One Oklahoma City energy executive paying close attention to the One Big Beautiful Bill is Mark Behrman, President and CEO at LSB Industries Inc.
He will be focused on the energy tax credits that could be affected. LSB Industries is one company that is taking advantage of some of those credits and Berhman is keen to see if any changes will affect his company’s ammonia-production and carbon capture projects.
Carbon capture has been a big topic of conversation ever since the Inflation Reduction Act of 2022 was signed into law by former President Biden. Months after the law was created and boosted tax credits, LSB Industries jumped on board, hoping to take advantage.
Behrman says his firm remains in talks with the Environmental Protection Agency as it plans to begin construction on a large carbon-capture project at the firm’s Arkansas operation. It will be the first such project in Arkansas and only the third of its kind across the nation.
“We’re hoping this fall to be able to start construction,” said Mark Behrman, President and CEO at LSB Industries, the Oklahoma City firm with an ammonia-producing operation in El Dorado, Arkansas. The El Dorado plant is one of several owned and operated by LSB Industries. Others are in Pryor, Oklahoma and Cherokee, Alabama and Baytown, Texas where chemical products for agricultural, mining and industrial markets are manufactured.
The company has been in talks with the EPA for nearly two years about its move to create a carbon capture facility at the plant. In an interview with OK Energy Today, Behrman explained the EPA already has allowed LSB Industries to drill a 6,000-feet deep well in preparation for the eventual CO2 sequestration project.
“The well will allow us to store up to 400,000 tons a year. But we can go up to about 550,000 tons,” said Behrman.
The well, he said, is located on the 1,400-acre site of the ammonia plant. In conjunction with Lapis Carbon Solutions, another firm involved in the project, LSB plans to capture CO2 emissions from its ammonia plant and inject them deep into the earth. LSB and Lapis filed a permit application with the EPA in 2023 to construct a Class VI well to capture and permanently store or “sequester” the carbon dioxide. Class VI wells are those used to inject CO2 into deep rock formations.
The plant is located in the Smackover formation but Behrman said the injections will be below its depth, thereby avoiding any mixing with the heavy brine for which the formation is known.
“We’ll be going deeper than the formation containing the brine.”
LSB and Lapis plan to target what are called the Hosston and Cotton Valley geologic formations where the captured CO2 will be permanently stored. The original goal was to be operational in 2025 and help LSB reduce its direct greenhouse gas emissions by nearly 25% from existing levels. By doing so, LSB indicated it would be able to produce more than 375,000 metric tons of low carbon or “blue” ammonia a year. Blue ammonia is considered to be more valuable than conventional ammonia.
LSB Industries, spurred in part by the growing climate discussion of the past several years, made the decision two years ago to launch the project and take advantage of tax credits offered by the federal government. Under the 2022 Inflation Reduction Act, the tax credits were increased and at the same time, the Act eased requirements to qualify for them.
The Act, signed into law by former President Biden on August 16, 2022, boosted the tax credits from $50 per metric ton to $85 per metric ton. It also created a tax credit of $180 per metric ton for carbon dioxide captured using direct air capture technology. The act was considered a breath of life for the EPA’s Section 45Q program, which is the federal carbon capture tax credit.
As the law stated in 2023, it defined the tax credit as “The amount that a taxpayer may claim as a Section 45Q tax credit is computed per metric ton of qualified carbon oxide captured and sequestered (before 2018, the tax credit was exclusively for CO2). For the purposes of the tax credit, qualified carbon oxide is a carbon oxide that would have been released into the atmosphere if not for the qualifying equipment.”
The ongoing vote in the U.S. House regarding President Trump’s One Big Beautiful Bill, which was passed this week by the U.S. Senate with a few minor changes on the original House-approved bill, has the attention of Behrman. He’s concerned that perhaps some of the credits might be affected.
That’s because the newest version of the bill includes a rollback of some clean energy tax credits created by the Inflation Reduction Act. The bill that won approval in the Senate contains an acceleration of the sunset of some of the climate incentives such as elimination of EV tax credits.
It also shortens the lifespan of the 45V hydrogen prodution tax credit, which is used by LSB Industries in the creation of blue ammonia at the El Dorado plant. It too came out of the Inflation Reduction Act and was created to provide up to $3 per kilogram of low-emission hydrogen for a 10-year time period.
Behrman is concerned that whatever comes out of Congress will phase out the 45V tax credit for projects not under construction by the end of 2027. It’s why there is a sense of urgency on the part of LSB to begin construction with Lapis Carbon Solutions. Those hydrogen projects not operational by Dec. 31, 2027 would not be eligible for the credits. The changes, if approved in the final bill, would also have an impact on the Energy Department’s Regional Clean Hydrogen Hubs initiative, of which Oklahoma was not picked in its plan involving Arkansas and Louisiana.
