Houston-based pipeline operator Kinder Morgan has acquired oil- and gas-producing assets in west Texas from Avad Energy Partners and plans to use U.S. carbon capture incentives to increase production from the properties. Reuters reported recently the purchase shows how the tax credit for carbon sequestration in the U.S. Inflation Reduction Act “is spurring oil and gas deals by increasing the attractiveness of older oil-producing areas.” KMI reportedly paid about $100 million for this oilfield that first produced oil in the 1920s and still produces about 1,100 barrels per day.
Kinder Morgan operates a small oil production business that produces about 50,000 b/d of oil by injecting carbon dioxide into the wells. The U.S. tax credit for carbon sequestration ($60 per metric ton) made the field more economic.
The assets include about 265 wells on 11,600 acres primarily in Crane County. Another 100 million to 300 million barrels of oil could be recovered.