Published in the Clarion Ledger on March 20, 2015
Mississippi’s CO2-based enhanced oil recovery policy is the envy of the energy nation. Energy policy and business professionals from all over the world have traveled to Mississippi to see a remarkable transformation. Energy production from old oil fields is on the rise here — something few states can claim.
Currently, a few outside investors are trying to undo the policies that have encouraged billions of in-state investment — simply so they can lower their investment and risk. They still want the Legislature to pass broad new laws to settle a narrow private dispute even after the Legislature has wisely rejected this proposal twice. Such a law would send a clear message of public policy instability to the energy business community everywhere.
Inherent in the oil and gas business is large capital investment and lots of risk. This industry has a long-standing history of operating under the virtue of private contracts. Private disputes are best settled privately, not by asking the Legislature to intervene with destructive mandates. Without legislation, there are companies now negotiating and reaching agreements to enable new CO2 supplies to be delivered to additional oil fields. Over 20 years, this type of progress and entrepreneurship has brought more than $5 billion in investment, much of that to build pipelines to carry CO2 to oil fields to get them pumping again. The economic impact is tremendous in rural areas.
This is a unique industry still developing in the U.S., and Mississippi is leading. Pumping CO2 breathes new life into old fields, unleashing the huge volumes of oil left behind from early production. CO2 travels through pipelines to old oil fields.
Now, these outside investors, making wildly exaggerated claims about tax revenue potential and oil production estimates, have tried to bypass private negotiations by asking the Legislature to retroactively mandate new requirements to the pipeline owners, essentially changing the rules in the middle of the game. But the law passed by the Legislature in 1984 explicitly encouraged CO2-based production by permitting pipeline construction and allowing a very limited use of court-monitored eminent domain to construct projects.
Patrick Sullivan is president of the Mississippi Energy Institute.