MIDSTREAM AND GAS STORAGE ASSETS

IEP sees a lot of opportunity in the large number of midstream projects where it can apply its carbon dioxide experience to reduce carbon emissions in midstream projects, particularly in gas processing facilities. A number of state and federal governments are aggressively pushing for industry participation. The 45Q tax credit along with the new state tax credit will increase the profitability of midstream assets. REITs are spending more aggressively in the midstream space as some capital expenditures and expenses can now be deducted as tax credits based on changes in the new tax code. The Inflation Reduction (IRA) and other tax benefits on climate change make many of these projects financially attractive. Along with the federal incentives for the development of storage projects in the Gulf of Mexico, state governments are also providing attractive incentives.

 

IEP plans to develop ventures where hydrogen is injected in gas storage and pipeline projects to realize greater efficiencies and further reduce carbon emissions. The company will help decarbonize the upstream supply chain, including the use of renewable hydrogen injected at selected points where wind and solar energy are delivered. In addition, over-pressure management is an important component of maximizing flow in select midstream stages. Flow volumes are increased by managing over-pressure in certain midstream segments. IEP has also found that the selection of materials is also important at high-volume segments.

 

The same technologies are applied to sustainable energy projects from a reservoir and facilities perspective. Aggressive capital deployment in the carbon reduction and renewable energy space is now taking place. IEP believes larger midstream assets will change hands as some of the current holders of these assets may not elect to spend the large amounts of capital required to convert those midstream facilities.