Published on 23 May 2024 on Zacks via Yahoo Finance

Kinder Morgan (KMI) Leverages Carbon Credits in Texas Oilfield

Kinder Morgan (KMI) has strategically acquired oil and gas-producing assets in the Permian Basin for approximately $100 million, per a report by Reuters on Wednesday. This acquisition includes 265 wells located in a mature area of the Texas oilfield and 11,600 acres of land. These assets, first developed in the 1920s, currently produce around 1,100 barrels of oil per day. Kinder Morgan plans to leverage these assets to boost production using U.S. carbon capture incentives.

Focus on Carbon Capture Incentives

The acquisition is significantly influenced by the U.S. Inflation Reduction Act's $60 per metric ton tax credit for carbon sequestration. This incentive has made older oil-producing areas more attractive for deals and investments. The move demonstrates how such tax credits can drive oil and gas companies to invest in mature fields with the potential for enhanced recovery through carbon capture technologies. By tapping into these tax credits, Kinder Morgan plans to enhance oil production from these mature fields using carbon dioxide (CO2) injection, a technique known as enhanced oil recovery (EOR).