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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 ENHANCED13
OIL 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 department'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 secretary determines the project shall meet the requirements of R.S.20
30:1003(8). The certification shall remain valid only if the project commences21
construction on or before December 31, 2015.22
B. Upon making such determination, the secretary shall issue a23
certificate to the project that such project is a qualified low carbon energy24
project.25
C. Upon issuance of the certificate certifying a project as a qualified low26
carbon energy project, the secretary shall make the monies in the fund available27
to any qualified low carbon energy project, in accordance with an irrevocable28
and binding agreement with the department, to offset, reimburse or ameliorate29 SB NO. 739
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capital costs or debt service incurred by the owner of such project and related1
to such project after its commercial operation date, as provided in R.S. 30:1005.2
D. Notwithstanding any provision of law to the contrary, the secretary3
shall provide a qualified low carbon energy project with monies from the fund4
that are generated through enhanced oil or gas recovery utilizing carbon5
dioxide from such project. Monies in the fund generated by enhanced oil or gas6
recovery attributable to one project shall not be provided to or for the benefit7
of another project.8
E. Once the secretary issues the certificate and determines the9
appropriate recipient of monies from the fund, such monies are dedicated and10
obligated to the purposes and uses authorized by this Chapter and may not be11
used for any other purpose.12
§1005. Carbon Dioxide Project Incentive Fund13
A.(1) There is hereby established a fund in the custody of the state14
treasurer to be known as the Carbon Dioxide Project Incentive Fund,15
hereinafter referred to as the "fund", which shall constitute a special custodial16
trust fund which shall be administered by the secretary, who shall make17
disbursements from the fund solely in accordance with the purposes and uses18
authorized by this Chapter.19
(2) The fund shall not be used for any other governmental purposes, nor20
shall any branch of government be allowed to borrow any portion of the funds.21
It is the intent of the legislature that this fund and its increments shall remain22
intact and inviolate.23
(3) The monies in the fund shall be invested by the treasurer in the same24
manner as monies in the state general fund. All interest earned on the money25
invested from the fund by the state treasurer shall be credited to the fund. All26
unexpended and unencumbered monies in the fund at the end of the fiscal year27
shall remain in the fund, except as provided in Subsection E of this Section.28
B. At the time the secretary certifies a project as a low carbon energy29 SB NO. 739
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project, the secretary or the State Mineral and Energy Board shall negotiate1
with the project a percentage of the royalties, rentals, and bonuses, but not2
severance taxes, due to the state and attributable to enhanced oil or gas3
recovery related to injection of carbon dioxide produced from qualified low4
carbon energy projects shall be deposited into the fund after commercial5
operation of the project, but only after the amount provided in Article VII,6
Section 10.3(A)(2)(a) of the Constitution of Louisiana and R.S. 39:94(A)(2)(a),7
referred to as the "base", has been satisfied each fiscal year, and which8
percentage shall be applied only to the increase in production of oil or gas9
resulting from the injection of such carbon dioxide. No royalties, rentals, or10
bonuses resulting from production of oil or gas existing at the time such11
enhanced oil or gas recovery is begun shall be deposited into the fund.12
However, no negotiated rate shall be authorized until reviewed and approved13
by the Joint Legislative Committee on the Budget.14
C. The royalties, rentals, bonuses and payments due to the state from a15
qualified low carbon energy project shall be deposited into the fund and may be16
utilized by the secretary, as provided in R.S. 30:1004.17
D. The fund shall not exceed thirty-five million dollars per qualified low18
carbon energy project, on an average daily basis for the period of twelve19
consecutive months, and, if the monies in the fund exceed such amount, any20
excess monies in the fund shall be transferred by the secretary to the general21
fund. However, such transfer shall not occur more often than once every twelve22
consecutive months.23
E.(1) The total amount of incentive money to be made available from the24
fund to a qualified low carbon energy project shall be three hundred fifty25
million dollars per project.26
(2) After the total amount of incentive monies have been provided with27
respect to any qualified low carbon energy project, no royalties, rentals,28
bonuses, or payments due to the state produced by enhanced oil or gas recovery29 SB NO. 739
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related to injection of carbon dioxide produced from such qualified low carbon1
energy project shall be deposited into the fund.2
(3) After the total amount of incentive monies have been provided with3
respect to a qualified low carbon energy project, any sums attributable to4
royalties, rentals, bonuses, or payments due to the state produced by enhanced5
oil or gas recovery attributable to injection of carbon dioxide produced from6
such qualified low carbon energy project remaining in the fund shall be7
transferred by the secretary to the general fund.8
F. The secretary shall keep accurate accounts of all receipts and9
disbursements related to the administration of the fund, and be authorized to10
require any qualified low carbon energy project to provide an annual11
accounting of any monies received from the fund. The carbon dioxide produced12
by a qualified low carbon energy project and utilized in enhanced oil or gas13
recovery pursuant to the provisions of this Chapter shall be metered or14
otherwise measured to provide an accurate tracking of the amount of such15
carbon dioxide so utilized. However, the operator conducting the enhanced oil16
or gas recovery activities shall be permitted to physically inject, for purposes of17
enhanced oil or gas recovery under the provisions of this Chapter, carbon18
dioxide, whether anthropogenic or naturally occurring, other than the carbon19
dioxide produced by a qualified low carbon energy project, provided the20
operator can show to the secretary's satisfaction that the metered or measured21
amount of carbon dioxide received by the operator from a qualified low carbon22
energy project matches the amount of other carbon dioxide utilized in the23
enhanced oil or gas recovery operations.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 was prepared by J. W. Wiley. The following digest,
which does not constitute a part of the legislative instrument, was prepared
by Jay Lueckel.
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, 2015, 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 and the secretary shall make the monies in SB NO. 739
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the fund attributable to any qualified low carbon energy project in accordance with
irrevocable and binding agreements to offset, reimburse or ameliorate capital costs or debt
service by the owners of such projects.
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 at the time the secretary certifies a project, the secretary or the State
Mineral and Energy Board shall negotiate with the project a percentage of the royalties,
rentals, bonuses, but not the severance taxes, 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 that 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 percentage shall be
applied only to the increase in production of oil or gas resulting from the injection of such
carbon dioxide. No royalties, rentals, or bonuses from production on existing oil or gas shall
be deposited into the fund. No negotiated rate shall be authorized until reviewed and
approved by the Joint Legislative Committee on the Budget.
Proposed law provides that the fund cannot exceed $35 million 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 shall be $350 million per project.
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, or bonuses 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 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 SB NO. 739
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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
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, or bonuses 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.
Committee Amendments Proposed by Senate Committee on Finance to the
engrossed bill.
1. Deletes all references to the Public Service Commission.
2. Makes available monies in the fund for qualified low carbon energy projects
in accordance with irrevocable and binding agreements to offset, reimburse
or ameliorate capital costs or debt service by the owners of such projects.
3. Requires that the secretary or the State Mineral and Energy Board negotiate
the rate for a percentage of the royalties, rentals, and bonuses, but not
severance taxes, due the state for certified projects. SB NO. 739
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4. Exempts royalties, rentals, or bonuses from existing production from deposit
into the fund and requires the Joint Legislative Committee on the Budget to
review and approve the negotiated rate before it may be authorized for any
project.
5. Reduces the cap on the Carbon Dioxide Project Incentive Fund from $150
million to $35 million and expands the total incentive money per project
from $300 million to $350 million.