A Legal and Commercial Primer on Carbon Capture

THE WAY FORWARD : A LEGAL AND COMMERCIAL PRIMER ON CARBON CAPTURE , UTILIZATION , AND SEQUESTRATION ∗
AUSTIN LEE , JAMES MCANELLY , ELIZABETH MCGINLEY , JARROD GAMBLE
I .
THE SECTION 45Q FEDERAL INCOME TAX CREDIT ............................... 45
A . Eligibility for Section 45Q Credits ................................................... 46
B . Recapture of Section 45Q Credits ..................................................... 47
II .
CCUS METHODS , APPLICATIONS , AND SELECT INFRASTRUCTURE ....... 48
A .
Select Capture Methods used for CCUS ........................................ 48
B .
Primary Disposal and Sequestration Processes and Select CO 2
Infrastructure .................................................................................. 51
1 .
Application of CO 2 for EOR Operations ................................. 51
2 .
EOR as a Climate Change Mitigation Strategy for the
Fossil Fuels Industry ................................................................ 54
3 .
Application of CO 2 for Sequestration Projects ........................ 56
4 .
Review of Select CO 2 Infrastructure ........................................ 57
III .
REAL PROPERTY RIGHTS AND RELATED LEGAL CONSIDERATIONS
FOR EOR AND SEQUESTRATION OPERATIONS . ...................................... 58
A .
Ownership of Subsurface Geological Pore Space in the United
States .............................................................................................. 58
B . Legal Distinctions between EOR and Sequestration Projects ........ 61
IV .
CERTAIN COMMERCIAL AND LEGAL CONSIDERATIONS
SURROUNDING THE COMMON ARRANGEMENTS NECESSARY TO
CONDUCT THESE OPERATIONS .............................................................. 67
A .
Participants ; Economic Drivers and Objectives for CCUS
Projects .......................................................................................... 67
B .
Structure of Commercial Contractual Arrangements for CCUS
Projects .......................................................................................... 68
C .
CCUS Project Specific Considerations .......................................... 70
1 .
Industry and Private-Party Considerations .............................. 71
2 .
General Compliance and Recapture Risk under
Section 45Q ............................................................................. 71
3 .
Minimum Volume Commitments ............................................ 72
4 .
Access and Information Rights ................................................ 74
* The authors wish to thank their Bracewell colleague , Jason Hutt ( Environmental and Natural Resources ), for his insights and contributions .