid gas per day (12 MMcf/day). A second injection well, the Independence AGI #2, has been permitted and is scheduled to be completed in 2022. This  will double the geologic sequestration capacity of the Dark Horse Facility.

The risk of induced seismic activity from a well of this depth is very low. To monitor for any seismic activity, Piñon has installed a seismic station at the wellsite that will become part of the New Mexico statewide monitoring network.

Piñon will report information on carbon dioxide received for injection, implement an EPA-approved site-specific Monitoring, Reporting, and Verification Plan (MRV Plan), and report the amount of carbon dioxide geologically sequestered.

Carbon Capture News & Resources

Carbon Storage R&D

U.S. Department of Energy – Office of Fossil Research

Carbon dioxide storage in geologic formations includes oil and gas reservoirs, unmineable coal seams, and deep saline reservoirs. These are structures that have stored crude oil, natural gas, brine and CO2 over millions of years. 

Saline Formations. Storage of CO2 in deep saline formations does not produce value-added by-products, but it has other advantages. First, the estimated carbon storage capacity of saline formations in the United States is large, making them a viable long-term solution. It has been estimated that deep saline formations in the United States could potentially store more than 12,000 billion tonnes of CO2.

Read the report

Federal Policy Blueprint

The Carbon Capture Coalition

In February 2018, Congress passed legislation that reformed and expanded the U.S. Federal Section 45Q tax credit for CO2 storage.

The reform of the 45Q incentive was enacted as part of the broader Bipartisan Budget Act of 2018. Key provisions of the reformed 45Q tax credit include:

  • Increases the credit value incrementally over ten years from $10 to $35 per metric ton of CO2 stored geologically through enhanced oil recovery and from $20 to $50 per ton for saline and other forms of geologic storage;
  • Provides $35 per metric ton of CO2 emissions reduced through the beneficial use of captured CO2 for purposes beyond EOR;
  • Authorizes the program for carbon capture projects that commence construction within six years of enactment, and projects meeting that timeframe can claim the credit for 12 years after being placed in service;
  • Establishes a threshold of 25,000 metric tons for CO2 captured and put to beneficial uses other than EOR;
  • Awards the credit to the owner of the carbon capture equipment and allows transfer of the credit to other entities responsible for managing the CO2 to provide greater flexibility for companies with different business models to utilize the tax credit effectively, including cooperatives and municipal utilities;
  • Increases financial certainty for investors in carbon capture projects by eliminating the previous cap on credits, which the original 45Q credit was about to reach.

Download the full report

Treasury Department and Internal Revenue Service Release Final Rule on Section 45Q Credit Regulations

January 6, 2021

WASHINGTON – Today, the Treasury Department and Internal Revenue Service (IRS) issued final regulations regarding the section 45Q credit for qualified carbon oxide sequestration using carbon capture equipment placed in service on or after the date of the enactment of the Bipartisan Budget Act of 2018. 

“These final regulations provide taxpayers and the American energy sector with needed clarity on utilizing the section 45Q credit,” said Treasury Secretary Steven T. Mnuchin. “These regulations are an essential step toward harnessing the entrepreneurial spirit of Americans to further modernize the American energy sector, while ensuring American energy producers maintain their competitive edge around the world.”

These final regulations provide procedures to determine adequate security measures for the geological storage of qualified carbon oxide, exceptions to the general rule for determining to whom the credit is attributable, procedures for a taxpayer to make an election to allow third-party taxpayers to claim the credit, the definition of carbon capture equipment, and standards for measuring utilization of qualified carbon oxide.

In addition, the final regulations allow smaller carbon capture facilities to be aggregated into one project for purposes of claiming the credit when certain factors are present, such as common ownership and location; as well as provide guidance on recapture, including introducing a recapture period of 3-years. Under these rules, credits must be repaid if previously sequestered carbon oxide leaks into the atmosphere during a three-year period after the initial storage or injection. 

Download the IRS regulations, released Jan. 6, 2021, regarding the section 45Q credit

Read the final IRS Ruling in the Federal Register