Tax Credits Fuel a New EOR Era

A sweeping 2026 review and richer tax credits are pushing CO2-enhanced oil recovery from niche to scalable strategy

18 Mar 2026

A scientific review has outlined new benchmarks for carbon dioxide-enhanced oil recovery (CO2-EOR) across US reservoirs, as revised federal tax credits improve the economics of large-scale deployment.

Published in Energies in February 2026, the University of Regina study assesses CO2 injection techniques across a range of formations, including Permian Basin sandstones, Bakken shale and coalbed methane systems. The analysis comes as the updated 45Q tax credit offers $85 per tonne for both CO2 storage and CO2-EOR, placing the two activities on equal financial footing.

The study finds that CO2 injection is most effective when combined with mobility control methods, which help manage how the gas moves through reservoir rock. Because supercritical CO2 is less dense than in-situ fluids, it can bypass oil rather than displace it efficiently. The review evaluates several established approaches, including water-alternating-gas injection, foam-assisted flooding, polymer-assisted injection and low-salinity waterflooding.

Data from more than 60 field projects suggest that water-alternating-gas methods can increase oil recovery by nearly 10 percentage points over conventional waterflooding, with some cases reaching gains of up to 17 per cent under favourable conditions.

In shale formations, the study highlights the growing role of CO2 “huff-and-puff” cycles, where gas is injected and then produced from the same well. Pilot projects in the Eagle Ford and Bakken indicate measurable production gains, driven in part by molecular diffusion in low-permeability rock.

Coal seams are identified as another potential application. CO2 binds to coal surfaces at roughly twice the rate of methane, enabling gas production while storing carbon underground.

The review also points to advances in reservoir modelling, including machine learning tools that reduce simulation times and improve planning accuracy.

Despite technical progress and policy support, the authors identify CO2 transport infrastructure as a constraint. Expanding pipeline networks to key regions such as the Permian Basin and Gulf Coast is seen as critical to scaling both oil recovery and carbon storage.