45Q + Mississippi CO2 Sequestration Economics

45Q Tax Credit + Mississippi CO2 Sequestration

The federal 45Q tax credit provides up to $85/ton for permanent geologic CO2 sequestration (and lower rates for CO2 EOR with secondary sequestration). Mississippi is one of the U.S. states with active CO2 sequestration infrastructure — the Cranfield SECARB test site (Adams County) being the most prominent legacy example, with selected Denbury legacy CO2 floods now under ExxonMobil potentially transitioning toward sequestration-only operations.

For Mississippi mineral owners, 45Q matters because it changes the operator's economic incentives around how Jackson Dome CO2 supply is allocated. CO2 directed toward permanent sequestration (high 45Q rate) can outcompete CO2 directed toward continued EOR (lower 45Q rate plus declining oil production economics).

Cranfield as the Mississippi Prototype

The Cranfield field in Adams County is the textbook Mississippi 45Q prototype. Originally Denbury's first commercial Mississippi CO2 flood in 2008, the field also hosted the SECARB CO2 sequestration test program and is now operated by Durango Operating in what appears to be a sequestration-priority transition. Other Denbury legacy CO2 floods may follow the same trajectory under ExxonMobil's Low Carbon Solutions strategy.

Mineral Owner Implications

Pore space rights — the right to use the underground void space for CO2 storage — are typically allocated to the surface owner under most U.S. state frameworks, NOT to the mineral owner. This means 45Q credits earned from CO2 sequestration generally don't flow to mineral owners. However, mineral owners on Mississippi CO2 EOR fields are still affected indirectly:

CO2 reallocation away from EOR shortens expected oil production tail (reduces royalty cash flow)

Field-level Class VI permitting (CO2 sequestration permits) creates surface-level operational complexity that can affect ongoing producing well workover timing

Mineral interest valuations on Jackson Dome-supplied CO2 floods need to explicitly account for the EOR-vs-sequestration scenario tradeoff

For More 45Q Context

For broader 45Q tax credit context across multiple U.S. CCS regions see our 45Q Tax Credits for Mineral Owners guide, our Wabash Valley Resources CCS hub page (Indiana), and our Class VI Injection Wells overview.

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