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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 secretary of the Department of Natural Resources; to6
provide definitions, terms and conditions; to establish a special custodial trust fund;7
to provide for the uses of certain monies deposited into such fund; and to provide for8
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 industrial processes that will capture significant amounts of10
carbon dioxide for use in enhanced oil recovery.11
(4) It is the public policy of Louisiana and the purpose of this Chapter12
to provide for and enable the development of projects which produce carbon13
dioxide as a by-product that is captured and suitable for injection for enhanced14
oil or gas recovery.15
B. The secretary shall have jurisdiction and authority over all persons16
and property necessary to enforce effectively the provisions of this Chapter17
relating to carbon dioxide produced as a by-product and captured by qualified18
low carbon energy projects.19
§1003. Definitions20
Unless the context otherwise requires, the words defined in this Section21
shall have the following meaning when found in this Chapter:22
(1) "Carbon dioxide" means anthropogenically sourced carbon dioxide23
including its derivatives and all mixtures, combinations, and phases, whether24
liquid or gaseous, stripped, segregated, or divided from any other fluid stream25
thereof.26
(2) "Department" means the Department of Natural Resources.27
(3) "Enhanced oil or gas recovery" means the use of carbon dioxide for28
purposes of tertiary or secondary recovery of oil or gas.29 SB NO. 739
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(4) "Fund" means the Carbon Dioxide Project Incentive Fund1
established in R.S. 30:1005.2
(5) "Gas" has the same meaning as provided in R.S. 30:3(5).3
(6) "Oil" has the same meaning as provided in R.S. 30:3(4).4
(7) "Person" means any natural person, corporation, association,5
partnership, limited liability company, or other entity, receiver, tutor, curator,6
executor, administrator, fiduciary, or representative of any kind.7
(8) "Qualified low carbon energy project" means a project that8
produces at least two hundred fifty thousand tons per year of carbon dioxide9
and captures at least fifty percent of such eligible carbon dioxide produced by10
such project suitable for injection for enhanced oil or gas recovery.11
(9) "Secretary" means the secretary of the Department of Natural12
Resources.13
§1004. Duties and powers of the secretary; rules and regulations14
A. The departments's actions under this Chapter shall be directed and15
controlled by the secretary. In order to encourage enhanced oil or gas recovery16
projects utilizing injection of carbon dioxide, the secretary shall have the17
authority to certify, based on the evaluation of the technology assessment18
division of the department, any project as a qualified low carbon energy project19
if the project commences construction on or before December 31, 2020, and20
meets the requirements of R.S. 30:1003(8).21
B. Upon making such determination, the secretary shall issue a22
certificate to the project that such project is a qualified low carbon energy23
project.24
C. Upon issuance of the certificate certifying a project as a qualified low25
carbon energy project:26
(1) The Public Service Commission is granted jurisdiction to entertain27
a request by any qualified low carbon energy project for a rate order from the28
Public Service Commission that includes a request that the Public Service29 SB NO. 739
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Commission utilize the fund as provided in R.S. 30:1005, and any ensuing order1
of the Public Service Commission granting such request shall require the2
project to deposit with the Public Service Commission, upon commercial3
operation, up to one hundred fifty million dollars ("initial deposit") depending4
on the size or portion of the project subject to the order. The initial deposit5
shall be held in trust and controlled by the Public Service Commission through6
a third-party administrator, with the expenses of the administration of such7
fund to be paid from the initial deposit, but such deposit, unless and until used8
by the Public Service Commission as provided herein, shall remain the property9
of the owner of the qualified low carbon energy project which made the initial10
deposit.11
(2) The secretary shall do the following:12
(a) Make the monies in the fund attributable to any qualified low carbon13
energy project that obtains a rate order from the Public Service Commission14
available to be utilized by the Public Service Commission, upon request by the15
Public Service Commission and presentation of documentation supporting such16
request, to offset or ameliorate the effect of such project on the electric bills of17
the ratepayers under its jurisdiction after the commercial operation date of the18
project, as provided in R.S. 30:1005, but only after the initial deposit has been19
exhausted.20
(b) Make the monies in the fund available to any qualified low carbon21
energy project to the extent such project is not subject to any rate order of the22
Public Service Commission, in accordance with an irrevocable and binding23
agreement with the department, to offset, reimburse or ameliorate capital costs24
or debt service incurred by the owner of such project and related to such25
project after its commercial operation date, as provided in R.S. 30:1005.26
D. Notwithstanding any provision of law to the contrary, the secretary27
shall provide to the Public Service Commission or to a qualified low carbon28
energy project, to the extent such project is not subject to any rate order of the29 SB NO. 739
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Public Service Commission, with monies from the fund that are generated1
through enhanced oil or gas recovery utilizing carbon dioxide from such2
project. Monies in the fund generated by enhanced oil or gas recovery3
attributable to one project shall not be provided to or for the benefit of another4
project. If a portion of the output of a project is subject to a rate order of the5
Public Service Commission, the monies in the fund attributable to enhanced oil6
or gas recovery utilizing carbon dioxide from the portion of the project that is7
subject to a rate order of the Public Service Commission will be provided8
exclusively to the Public Service Commission and the monies in the fund9
attributable to enhanced oil or gas recovery utilizing carbon dioxide from the10
portion of the project that is not subject to a rate order of the Public Service11
Commission will be provided exclusively to the owner of the project.12
E. Once the secretary issues the certificate and determines the13
appropriate recipient of monies from the fund, such monies are dedicated and14
obligated to the purposes and uses authorized by this Chapter and may not be15
used for any other purpose.16
§1005. Carbon Dioxide Project Incentive Fund17
A.(1) There is hereby established a fund in the custody of the state18
treasurer to be known as the Carbon Dioxide Project Incentive Fund,19
hereinafter referred to as the "fund", which shall constitute a special custodial20
trust fund which shall be administered by the secretary, who shall make21
disbursements from the fund solely in accordance with the purposes and uses22
authorized by this Chapter.23
(2) The fund shall not be used for any other governmental purposes, nor24
shall any branch of government be allowed to borrow any portion of the funds.25
It is the intent of the legislature that this fund and its increments shall remain26
intact and inviolate.27
(3) The monies in the fund shall be invested by the treasurer in the same28
manner as monies in the state general fund. All interest earned on the money29 SB NO. 739
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invested from the fund by the state treasurer shall be credited to the fund. All1
unexpended and unencumbered monies in the fund at the end of the fiscal year2
shall remain in the fund, except as provided in Subsection E of this Section.3
(B) Fifty percent of royalties, rentals, bonuses and payments due to the4
state and attributable to enhanced oil or gas recovery related to injection of5
carbon dioxide produced from qualified low carbon energy projects shall be6
deposited into the fund, but only after the amount provided in Article VII,7
Section 10.3(A)(2)(a) of the Constitution of Louisiana and R.S. 39:94(A)(2)(a),8
referred to as the "base", has been satisfied each fiscal year, and which fifty9
percent portion shall be applied only to the increase in production of oil or gas10
resulting from the injection of such carbon dioxide.11
C.(1) If there is an initial deposit made with the Public Service12
Commission by a qualified low carbon energy project, such initial deposit shall13
be used by the Public Service Commission exclusively for the purposes as14
provided in R.S. 30:1004(C)(2) and shall be so used prior to the distribution to15
the Public Service Commission of any royalties, rentals, bonuses or payments16
deposited into the fund.17
(2) If the initial deposit has been exhausted, the royalties, rentals,18
bonuses and payments due to the state shall be deposited into such fund subject19
to the maximum amount of the fund as provided in Subsection E of this Section,20
and may thereafter be utilized by the Public Service Commission as provided21
in R.S. 30:1004. The Public Service Commission shall promptly notify the22
secretary when the initial deposit has been exhausted.23
D. The royalties, rentals, bonuses and payments due to the state from a24
qualified low carbon energy project, to the extent it is not subject to any rate25
order of the Public Service Commission, shall be deposited into the fund and26
may be utilized by the secretary, as provided in R.S. 30:1004.27
E. The fund shall not exceed one hundred fifty million dollars per28
qualified low carbon energy project, on an average daily basis for the period of29 SB NO. 739
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twelve consecutive months, and, if the monies in the fund exceed such amount,1
any excess monies in the fund shall be transferred by the secretary to the2
general fund. However, such transfer shall not occur more often than once3
every twelve consecutive months.4
F.(1) The total amount of incentive money to be made available to a5
qualified low carbon energy project, to the extent it is not subject to any rate6
order of the Public Service Commission, shall be three hundred million dollars7
per project.8
(2) After the exhaustion of the initial deposit, the total amount of9
incentive money to be made available to the Public Service Commission with10
regard to a qualified low carbon energy project that is subject to a rate order11
from the Public Service Commission shall be four hundred million dollars.12
(3) After the total amount of incentive monies have been provided with13
respect to any qualified low carbon energy project, no royalties, rentals,14
bonuses, or payments due to the state produced by enhanced oil or gas recovery15
related to injection of carbon dioxide produced from such qualified low carbon16
energy project shall be deposited into the fund.17
(4) After the total amount of incentive monies have been provided with18
respect to a qualified low carbon energy project, any sums attributable to19
royalties, rentals, bonuses, or payments due to the state produced by enhanced20
oil or gas recovery attributable to injection of carbon dioxide produced from21
such qualified low carbon energy project remaining in the fund shall be22
transferred by the secretary to the general fund.23
G. If any portion of the initial deposit remains in the fund thirty years24
after such deposit was made, the Public Service Commission shall return such25
remaining portion of the initial deposit to the owner of the qualified low carbon26
energy project that made such initial deposit, or its successor. If no such owner27
or successor exists, then the money shall be transferred to the general fund.28
H. The secretary shall keep accurate accounts of all receipts and29 SB NO. 739
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disbursements related to the administration of the fund, and be authorized to1
require the Public Service Commission to provide an annual accounting of any2
monies received from the fund. The carbon dioxide produced by a qualified low3
carbon energy project and utilized in enhanced oil or gas recovery pursuant to4
the provisions of this Chapter shall be metered or otherwise measured to5
provide an accurate tracking of the amount of such carbon dioxide so utilized.6
However, the operator conducting the enhanced oil or gas recovery activities7
shall be permitted to physically inject, for purposes of enhanced oil or gas8
recovery under the provisions of this Chapter, carbon dioxide, whether9
anthropogenic or naturally occurring, other than the carbon dioxide produced10
by a qualified low carbon energy project, provided the operator can show to the11
secretary's satisfaction that the metered or measured amount of carbon dioxide12
received by the operator from a qualified low carbon energy project matches13
the amount of other carbon dioxide utilized in the enhanced oil or gas recovery14
operations.15
Section 2. R.S. 39:94(A)(2)(a)(iv) is hereby enacted to read as follows:16
§94. Budget Stabilization Fund17
A. There is hereby created in the state treasury a special fund to be designated18
as the Budget Stabilization Fund, hereafter referred to in this Section as the "fund",19
which shall consist of all money deposited into the fund in accordance with Article20
VII, Section 10.3 of the Constitution of Louisiana. Money shall be deposited in the21
fund as follows:22
* * *23
(2)(a) All revenues received in each fiscal year by the state in excess of eight24
hundred fifty million dollars, hereinafter referred to as the "base", as a result of the25
production of or exploration for minerals, hereinafter referred to as "mineral26
revenues", including severance taxes, royalty payments, bonus payments, or rentals,27
and excluding such revenues designated as nonrecurring pursuant to Article VII,28
Section 10(B) of the Constitution of Louisiana, any such revenues received by the29 SB NO. 739
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state as a result of grants or donations when the terms or conditions thereof require1
otherwise and revenues derived from any tax on the transportation of minerals, shall2
be deposited in the fund after the following allocations of said mineral revenues have3
been made:4
* * *5
(iv) As provided in Chapter 10 of Title 30 of the Louisiana Revised6
Statutes of 1950.7
* * *8
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by J. W. Wiley.
DIGEST
Morrish (SB 739)
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, department, enhanced oil or gas
recovery, fund, gas, oil, person, qualified low carbon energy projects, and secretary.
Proposed law authorizes the secretary of DNR to certify, based on the evaluation of the
technology assessment division of the department, any project as a qualified low carbon
energy project if the project commences construction on or before Dec. 31, 2020, and meets
the requirements of proposed law.
Proposed law provides that the secretary will issue a certificate to the project that such
project is a qualified low carbon energy project.
Proposed law provides that after the secretary issues a certificate certifying a project as a
qualified low carbon energy project:
(1)The Public Service Commission ("PSC") is granted jurisdiction to entertain a request
by any qualified low carbon energy project for a rate order from the PSC that
includes a request that the PSC utilize the fund as provided in R.S. 30:1005, and any
ensuing order of the PSC granting such request shall require the project to deposit
with the PSC, upon commercial operation, up to one hundred fifty million dollars
("initial deposit") depending on the size or portion of the project subject to the order.
The initial deposit shall be held in trust and controlled by the PSC through a third-
party administrator, with the expenses of the administration of such fund to be paid
from the initial deposit, but such deposit, unless and until used by the PSC as
provided herein, shall remain the property of the owner of the qualified low carbon
energy project which made the initial deposit.
(2)The secretary must do the following:
(i)Make the monies in the fund attributable to any qualified low carbon energy SB NO. 739
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project that obtains a rate order from the PSC available to be utilized by the
PSC, upon request by the PSC and presentation of documentation supporting
such request, 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, but only after the initial
deposit has been exhausted.
(ii)Make the monies in the fund available to any qualified low carbon energy
project to the extent such project is not subject to any rate order of the PSC,
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, to the extent such project is not subject to any rate order of the PSC,
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 portion of the output of a project is subject to a rate order of the
PSC, the monies in the fund attributable to enhanced oil or gas recovery utilizing carbon
dioxide from the portion of the project that is subject to a rate order of the PSC 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 is not subject to a
rate order of the PSC will be provided exclusively to the owner of the project.
Proposed law provides that once the secretary issues the certificate and determines the
appropriate recipient of monies from the fund, such monies are dedicated and 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
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 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 will be deposited into the fund, but only
after the amount provided in Article VII, Section 10.3(A)(2)(a) of the Constitution of
Louisiana and R.S. 39:94(A)(2)(a), referred to as the "base", has been satisfied each fiscal
year, and which 50% portion will be applied only to the increase in production of oil or gas
resulting from the injection of such carbon dioxide.
Proposed law provides that if there is an initial deposit made with the PSC by a qualified low
carbon energy project, such initial deposit can be used by the PSC as provided in proposed SB NO. 739
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law and will be so used prior to the distribution to the PSC of any royalties, rentals, bonuses
or payments deposited into the fund.
Proposed law provides that if the initial deposit has been exhausted, the royalties, rentals,
bonuses and payments due to the state will be deposited into such fund subject to the
maximum amount of the fund as provided in proposed law, and may thereafter be utilized
by the PSC, as provided in proposed law. The PSC shall promptly notify the secretary when
the initial deposit has been exhausted.
Proposed law requires that the royalties, rentals, bonuses and payments due to the state from
a qualified low carbon energy project, to the extent it is not subject to any rate order of the
PSC, 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, to the extent it is not subject to any rate order of the
PSC, will be $300 million dollars per project.
Proposed law provides that after the exhaustion of 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 that is subject to a rate order from the PSC 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 PSC to return any portion of the initial deposit remaining in 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.
Proposed law provides that the carbon dioxide produced by a qualified low carbon energy
project and utilized in enhanced oil or gas recovery pursuant to the provisions of proposed
law will be metered or otherwise measured to provide an accurate tracking of the amount of
such carbon dioxide so utilized. Further provides that the operator conducting the enhanced
oil or gas recovery activities will be permitted to physically inject, for purposes of enhanced
oil or gas recovery under the provisions of proposed law, carbon dioxide, whether
anthropogenic or naturally occurring, other than the carbon dioxide produced by a qualified
low carbon energy project, provided the operator can show to the secretary's satisfaction that
the metered or measured amount of carbon dioxide received by the operator from a qualified SB NO. 739
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low carbon energy project matches the amount of other carbon dioxide utilized in the
enhanced oil or gas recovery operations.
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))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Natural Resources to
the original bill.
1. Changed the commissioner of conservation to the secretary of the Dept. of
Natural Resources.
2. Provided relative to policy and jurisdiction.
3. Deleted and revised certain definitions.
4. Provided relative to the duties and powers of the secretary.
5. Authorized the Public Service Commission to consider requests for certain
rate orders.
6. Provided relative to monies in the fund attributable to qualified low carbon
energy projects and rate orders.
7. Provided for the administration of monies placed into the fund.