CHPS of Insight Episode 11: Navigating Carbon Capture in Louisiana | Challenges and Opportunities

In this episode of CHPS of Insight, host Chris White speaks with Clark Hill Senior Counsel Colleen Jarrott and Onterris Energy and Critical Infrastructure Market Leader Ray Cheatham about carbon capture and sequestration (CCS) development in Louisiana. 

The conversation centers on the ongoing moratorium on new Class VI applications, originally intended as a short pause while regulators reviewed roughly 34 pending applications. They discuss Louisiana’s advantages - industrial emitters, existing CO2 pipeline/EOR history, geology, and workforce - while emphasizing safety, permitting rigor, public opposition, and best practices such as strong pore space leases, early community engagement, and regulator relationships.

This podcast is intended for general informational purposes only and does not constitute legal or financial advice or a solicitation to provide legal services. The information in this podcast is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Listeners should not act upon this information without seeking professional legal counsel. The views and opinions expressed in the podcast represent those of the individual speaker only and are not necessarily the views of Clark Hill PLC.

Transcript

Speaker 0:17

This podcast is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this podcast is not intended to create, and receipt of it does not constitute a lawyer-client relationship. Listeners should not act upon this information without seeking professional legal counsel. The views and opinions expressed in the podcast represent those of the individual speaker only and are not necessarily the views of Clark Hill PLC.

Chris White 0:43

Hello, everyone, and welcome back to Chips of Insight, where we bring policy to practice. Our goal is to deliver current perspectives on policy that affect your business for the professionals at Clark Hill Public Strategies and our subject matter expert clients and associates. I'm Chris White, your host, and today it's my pleasure to welcome Colleen Jarrott and Ray Chadham onto the podcast. Colleen, why don't you introduce yourself?

Colleen Jarrott 1:04

Thank you, Chris. Yeah, excited to be here today to talk to you about carbon capture development. I'm Colleen Jarrott. I am senior counsel with Clark Hill in the Washington, D.C. office. I am somewhat of a new transplant, I guess back to Washington, D.C. I just came from Louisiana where I spent 21 years practicing energy law. And I say energy law mainly because I found myself rebranding myself after COVID. I would say prior to COVID, most of my concentration was on oil and gas law, sort of traditional oil and gas litigation, defending oil and gas operators in cases that are known in Louisiana as legacy lawsuits, where there are basically claims by landowners against oil and gas operators for historical operations that potentially or allegedly caused, you know, groundwater contamination or soil contamination or both. And so these cases were very time consuming and lasted ultimately many, many years, 10 to 15 years sometimes. So it's focused a lot on that, did a little bit of energy transactional work, working offshore, helping clients with regulatory matters offshore, dealing with joint operator agreements, in addition to protecting operators against incidents of noncompliance, against Bessie Boom, and then also doing some work more recently on the carbon capture side. And that really kind of came about during COVID, was looking for an opportunity for new business, looking for something on the other side of the pandemic, right? I don't think we ever really knew what the world was going to look like on the other side of COVID. And so started to look for an area of law that I could concentrate on that would be something that would be new, but also an opportunity to find some business development opportunities as well. And so found carbon capture and sequestration, was really fascinated by it, realized that there was a really big tie with oil and gas law and as well as the industry itself. And so really started to concentrate on carbon capture. I've spoken at over 30 different conferences. I've written law review articles on this topic, and so really have found myself diving into carbon capture as a whole and really as my sole concentration since about 2020. And with us today, we've got Ray Cheatham who's with Onterris. Ray, do you want to take a minute to introduce yourself?

Ray Cheatham 3:26

Sure, and thank you for having me. Glad to be here. Ray Cheatham, I'm the Energy and Critical Infrastructure Market Leader for Onterris. We're an environmental health and safety consulting firm based in the US, Australia, and Canada. And I've got a background of way more than 30 years of experience. I'm a geologist by training and have worked all over the world and throughout the US on various types of environmental projects. The carbon sequestration goes back to 2018, I believe, where a gentleman that I work with and I started a carbon sequestration practice doing class six permits and have led permits in I think six or seven states at this point, and have like the testing and monitoring programs as well as had a unique experience to be an advisor to a foreign government on developing carbon sequestration in that country. So glad to be here and uh very interesting topic we have to discuss today.

Chris White 4:26

Absolutely. No, this topic is obviously very, very timely right now, and there's it's all over the news, and it's something that is hidden all across the country. But I understand right now it's been very, very front and center, especially in Louisiana. I think there's something going on, and the governor's got a careful eye on it. Do you guys want to dig in and let us know kind of the background there and what we should expect to see and what we're seeing?

Colleen Jarrott 4:48

Absolutely. I mean, it's been a very interesting history to watch carbon capture unfold within the state itself. So really, CCS dates back to 2009 in Louisiana, but nobody really heard much about it until about 2020, and that's when people, their ears started to perk up again, and people started to become interested in carbon capture and the economic opportunities that were there with it. But really, the legislation that is sort of the backbone of carbon capture in Louisiana was passed in 2009, and that was the Louisiana Geologic Sequestration of Carbon Dioxide Act. And that act basically sat dormant for a number of years until 2020, when there were a number of revisions and amendments that were made to that piece of legislation. And really that all related to eminent domain. And so in 2020, we started to see that operators who were building out these carbon capture projects would have the opportunity to use eminent domain as a way of obtaining pore space in the subsurface to put carbon dioxide and have it reside there permanently. And then from 2020, we saw other, you know, changes happening, of course. In the 2024 legislative session, we started to see that more of these operator-friendly pieces of legislation were being passed. So not only could operators use eminent domain, but then also we started to see that in 2025, pipeline owners could also use eminent domain to lay new pipe. We also started to see that operators could use unitization rules, sort of like how unitization is applied in oil and gas law, where if you're looking at a particular project acreage, you would need to have at least 75% of the co-owners agreeing to a lease for that project acreage for a carbon capture project. That was later revised to up that percentage just a little bit more in 2025 from 75% to 85%. But those were the kinds of adjustments that we were seeing on the legislative side as it relates to carbon capture. And last year, the governor put somewhat of a pause in place. I still like to call it a pause to be somewhat optimistic. Others like to call it a moratorium. And frankly, it is actually a moratorium, right? So the governor said, hey, look, we just had a major reorganization happen within the department that is responsible for approving class six well applications. That is the Louisiana Department of Conservation and Energy. And there at that time, there were about 34 applications for projects that were pending at the time that the moratorium was put in place. That moratorium was only supposed to last about 45 days, which meant that it was going to expire on December 1st. Well, here we are. It's July of 2026. Unfortunately, the moratorium is still in place. So we are hopeful that's ultimately going to go away. But what we've seen is that moratorium has allowed for time for those 34 applications that were pending back in October of last year to really be reviewed appropriately to make sure that those projects are going to be safe. And then, of course, any new applications that people wanted to file or the operators wanted to file, those were put on pause. So it's really the new applications that weren't being accepted, but the applications that were already in the pipeline are being cycled through, are being appropriately evaluated and reviewed to make sure that they are safe, to make sure that they are going to not have any sort of environmental impact or any side sort of human impact. And so we're waiting to see what's ultimately going to happen. I think that the moratorium, and Ray, correct me if I'm wrong, I think that moratorium has put somewhat of a chilling effect on some of the projects in Louisiana. But folks are still interested in being there. Folks are still interested in the poor space in Louisiana. We are geologically attractive. We are also economically attractive in Louisiana. So I think that ultimately things are going to get back on track. We're just in this sort of limbo state right now.

Ray Cheatham 8:55

Yeah, and it's remarkable if I go back to pre-2020 with forecasts showing decarbonization goals net zero, 2050, or 1.5. All of those forecasts have carbon sequestration as a critical component for achieving that. So with great gusto and gung-ho diving into preparing class six permits in various states, no state was in a better position, in my opinion, to really leverage and grow carbon sequestration like Louisiana was. A great industrial base with lots of CO2 emitters that are willing to contract for carbon sequestration. You have CO2 pipelines from years of enhanced recovery. You have great geology with large clean aquifers that can accept a huge amount of carbon sequestration. And then with Louisiana getting primacy, it just seemed like the deck was stacked for carbon sequestration to just really want to explode, but you know, grow rapidly in Louisiana more so than anywhere. But as Yogi Gera said, the feature ain't what it used to be. You know, with litigation, social pushback, and legislation being somewhat hostile lately, it's really frozen the market. And as Colleen said, a lot of projects are still in the queue, but people can't sit on money forever. And many times they don't do the large investment until they actually get the permit hand and go through formal FID. But they're sitting on capital, they're sitting on opportunity, and they can't wait forever. It's inevitable. Some projects are pulling out already, but it's just the world has shifted a lot in the last six years.

Colleen Jarrott 10:43

But the thing I think that keeps Louisiana being the carbon capture capital, if you will, of the United States is the fact that we also have an industry, the oil and gas industry, that can easily pivot from doing traditional exploration and production processes, carbon capture projects and facilities. And so it's an easy segue to go from the oil and gas side of things to the carbon capture side of things. And I think that's something that it's a skill set that is only that is unique to Louisiana. And I think that we have a number of people there that are well entrenched in the oil and gas industry that are now looking to the opportunities that are being provided by the carbon capture industry. And so I think that still makes Louisiana a very attractive location for these projects. You'll see if you look at a map of where these projects are really kind of taking off, you'll see there are a lot of them around sort of the river parishes, around Baton Rouge. There's some really good geology, some really good poor space there. And then you see a lot of projects that are taking off in the southwestern part of the state over by Lake Charles. Again, because that's an area that is rich in oil and gas production in the oil and gas industry. You've got folks there that have the jobs, the skill sets to do the projects that need to be done in order to have carbon capture be successful. So that's really great to see. And I think that people, even though Texas now has their primacy, I think there is a little bit of competition happening there between Louisiana and Texas. But I think folks have been so involved and invested in Louisiana that it's still a state rich and primed for these types of projects.

Ray Cheatham 12:33

They're already injecting CO2, they're already transporting CO2, they're using it for oil recovery. So their pivot is very easy. You know, they know the technology, they know how to manage CO2, so that's an easy pivot for those. And those are some of the companies that are still moving forward that were the first six that got through before the moratorium.

Colleen Jarrott 12:55

Absolutely. And it's great that you mentioned the projects with EOR and all the work that was being done up in the Hainesville shale area, because that really is a form of carbon capture, the enhanced oil recovery. I mean, most people think of carbon capture as only being permanent sequestration, but really there are two forms of CCS. You've got the EOR piece, like they were doing up in the Hainesville, with using carbon dioxide as a way of encouraging more production of oil and gas. But then you've got the other side of it too, with the permanent sequestration where the emissions of CO2 just go from a facility, a direct point source, through a pipeline and then into pore space to reside permanently. I think one of the things that that has been a big issue for especially community stakeholders around these carbon capture projects is this idea of are these projects safe? And I think that we can point to all the work that has been done with EOR to prove that these projects are safe. There hasn't been a major incident related to any EOR project that has caused any sort of human impact or environmental impact. And those projects have been going on for at least the last 30 or 40 years without incident. So I think that's something that the industry can point to to say, hey, look, we understand your concerns about environmental justice. We understand your concerns about any sort of negative impact that may happen to a community or to a particular demographic. But really, these projects are there to bring in economic and revenue production really for the parishes where these projects are located. So the fact that these EOR projects have been going on for 40 years, no problems at all. They are safe. They certainly can be safe. And so I think that those are things that sort of need to be promoted about these projects in order to give people that sense of look, we're not putting you in a position where there's going to be any sort of huge catastrophe as a result of doing a carbon capture project. So I think being able to put people's minds at ease about that, about the safety is something that's very important.

Ray Cheatham 15:04

That's a very good point. And having been inside the tent, as you say, preparing classics permits and the rigor with which they projects have to be studied, the monitoring that occurs, the communities often are citing fear of risk to groundwater, fear of pipeline leaks, fear of induced seismicity. And those all those issues are studied very thoroughly and monitored all for free choice and communities choosing what's going to go in their community. No problem with that. My concern is that the risk that they're citing is not really relevant given how these projects are developed and monitored over time. And if there were to be issues, they would be spotted, recognized, and resolved before ever impacting the groundwater that's being used or causing earthquake. So I feel like the industry and the permitting process will lead to very safe projects, but it's a matter of how do you communicate that, how do you make people comfortable with something that is new to them. But as you say, EOR has been going on for decades with issues in Louisiana. It's a little bit of a mismatch between the fear and the reality of what the projects will be.

Colleen Jarrott 16:22

Exactly. I think it's always important when dealing with community stakeholders to get in there early and to develop a level of trust with them. Do the things that you say you're gonna do when you're gonna do them. It kind of goes back to those rules you learn in kindergarten. And I hate to be so sophomoric about it, but it really does kind of come back to that, right? And you've got to be able to build that trust with the people in the community so that they feel safe. We've certainly seen, and I know Ray has probably been a part of these public hearings where before a project really gets underway, there's usually a public hearing in the parish where the project is going to occur. And we have seen where those hearings can get pretty violent. People get angry, they have to have security on site to make sure that people are safe. But I think it does go back to the fact that this is new technology and just naturally, just human instinct is to be skeptical, is to be wary of what this new thing is. And so I think that until folks feel comfortable that carbon capture can be safe, I think we're going to probably continue to see some of these more violent demonstrations by community stakeholders at these public hearings. I've heard some some pretty bad stories about those public hearings and how heated things can become. And we certainly saw with the the project that was happening in Lake Moripaw, which we all know is now going by the wayside, but we saw that those community hearings, there was a lot of tension, there was a lot of animosity. It was an entire parish that was trying to shut down this project. But I think that perhaps some of the issues there revolved around the fact that there was a a lack of trust between the parties that were engaging in order to have this project come to fruition.

Ray Cheatham 18:07

Yeah, and I've seen kind of an evolution. Some of the early projects in Louisiana did not proactively engage communities early, and that ended up obviously being a mistake. But I've also seen some clients I work for in Louisiana being very proactive with the communities being up front and getting out in front of it, letting them know actually what's going on so they can't be steered by misinformation. And one of the benefits that I hate to see Louisiana communities lose are the community benefits because these companies put together community benefit plans to provide funding for various things in the community that really make the communities a better place. And by prohibiting or eliminating the development, which I think will be safe, they're also missing out on things that could make their community a better place. I will say also the thing that bothers me about community meetings, forums is when you have outside influences come in who aren't from the local community. If it could stay purely with the community, understanding what the development's going to mean to them. And generally for these types of projects, how inconsequential the service disruption is and that they'll be managed safely. There really are real upsides to communities embracing these and supporting them. One thing I've seen on the community engagement, there's a bifurcation. It seems the parishes generally that are in opposition don't have that much oil and gas infrastructure and operations on them. And the ones that are more accustomed to oil and gas operations, understand pipelines, understand drilling, and inherently just are less opposed to it. So the projects that the governor prioritized are all in counties that are relatively low opposition or friendly. And all of those counties have significant oil and gas development ongoing, only natural, I guess you would think that they would be comfortable with it.

Colleen Jarrott 20:14

These projects, they can really go a long way in terms of revenue generation for a parish, not only bringing in dollars, but also jobs for these parishes. And some of these parishes are in extremely rural areas where job opportunities aren't necessarily plentiful. But this would be the kind of project where you could employ hundreds of people at a carbon capture facility and hopefully have that be something that would, again, bring in more revenue to the parish itself. I mean, we haven't seen any sort of tax incentives at the state level. Certainly there are tax incentives at the federal level. Under the One Big Beautiful Bill Act, we see that under that act for utilization, we saw that those numbers climbed, right? So for direct air capture projects, it went from 130 per ton for tax credit up to $180 per ton. And then on the permanent sequestration side of things, we saw it go from 60 to about 80 for the utilization piece of those tax credits. We don't see that at the local level in Louisiana, but certainly at the federal level, those types of benefits are available. And so that would attract people to come to Louisiana to build out these projects.

Chris White 21:26

That's obviously a lot of moving parts and a lot of uncertainty out there for people, unfortunately. Touching on the background and detail, what's going on, and if you had your crystal ball and you're able to think about what's coming next between legislative expectations or technology, or what do you think is likely to be the what moves next, what causes the next shift in paradigm or in foreign policy?

Colleen Jarrott 21:46

Yeah, I think the thing that would be next would be to have the governor lift this pause. I think that would really do a lot in terms of bringing about additional carbon capture interest and carbon capture disabilities. development. I think that's really the next piece. And hopefully we see that. I think that a lot of the the community pushback that the governor was perhaps hearing about these projects was something that encouraged him to put this pause in place. But I think that would be the one piece that would really be that would really be great and would create a a wonderful shift in where things are right now. I think in terms of project development, I think there's still there are still companies out there. I see it through clients that I work with who are interested in looking at poor space and doing poor space acquisition, trying to get leases in place, getting their class six permit applications put together, not necessarily filed at this point, but sitting on those and waiting for that right opportunity to actually file them with the Louisiana Department of Conservation and Energy for review. So I think that there's definitely momentum in the right way. The momentum is still strong. It's still happening. I think that if this pause could be lifted, I think that would definitely push everything over the goal line.

Ray Cheatham 23:02

I think the expectation is there'll be some of the same proposed legislation in the next session as there has been in the past. But some projects are moving forward and the ones that Governor Landry prioritized specifically so I think there will become a greater comfort level as some of these projects actually start being implemented and people see that they're operated safely. But the things Louisiana needs or doesn't need to do if Louisiana wants to make it easier to advance these projects safely lifting the moratorium, establishing a legal framework for poor space so that's off the table. And the imminent domain issue is very significant because if you have a 30 mile pipeline and one landowner can say no and you either have to reroute or scrap the project, that's what eliminating imminent domain would be so whether it's imminent domain or some other structure, there has to be some legal certain way that they can plan and implement these projects, whether it's the pipeline or the sequestration side itself.

Colleen Jarrott 24:09

Yeah. I would say over the last three legislative sessions we have seen a lot of bills introduced and pre-filed as it relates to carbon capture. There were for this particular for 2026's legislative session there were 40 bills that were introduced. Most of them were community opposition to these these types of projects in fact they were proposing that some parishes be given the opportunity to actually veto some of these projects coming into their parish. None of those bills actually made it through the House this year. They either died in committee or died on the House floor. So this was an interesting year where there really weren't many major bills that were passed that would really influence where these projects are going. And so that was interesting to see but we expect the very same thing for 2027. In 2025 it was somewhat of a fiscal session in Louisiana. So they were just supposed to be focusing on money but we saw again about 25 pre-filed bills relating to carbon capture and we did have some big bills come out of that as it related to eminent domain like Ray was saying and also unitization but and also to some safety requirements as well right so always trying to make sure that these projects are safe not only at a local level but at a a a state level overall we always want to ensure that there's safety involved in these projects and certainly the Department of Conservation and Energy they have been tasked with that and they are definitely trying to make sure that all of these projects are safe before there's any drilling of a class six well. So it was interesting to kind of see over 2024 2025 and 2026 kind of how that legislative structure has changed over time going from operator friendly to a little bit more landowner friendly to this year really not having much legislation if any passing at all relating to carbon capture.

Ray Cheatham 26:03

I would bring out my crystal ball I will say that given the natural advantages Louisiana has given the history and pipeline infrastructure that's already there and given the number and type of CO2 emitters that are there, it's going to happen. And it may be I would guess it's going to happen in the parishes that are either now or become more amenable and understanding of what's going on that's where the sequestration is going to go and if the opposition is just too high in certain parishes then it won't happen there is my prediction. Nobody's going to force sequestration but I think there will be lots of parishes plenty of parishes that will embrace it accept it and get the benefits and then work with the developers to make it happen.

Colleen Jarrott 26:53

Yeah agreed this is really Louisiana's moment we have the right geology we have the right workforce we've got the right administration in place and we've got the right people at the Louisiana Department of Conservation and Energy that are analyzing the class six well permits and making sure that all of these projects are meeting not only the regulatory requirements but also the safety requirements that are needed in order to move forward. So I think this is our time to really shine and and I'm hoping that is something that everyone will recognize and that Louisiana will continue to be the carbon capture capital of the United States.

Chris White 27:30

I think that makes total sense. But crystal balls are wonderful and they got a lot more good discussion out of there. But the one final thing I like to put people on the spot for if you were speaking in a general way to either current clients future clients or just people in the space what would you say would be your top three or however many best practices to protect themselves now and to anticipate what might be changing or make sure they're agile enough to make the moves as they need to Yeah I think a lot of that's going to really come out of the provisions that are put into these poor space leases, right?

Colleen Jarrott 28:01

That's really the the first place that everyone goes to for these projects is making sure they have the right pore space and enough of it to make sure that they can sequester the carbon dioxide over time and have it stay there in place in sitio if you will over for forever really these are projects that are intended to permanent sequestration is exactly that. It's meant to stay in place for eternity. And so I think having the right pore space lease is very important and making sure that you've got enough ability to be nimble as it relates to these carbon capture projects just because there is a lot of turmoil that has happened over time. And I think until we start getting technology that's really to scale getting these projects where they are to scale I think that you're going to have to need you're going to need to have that sort of flexibility in your lease agreements and things like that. In addition to any facilities that you might be co-locating on your campus for the carbon capture project as well I think those are going to be things that are going to be very important.

Ray Cheatham 29:02

Yada I agree and early and well thought through community engagement is critical to make sure the community understands what you're doing, make sure you're aligning community benefit plans with what's meaningful to the community and then just clear communication again I think if most people in communities understood how these are being developed, how well they're studied, how well they're monitored, I think they would be a lot more comfortable with it. But that gets down to having to translate technical information into ways that people can understand and get comfortable with it and possibly get beyond distrust of a company you don't know coming in to do something in your backyard. And I've seen companies doing that very proactively and engaging the community well but Louisiana right now I think that's a very critical component of what you're going to need to make these projects happen.

Colleen Jarrott 30:00

I would add one more thing too I think developing relationships with the regulators that are doing the hard work of reviewing these class 6 well programs and the applications I think having the right relationships with the right regulators is going to be something that's important in terms of making sure that your project can develop somewhat seamlessly by having those relationships you can pick up a phone and make a phone call, send an email, try to do something to move those projects along and so you want to have counsel that has those relationships at the state level and you want to make sure that you're able to leverage those relationships to your benefit and your advantage.

Chris White 30:38

That's fantastic. I want to thank you both this was incredibly informative and I appreciate you hopping on and with such a fast moving and timely topic to get this in front of people. And so I I'll just encourage everyone listening to to reach out to Colleen and Ray with any questions they have or to continue to get the insight that may be going forward. And obviously if things do change I welcome you both to come back. We can always do small little episodes to update if the moratorium goes away or something else changes to make sure people know about that right away and what that changes for them. So again thank you very much.

Colleen Jarrott 31:08 Chris White 31:08 Chris White 31:08

Thank you Chris, it was great to be here. Thank you so much for having us.

Ray Cheatham 31:12

Thank you, Chris. Pleasure to be involved.

Speaker 31:32

This podcast is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this podcast is not intended to create and receipt of it does not constitute a lawyer client relationship. Listeners should not act upon this information without seeking professional legal counsel. The views and opinions expressed in the podcast represent those of the individual speaker only and are not necessarily the views of Clarkhill PLC