American Oil and Gas Reporter - March 2020 - 21

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IndustryDigest
too demanding and specific to be
merely a general statement of policy.
He wrote the document implemented a
required template for BLM's leasing
process by using "language that can
only be understood as 'finally
determinative of the issues or rights to
which it is addressed.'"
Bush's ruling limits its impacts to
future lease sales where the sage grouse
habitat will be most affected by oil and
gas activities, and requires use of the
former requirement for a 30-day
comment period and 30-day protest
period for those areas.
The Western Energy Alliance and the
state of Wyoming successfully sought to
intervene after the complaint was filed. ❒

IRS Issues Guidance On
Carbon Capture Credits,
But Questions Remain
WASHINGTON-More than two
years after Congress passed the
FUTURE Act to reform and expand
Section 45Q tax credits for geologically
storing or beneficially using captured
carbon dioxide, the Internal Revenue
Service has published guidance and a
revenue procedure to start defining how
to claim the credits. While carbon
capture advocates express
encouragement at the development, they
also say the guidelines have been a long
time coming and urge the agency to
expand them as soon as possible.
The newly published guidance
defining beginning and continuous
construction parameters to qualify for
the credit and the procedure to establish
rules for business partnerships with
investors claiming the credit show the
IRS has considered Carbon Capture
Coalition recommendations, affirms
group Director Brad Crabtree.
"The beginning guidance adopts wellestablished precedents based on years of
experience with wind and solar tax
credits and adapts that experience to
carbon capture," he relates. "Importantly,
the guidance incorporates both the wellunderstood physical work test and 5%

Coming In April
Texas Alliance
Convention Section

safe harbor for determining whether a
carbon capture project has begun
construction to qualify for the credit.
"We are especially pleased the IRS
has embraced our recommendation to
provide for a longer six-year continuity
requirement to complete construction
of carbon capture projects (wind and
solar have a four-year requirement),"
he says. "Similarly, the revenue
procedure on partnerships draws on
well understood precedents that should
provide confidence to project
developers and investors structuring
financial deals to move forward with
carbon capture projects."
But while Crabtree expresses
appreciation for the IRS' work, he also
laments how much time it has taken,
saying "this work took far too long and
has delayed hundreds of millions if not
billions of dollars in investments in the
development and deployment of carbon
capture, use and geologic storage projects
that Congress sought to incentivize
through its bipartisan reform of 45Q."
According to press accounts, Baker
Botts partner Barbara De Marigny says
plenty of questions remain before
companies will feel confident
greenlighting carbon capture and
sequestration projects. "This guidance
alone is not sufficient to give great
comfort to companies that are
concerned about whether their
sequestration is sufficient," she is
quoted. "Without that piece, knowing
how to allocate the credit or whether
you have built your facility in time is
not going to resolve the basic
investment questions."
Crabtree suggests a rule to address
remaining long-term issues associated
with the credit's implementation is the
final remaining piece of the puzzle that
must be placed to unleash private
investment in carbon capture projects.
"The Coalition urges Treasury officials
to (complete) the rule as quickly as
possible to avoid any further delays in
project development that threaten to
undermine the full potential of the 45Q
policy to help foster economywide
deployment of carbon capture to meet
midcentury emissions reduction goals
while supporting domestic energy and
industrial production and high-wage
jobs," he says.
The notice containing the Section 45Q
guidance can be found at www.irs.gov/pub/irs-drop/n-20-12.pdf. ❒

Constitution Stymied;
Jordan Cove In Limbo
ALBANY, N.Y.-A pair of natural
gas infrastructure projects targeted by
anti-development activists sustained significant blows in February, and in the
case of the Constitution Pipeline, the
blow appears to be fatal.
First, the Federal Energy Regulatory
Commission postponed a final environmental analysis for the $10 billion Jordan Cove liquefied natural gas terminal
planned for Coos Bay, Or. According to
published reports, FERC's announcement came one day after Oregon Department of Land Conservation and Development Director (DLCD) Jim Rue
announced his agency had concluded
the project would undermine the state's
coastal scenic and aesthetic resources,
endangered species, critical habitat,
fisheries and commercial fishing. Press
accounts cite Rue's words in a letter to
project supporters in which, the director
says, neither FERC nor the U.S. Army
Corps of Engineers "can grant a license
or permit for this project unless the
U.S. secretary of commerce overrides
this objection on appeal."
A couple days later, press accounts
indicate, Williams Partners LP announced it was pulling the plug on the
124-mile Constitution Pipeline, which
would have transported 650,000
dekatherms of natural gas a day from
Pennsylvania into New York's Southern
Tier. "Williams-with support from its
partners Duke, Cabot and AltaGas-has
halted investment in the proposed Constitution project," the company is quoted. "While Constitution did receive positive outcomes in recent court proceedings and permit applications, the underlying risk-adjusted return for this greenfield pipeline project has diminished in
such a way that further development is
no longer supported."
The Constitution Pipeline project
had drawn opposition from New York
Governor Andrew Cuomo, whose administration used the state's Section 401
water quality authority to stymie the
project, a move U.S. Environmental
Protection Agency Administrator Andrew Wheeler deemed "the worst environmental decision by an elected official in recent history" (AOGR, December 2019, pg. 29).
"Our existing pipeline network and
expansions offer much better risk-adMARCH 2020 21


https://www.irs.gov/pub/irs-drop/n-20-12.pdf https://www.irs.gov/pub/irs-drop/n-20-12.pdf

American Oil and Gas Reporter - March 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - March 2020

Contents
American Oil and Gas Reporter - March 2020 - 1
American Oil and Gas Reporter - March 2020 - 1
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American Oil and Gas Reporter - March 2020 - Contents
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