The Best Tax-Deductible Retirement Investment?
Portable CO2 EOR Oil Field Re-Pressurization Projects
Socially-responsible and Patriotic Investors, who would like to use their money to do something good for America (and at the same time benefit financially) can now take advantage of the generous tax-deductions and other incentives granted by Congress to encourage America’s Accredited Investors to invest in Enhanced Oil Recovery projects that can help America to reduce its dependence on foreign oil imports (and at the same time generate annual returns of more than 25% per year to Investors).
What most people don’t realize is that, for every barrel of oil taken out of the ground through primary phase oil production, there still remains 3-4 barrels of stranded oil left in the ground long after the oil field has been closed (after losing its natural drive pressure that would push the oil to production wells).
50%-65% of this previously inaccessible and stranded oil (totaling literally hundreds of billions of barrels in the U.S) can now be recovered using the latest CO2 EOR gas injection techniques to re-pressurize and re-mobilize this stranded oil for extraction and sale.
Unfortunately, there are not enough CO2 supplies and not enough CO2 pipelines to meet demand. While major oil companies and the U.S. Department of Energy see value in developing CO2 EOR in the largest-size legacy oil fields (that can volumetrically justify the cost of building a $1-million a mile CO2 pipeline), there are literally 100s of 1000s of smaller, medium-sized oil fields in America that don’t have a nearby CO2 pipeline, but are nevertheless each EOR-worthy and capable of profitably recovering another 500,000-1,000,000 barrels of stranded oil.
It is for this vast and unserved oil market that Fossil Bay Energy developed it Portable Exhaust Gas Injection CO2 EOR system that self-generates its own CO2 gases to inject into and re-pressurize America’s depleted oil fields that are unserved by CO2 pipelines.
Just as horizontal drilling and multi-stage fracking unlocked the value of numerous multi-billion barrel shale gas and shale oil plays over the last five years, Portable CO2 EOR technologies promise to usher in a new era of low-cost oil production that can unlock the value of America’s multi-billion barrel stranded oil resources at a fully-burdened cost of less than $15-$25 per barrel of recovered oil.
With high birthrate population growth in developing countries helping to add another 3-billion new consumers to the world’s population over the next few decades, the global demand for oil will only continue to grow beyond today’s 94-million barrel a day capacity, with higher oil prices as the result (which is good for investors).
For Investors worried about their retirement incomes – who are looking for even better returns than the average 7% per year earned by stocks, bonds or real-estate investments – a portable CO2 EOR investment can offer average annual ROIs of more than 25% due to the following:
- Significantly reduced risk from 100% tax-deduction of the IDC Intangible Drilling Costs and Qualified Tertiary Injectant EOR costs passed-through to Investors/partners for deduction against their ordinary income – enabling investors to literally deduct more than 65%-75% of their investment in the first year.
- 15% Tax-Free Oil Income. In addition to the benefits above, 15% of gross oil sales are tax-free to Investors, courtesy of Congressionally-granted oil depletion credits to Fund Partners.
- When a closed and inactive oil field (with currently un-bookable oil reserves) implements CO2 EOR to extract “economically producible” oil, its reserves, under the latest SEC Oil-Reserves accounting rules, can be re-classified and booked as “Proved Reserves” that can be valued, collateralized and borrowed-against for the benefit of its Partners/Investors under international Reserves Based Lending criteria.
- REITs and Real Estate Investors who sell their investment properties at a market-high can defer taxation on and protect their profits from taxation this year by re-investing their sales proceeds into a CO2 EOR investment under IRS rule IRC § 1031 Like-Kind Exchange of Property for oil and gas properties.
- No “dry hole” oil exploration risk – EOR is implemented in known and proved oil fields that previously produced >500,000-1,000,000 barrels of oil and can produce similar amounts of oil again from portable CO2 EOR.
- Reduced exposure to oil price volatility – while other costlier oil projects will lose money if the price of oil falls below $50 per barrel, portable CO2 EOR’s all-in oil recovery cost of less than $15-$25 per barrel assures investors of large tax-deductions and high profitability even in times of low oil prices.
- Higher upside potential — with the WTI price of oil seeming to bottom out at $42.41 per barrel and reaching new 2015 highs at >$55.00 per barrel, Investors’ profits and average annual ROIs of >25% per year could increase even more, if and when oil prices increase back to oil’s previous $65-$75 a barrel range.
Investors who invest as General Partners in a Limited Partnership that owns a direct Working Interest ownership stake in an EOR project may utilize the IDC and CO2 Injectant deductions as an offset to their “ordinary income” (taxable adjusted gross income items, e.g. salary, interest, dividends, rental, etc.).
While required by the IRS to share corporate liabilities, Partner liabilities would be mitigated by the LP maintaining multi-million dollar insurance coverage and utilizing drilling and EOR sub-contractors who carry both liability and workers’ compensation insurance. And when all the EOR injection and production wells have been drilled, completed and EOR implemented, each General Partner unit would then be automatically converted to a Limited Partner unit, thus limiting future partner liability.
Corporate and Individual Accredited Investors interested in tax-advantaged and risk-mitigated portable CO2 EOR investments should consult their accountants and attorneys to determine their suitability for such investment.
Contact: Larry Shultz, COO