((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
U.S. pipeline operator Kinder Morgan KMI.N Inc has acquired oil and gas production assets in West Texas and plans to exploit U.S. carbon capture incentives to increase production from those properties, according to people familiar with the matter.
The purchase shows how the U.S. Inflation Reduction Act’s $60 per metric ton tax credit for carbon sequestration is boosting oil and gas deals by increasing the attractiveness of former oil-producing areas , said one of these people. The company paid about $100 million for the oil field, according to one of the people, which first produced oil in the 1920s and still pumps about 1,100 barrels a day.
Kinder Morgan has a small oil production company that produces about 50,000 barrels of oil per day by injecting carbon dioxide into wells to force more oil out. The U.S. tax credit for carbon sequestration has made the field more profitable, one of the people said.
The deal with Avad Energy Partners, a privately held company, involves some 265 wells located in a mature area of the largest U.S. oil field, according to Avad sales filings and people familiar with the matter.
Kinder Morgan declined to comment. An Avad Energy spokesperson did not immediately respond to a request for comment.
The acquisition includes some 11,600 acres of land that has the potential to increase oil production using the enhanced oil recovery technique involving the injection of carbon dioxide, the people said.
Kinder Morgan separately plans to sell several of its older conventional oil fields in the region, one of the people said, in order to focus on properties with higher potential.
“This shows that KMI remains in the exploration and production business,” one of the people said, using the acronym for exploration and production. “It has huge sources of CO2 in West Texas that can be used to produce more oil.
An additional 100 million to 300 million barrels of oil could be recovered over time using enhanced oil recovery, this person added.
