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Regular Session, 2010
SENATE BILL NO. 739
BY SENATOR MORRISH
ENERGY DEVELOPMENT. Provides relative to the Louisiana Carbon Capture and
Enhanced Oil Recovery Act. (8/15/10)
AN ACT1
To enact Chapter 10 of Title 30 of the Louisiana Revised Statutes of 1950, to be comprised2
of R.S. 30:1001 through 1005, and R.S. 39:94(A)(2)(a)(iv), relative to the Louisiana3
Carbon Capture and Enhanced Oil Recovery Act; to provide relative to enhanced oil4
and gas recovery projects utilizing injection of carbon dioxide; to provide for the5
duties and powers of the commissioner of conservation and the secretary of the6
Department of Natural Resources; to provide definitions, terms and conditions; to7
establish a special custodial trust fund; to provide for the uses of certain monies8
deposited into such fund; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. Chapter 10 of Title 30 of the Louisiana Revised Statutes of 1950, to be11
comprised of R.S. 30:1001 through 1005 is hereby enacted to read as follows: 12
CHAPTER 10. LOUISIANA CARBON CAPTURE AND ENHANCED OIL13
RECOVERY ACT14
§1001. Short title15
This Chapter shall be known and may be cited as the "Louisiana Carbon16
Capture and Enhanced Oil Recovery Act".17 SB NO. 739
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§1002. Policy; jurisdiction1
A. It is declared to be in the public interest for a public purpose and the2
policy of Louisiana that:3
(1) The capture and geologic sequestration of carbon dioxide will benefit4
the citizens of the state and the state's environment by reducing greenhouse gas5
emissions.6
(2) Carbon dioxide is a valuable commodity to the citizens of the state7
through its use for enhanced oil or gas recovery.8
(3) The citizens of the state and the state's economy and environment9
will benefit from the production of fuel and chemicals in Louisiana by utilizing10
pet coke or coal as a feedstock to produce substitute natural gas or chemicals11
without combustion by applying advanced gasification technology.12
(4) The citizens of the state and the state's economy and environment13
will benefit from the production of electric power in Louisiana from generating14
facilities utilizing advanced post-combustion carbon dioxide capture technology.15
(5) It is the public policy of Louisiana and the purpose of this Chapter16
to provide for and enable the development of the following projects which17
produce carbon dioxide as a by-product that is captured and suitable for18
injection for enhanced oil or gas recovery:19
(a) Projects that will produce fuel or chemicals by utilizing advanced20
gasification technology using pet coke or coal as a feedstock employed in the21
production of substitute natural gas or chemicals; or22
(b) Electric generation plants that produce electric power by utilizing23
advanced post-combustion carbon dioxide capture technology.24
B. The commissioner of conservation shall have jurisdiction and25
authority over all persons and property necessary to enforce effectively the26
provisions of this Chapter relating to carbon dioxide produced as a by-product27
and captured by qualified low carbon energy projects.28
§1003. Definitions29 SB NO. 739
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Unless the context otherwise requires, the words defined in this Section1
shall have the following meaning when found in this Chapter:2
(1) "Carbon dioxide" means anthropogenically sourced carbon dioxide3
including its derivatives and all mixtures, combinations, and phases, whether4
liquid or gaseous, stripped, segregated, or divided from any other fluid stream5
thereof.6
(2) "Chemical" means any marketable chemical manufactured by a7
qualified low carbon energy project utilizing advanced gasification technology8
using pet coke or coal as a feedstock, which may be manufactured in addition9
to substitute natural gas.10
(3) "Commissioner" has the same meaning as provided in R.S. 30:3(2).11
(4) "Department" means the Department of Natural Resources.12
(5) "Electric power" means electric capacity and energy produced by13
a qualified low carbon energy project utilizing advanced post-combustion14
carbon dioxide capture technology.15
(6) "Enhanced oil or gas recovery" means the use of carbon dioxide for16
purposes of tertiary or secondary recovery of oil or gas.17
(7) "Fund" means the Carbon Dioxide Project Incentive Fund18
established in R.S. 30:1005.19
(8) "Gas" has the same meaning as provided in R.S. 30:3(5).20
(9) "Office" means the office of conservation, Department of Natural21
Resources.22
(10) "Oil" has the same meaning as provided in R.S. 30:3(4).23
(11) "Person" means any natural person, corporation, association,24
partnership, limited liability company, or other entity, receiver, tutor, curator,25
executor, administrator, fiduciary, or representative of any kind.26
(12) "Qualified low carbon energy projects" mean projects utilizing27
advanced gasification technology using pet coke or coal as a feedstock and28
employed in the production of substitute natural gas or chemicals that captures29 SB NO. 739
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at least fifty percent of the eligible carbon dioxide produced by such project1
suitable for injection for enhanced oil or gas recovery, or projects producing2
electric power utilizing advanced post-combustion carbon dioxide capture3
technology which captures at least fifty percent of eligible carbon dioxide4
produced by such project suitable for injection for enhanced oil or gas recovery.5
(13) "Secretary" means the secretary of the Department of Natural6
Resources.7
(14) "Substitute natural gas" means pipeline quality equivalent natural8
gas manufactured by a qualified low carbon energy project utilizing advanced9
gasification technology using pet coke or coal as a feedstock, which may be10
manufactured in addition to chemicals.11
§1004. Duties and powers of the commissioner; rules and regulations12
A. The office's actions under this Chapter shall be directed and13
controlled by the commissioner. In order to encourage enhanced oil or gas14
recovery projects utilizing injection of carbon dioxide, the commissioner shall15
have the authority to:16
(1) Certify any project as a qualified low carbon energy project if the17
project commences construction on or before December 31, 2013, and meets the18
requirements of R.S. 30:1003(12).19
(2) Certify only one qualified low carbon energy project that produces20
substitute natural gas, a maximum of two qualified low carbon energy projects21
that produce chemicals, and a maximum of three qualified low carbon energy22
projects that produce electric power.23
B. Upon making such determination, the commissioner shall issue a24
certificate to the secretary that such project is a qualified low carbon energy25
project.26
C. Upon receipt of the certificate from the commissioner certifying a27
project as a qualified low carbon energy project, the secretary shall do the28
following:29 SB NO. 739
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(1) Provide the option to any qualified low carbon energy project to the1
extent to which it will produce substitute natural gas, in accordance with an2
irrevocable and binding agreement with the department, to deposit into the3
fund upon commercial operation, if the project elects to do so, an amount4
between fifty million dollars and one hundred fifty million dollars ("initial5
deposit") as determined by the secretary. The amount of the initial deposit shall6
be based upon the volume of carbon dioxide expected to be produced by such7
project to be used in enhanced oil or gas recovery upon commercial operation8
of such project.9
(2) Make the initial deposit and other monies in the fund attributable to10
any qualified low carbon energy project that produces substitute natural gas11
available to be utilized by the Public Service Commission, upon request by the12
Public Service Commission and at the discretion of the secretary, to offset or13
ameliorate the effect of such project on the electric bills of the ratepayers under14
its jurisdiction after the commercial operation date of the project, as provided15
in R.S. 30:1005.16
(3) Make the monies, not including the initial deposit, available to any17
qualified low carbon energy project that produces chemicals or electric power,18
in accordance with an irrevocable and binding agreement with the department,19
to offset, reimburse or ameliorate capital costs or debt service incurred by the20
owner of such project and related to such project after its commercial operation21
date, as provided in R.S. 30:1005.22
D. Notwithstanding any provision of law to the contrary, the secretary23
shall provide to the Public Service Commission or to a qualified low carbon24
energy project that produces chemicals or electric power with monies from the25
fund that are generated through enhanced oil or gas recovery utilizing carbon26
dioxide from such project. Monies in the fund generated by enhanced oil or gas27
recovery attributable to one project shall not be provided to or for the benefit28
of another project. If a project produces both substitute natural gas and29 SB NO. 739
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chemicals, the monies in the fund attributable to enhanced oil or gas recovery1
utilizing carbon dioxide from the portion of the project that produces substitute2
natural gas will be provided exclusively to the Public Service Commission and3
the monies in the fund attributable to enhanced oil or gas recovery utilizing4
carbon dioxide from the portion of the project that produces chemicals will be5
provided exclusively to the owner of the project.6
E. Once the secretary receives the certificate from the commissioner and7
determines the appropriate recipient of monies from the fund, such monies are8
obligated to the purposes and uses authorized by this Chapter and may not be9
used for any other purpose.10
§1005. Carbon Dioxide Project Incentive Fund11
A.(1) There is hereby established a fund in the custody of the state12
treasurer to be known as the Carbon Dioxide Project Incentive Fund,13
hereinafter referred to as the "fund", which shall constitute a special custodial14
trust fund which shall be administered by the secretary, who shall make15
disbursements from the fund solely in accordance with the purposes and uses16
authorized by this Chapter.17
(2) The fund shall not be used for any other governmental purposes, nor18
shall any branch of government be allowed to borrow any portion of the funds.19
It is the intent of the legislature that this fund and its increments shall remain20
intact and inviolate.21
(3) The monies in the fund shall be invested by the treasurer in the same22
manner as monies in the state general fund. All interest earned on the money23
invested from the fund by the state treasurer shall be credited to the fund. All24
unexpended and unencumbered monies in the fund at the end of the fiscal year25
shall remain in the fund, except as provided in Subsection E of this Section.26
B. The following monies shall be placed into the fund:27
(1) The initial deposit made by a qualified low carbon energy project28
which will produce substitute natural gas.29 SB NO. 739
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(2) Fifty percent of royalties, rentals, bonuses and payments due to the1
state and attributable to enhanced oil or gas recovery related to injection of2
carbon dioxide produced from qualified low carbon energy projects, but only3
after the amount of eight hundred fifty million dollars each fiscal year as4
provided in R.S. 39:94(A)(2)(a) has been satisfied.5
C.(1) If there is an initial deposit into such fund by a qualified low6
carbon energy project that produces substitute natural gas, such initial deposit7
shall be used by the Public Service Commission as provided in R.S.8
30:1004(C)(2) and shall be disbursed prior to using any royalties, rentals,9
bonuses or payments deposited into the fund.10
(2) If there is no initial deposit or if the initial deposit has been11
exhausted, the royalties, rentals, bonuses and payments due to the state shall be12
deposited into such fund until the maximum amount of the fund as provided in13
Subsection E of this Section has been satisfied, and may thereafter be utilized14
by the Public Service Commission, at the discretion of the secretary, as provided15
in R.S. 30:1004.16
D. The royalties, rentals, bonuses and payments due to the state from a17
qualified low carbon energy project that produces chemicals or produces18
electric power shall be deposited into the fund and may be utilized by the19
secretary, as provided in R.S. 30:1004.20
E. The fund shall not exceed one hundred fifty million dollars per21
qualified low carbon energy project, on an average daily basis for the period of22
twelve consecutive months, and, if the monies in the fund exceed such amount,23
any excess monies in the fund shall be transferred by the secretary to the24
general fund. However, such transfer shall not occur more often than once25
every twelve consecutive months.26
F.(1) The total amount of incentive money to be made available to a27
qualified low carbon energy project which produces chemicals or electric power28
shall be three hundred million dollars per project.29 SB NO. 739
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(2) In addition to the initial deposit, the total amount of incentive money1
to be made available to the Public Service Commission with regard to a2
qualified low carbon energy project which produces substitute natural gas shall3
be four hundred million dollars.4
(3) After the total amount of incentive monies have been provided with5
respect to any qualified low carbon energy project, no royalties, rentals,6
bonuses, or payments due to the state produced by enhanced oil or gas recovery7
related to injection of carbon dioxide produced from such qualified low carbon8
energy project shall be deposited into the fund.9
(4) After the total amount of incentive monies have been provided with10
respect to a qualified low carbon energy project, any sums attributable to11
royalties, rentals, bonuses, or payments due to the state produced by enhanced12
oil or gas recovery attributable to injection of carbon dioxide produced from13
such qualified low carbon energy project remaining in the fund shall be14
transferred by the secretary to the general fund.15
G. If any portion of the initial deposit remains in the fund thirty years16
after such deposit was made, the secretary shall return such remaining portion17
of the initial deposit to the owner of the qualified low carbon energy project that18
made such initial deposit, or its successor. If no such owner or successor exists,19
then the money shall be transferred to the general fund.20
H. The secretary shall keep accurate accounts of all receipts and21
disbursements related to the administration of the fund, and be authorized to22
require the Public Service Commission to provide an annual accounting of any23
monies received from the fund.24
Section 2. R.S. 39:94(A)(2)(a)(iv) is hereby enacted to read as follows:25
§94. Budget Stabilization Fund26
A. There is hereby created in the state treasury a special fund to be designated27
as the Budget Stabilization Fund, hereafter referred to in this Section as the "fund",28
which shall consist of all money deposited into the fund in accordance with Article29 SB NO. 739
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VII, Section 10.3 of the Constitution of Louisiana. Money shall be deposited in the1
fund as follows:2
* * *3
(2)(a) All revenues received in each fiscal year by the state in excess of eight4
hundred fifty million dollars, hereinafter referred to as the "base," as a result of the5
production of or exploration for minerals, hereinafter referred to as "mineral6
revenues," including severance taxes, royalty payments, bonus payments, or rentals,7
and excluding such revenues designated as nonrecurring pursuant to Article VII,8
Section 10(B) of the Constitution of Louisiana, any such revenues received by the9
state as a result of grants or donations when the terms or conditions thereof require10
otherwise and revenues derived from any tax on the transportation of minerals, shall11
be deposited in the fund after the following allocations of said mineral revenues have12
been made:13
* * *14
(iv) As provided in Chapter 10 of Title 30 of the Louisiana Revised15
Statutes of 1950.16
* * *17
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by J. W. Wiley.
DIGEST
Proposed law establishes the Louisiana Carbon Capture and Enhanced Oil Recovery Act.
Proposed law declares the public policy of Louisiana for the capture and geologic
sequestration of carbon dioxide for the benefit of the citizens of the state and the state's
environment by reducing greenhouse gas emissions.
Proposed law defines the following terms: carbon dioxide, chemical, commissioner,
department, electric power, enhanced oil or gas recovery, fund, gas, office, oil, person,
qualified low carbon energy projects, secretary, and substitute natural gas.
Proposed law authorizes the commissioner of conservation to: (1) certify any project as a
qualified low carbon energy project if the project commences construction on or before Dec.
31, 2013, and meets the requirements of proposed law; and (2) certify only 1 qualified low
carbon energy project that produces substitute natural gas, a maximum of 2 qualified low
carbon energy projects that produce chemicals, and a maximum of 3 qualified low carbon
energy projects that produce electric power.
Proposed law provides that the commissioner will issue a certificate to the secretary of DNR SB NO. 739
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that such project is a qualified low carbon energy project.
Proposed law requires the secretary of DNR upon receipt of the certificate from the
commissioner certifying a project as a qualified low carbon energy project to do the
following:
(1)Provide the option to any qualified low carbon energy project to the extent to which
it will produce substitute natural gas, in accordance with an irrevocable and binding
agreement with the department, to deposit into the fund upon commercial operation,
if the project elects to do so, an amount between $50 million and $150 million
dollars ("initial deposit") as determined by the secretary. Further provides that the
amount of the initial deposit will be based upon the volume of carbon dioxide
expected to be produced by such project to be used in enhanced oil or gas recovery
upon commercial operation of such project.
(2)Make the initial deposit and other monies in the fund attributable to any qualified
low carbon energy project that produces substitute natural gas available to be utilized
by the Public Service Commission, upon request by the PSC and at the discretion of
the secretary, to offset or ameliorate the effect of such project on the electric bills of
the ratepayers under its jurisdiction after the commercial operation date of the
project, as provided in proposed law.
(3)Make the monies, not including the initial deposit, available to any qualified low
carbon energy project that produces chemicals or electric power, in accordance with
an irrevocable and binding agreement with the department, to offset, reimburse or
ameliorate capital costs or debt service incurred by the owner of such project and
related to such project after its commercial operation date, as provided in proposed
law.
Proposed law requires the secretary of DNR to provide to the PSC or to a qualified low
carbon energy project that produces chemicals or electric power with monies from the fund
that are generated through enhanced oil or gas recovery utilizing carbon dioxide from such
project.
Proposed law provides that monies in the fund generated by enhanced oil or gas recovery
attributable to one project shall not be provided to or for the benefit of another project.
Further provides that if a project produces both substitute natural gas and chemicals, the
monies in the fund attributable to enhanced oil or gas recovery utilizing carbon dioxide from
the portion of the project that produces substitute natural gas will be provided exclusively
to the PSC and the monies in the fund attributable to enhanced oil or gas recovery utilizing
carbon dioxide from the portion of the project that produces chemicals will be provided
exclusively to the owner of the project.
Proposed law provides that once the secretary receives the certificate from the commissioner
and determines the appropriate recipient of monies from the fund, such monies are obligated
to the purposes and uses authorized by proposed law.
Proposed law creates the Carbon Dioxide Project Incentive Fund in the custody of the state
treasurer, which will constitute a special custodial trust fund which will be administered by
the secretary of DNR, who will make disbursements from the fund solely in accordance with
proposed law.
Proposed law provides that the fund cannot be used for any other governmental purposes,
nor can any branch of government be allowed to borrow any portion of the funds. Further
provides that it is the intent of the legislature that this fund and its increments will remain
intact and inviolate.
Proposed law provides that the monies in the fund will be invested by the treasurer in the SB NO. 739
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same manner as monies in the state general fund, all interest earned on the money invested
from the fund by the state treasurer will be credited to the fund, and all unexpended and
unencumbered monies in the fund at the end of the fiscal year will remain in the fund, except
as provided in proposed law.
Proposed law provides that the following monies will be placed into the fund:
(1)The initial deposit made by a qualified low carbon energy project which will produce
substitute natural gas.
(2)50% of royalties, rentals, bonuses and payments due to the state and attributable to
enhanced oil or gas recovery related to injection of carbon dioxide produced from
qualified low carbon energy projects, but only after the amount of $850 million each
fiscal year as provided in present law has been satisfied.
Proposed law provides that if there is an initial deposit into such fund by a qualified low
carbon energy project that produces substitute natural gas, such initial deposit can be used
by the PSC as provided in proposed law and will be disbursed prior to using any royalties,
rentals, bonuses or payments deposited into the fund.
Proposed law provides that if there is no initial deposit or if the initial deposit has been
exhausted, the royalties, rentals, bonuses and payments due to the state will be deposited into
such fund until the maximum amount of the fund as provided in proposed law has been
satisfied, and may thereafter be utilized by the PSC, at the discretion of the secretary of
DNR, as provided in proposed law.
Proposed law requires that the royalties, rentals, bonuses and payments due to the state from
a qualified low carbon energy project that produces chemicals or produces electric power
to be deposited into the fund and may be utilized by the secretary of DNR, as provided in
proposed law.
Proposed law provides that the fund cannot exceed $150 million dollars per qualified low
carbon energy project, on an average daily basis for the period of 12 consecutive months,
and, if the monies in the fund exceed such amount, any excess monies in the fund shall be
transferred by the secretary to the general fund. Further provides that such transfer will not
occur more often than once every 12 consecutive months.
Proposed law provides that the total amount of incentive money to be made available to a
qualified low carbon energy project which produces chemicals or electric power will be
$300 million dollars per project.
Proposed law provides that in addition to the initial deposit, the total amount of incentive
money to be made available to the PSC with regard to a qualified low carbon energy project
which produces substitute natural gas will be $400 million dollars.
Proposed law provides that after the total amount of incentive monies have been provided
with respect to any qualified low carbon energy project, no royalties, rentals, bonuses, or
payments due to the state produced by enhanced oil or gas recovery related to injection of
carbon dioxide produced from such qualified low carbon energy project will be deposited
into the fund.
Proposed law provides that after the total amount of incentive monies have been provided
with respect to a qualified low carbon energy project, any sums attributable to royalties,
rentals, bonuses, or payments due to the state produced by enhanced oil or gas recovery
attributable to injection of carbon dioxide produced from such qualified low carbon energy
project remaining in the fund will be transferred by the secretary to the general fund.
Proposed law requires the secretary to return any portion of the initial deposit remaining in SB NO. 739
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the fund 30 years after such deposit was made to the project owner or its successor. Further
provides that if no such owner or successor exists, then the money will be transferred to the
general fund.
Proposed law requires the secretary to keep accurate accounts of all receipts and
disbursements related to the administration of the fund, and authorizes the secretary to
require the PSC to provide an annual accounting of any monies received from the fund.
Present law provides for the allocation of monies in the Budget Stabilization Fund.
Proposed law provides that royalties, rentals, bonuses and payments due to the state and
attributable to enhanced oil or gas recovery related to injection of carbon dioxide produced
from qualified low carbon energy projects will be deposited into the Carbon Dioxide Project
Incentive Fund and not into the Budget Stabilization Fund.
Effective August 15, 2010.
(Adds R.S. 30:1001-1005 and R.S. 39:94(A)(2)(a)(iv))