The National Energy Strategy contains two major elements designed to increase oil production from known reservoirs in the contiguous United States: 1) a tax credit for specific investment and injectant costs for qualified enhanced oil recovery (EOR) projects; and 2) a highly focused, public-private cooperative R&D program. Both are currently being implemented by the Department of the Treasury and the Department of Energy, respectively. The present study estimates the potential reserve additions and impacts on public treasuries at oil prices between $22 and $34/Bbl. The new Federal tax credit, alone, could double current proved EOR reserves at oil prices in the $22/Bbl range and increase them by about one-third at prices in the $30/Bbl range. The effect of technology advances alone could also about double EOR reserves at these prices. The combination of technology advances and the tax incentive synergistically amplifies the effects on potential EOR reserves. The benefits of the tax credit come at some cost to the Federal treasury, but increase state revenues. Increased EOR activities due to the tax credit and technology advances could also increase economic activity and gross domestic product (GDP) and contribute to reductions in oil imports and the U.S. trade deficit.

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