CO2 Enhanced Oil Recovery, Explained
Most oil fields give up only a third to half of the oil in place using conventional methods. Injecting carbon dioxide into an aging field can recover a meaningful share of what is left — it is the largest form of enhanced oil recovery in the US, concentrated in the Permian Basin, and increasingly tangled up with carbon-capture tax policy.
Three Stages of Recovery
Primary
- Natural reservoir pressure alone pushes oil to the surface.
- Recovers roughly 5–15% of the oil originally in place before pressure drops too far to keep flowing economically.
Secondary
- Water or natural gas is injected to maintain reservoir pressure and physically push more oil toward producing wells.
- Typically adds another 10–20 percentage points of recovery on top of primary methods.
Tertiary (EOR)
- Changes the oil itself — CO2, steam or chemicals alter its viscosity so it flows more easily.
- CO2 injection is the dominant tertiary method in the US; it can add a further 5–20 percentage points of recovery in a field suited to it.
Even with all three stages, a large share of the oil originally in a reservoir is typically never recovered — see the barrel-of-oil and how-oil-is-formed pages for how reservoirs hold oil in the first place.
Key Figures
| Measure | Value | As of / source |
|---|---|---|
| US CO2-EOR output | ≈310,000 b/d (≈2.9% of US crude) | 2018 · industry estimate |
| Permian Basin CO2-EOR output | ≈185,000 b/d | 2018 · industry estimate |
| 45Q credit, EOR (post-2025 update) | $85/ton CO2 stored | 2025 · US tax code, industry reporting |
| Estimated breakeven impact | ~$28/bbl → ~$16/bbl | Industry estimate, post-2025 credit change |
No free, regularly updated source tracks CO2-EOR output at higher frequency than these industry estimates — treat the production figures as directional, not current-year. Well breakevens for ordinary (non-EOR) shale drilling are tracked separately on what is fracking.
CO2-EOR FAQ
What is CO2 enhanced oil recovery?
A technique for pulling more oil out of a field that primary and secondary recovery have already largely depleted. Carbon dioxide is injected into the reservoir, where — under the right pressure and temperature — it mixes with the remaining oil, making it less viscous and easier to push toward a producing well. It is the most common form of "tertiary" or enhanced oil recovery in the US.
How much US oil comes from CO2-EOR?
As of 2018, CO2-EOR accounted for roughly 310,000 barrels a day, about 2.9% of US crude output at the time, with the Permian Basin the largest single source at around 185,000 b/d. Figures have likely shifted since as both overall US production and CO2 supply infrastructure have grown, but no more recent comparable industry-wide estimate is available.
Where does the CO2 come from?
Historically, mostly from naturally occurring underground CO2 deposits (large domes in Colorado, New Mexico and Mississippi feed pipelines to the Permian Basin, the biggest CO2-EOR region). A growing share is now meant to come instead from CO2 captured at industrial facilities and power plants — captured, human-made CO2 injected underground rather than naturally sourced CO2, which is the version carbon-capture policy is trying to encourage.
What is the 45Q tax credit, and how does it relate to EOR?
Section 45Q of the US tax code pays companies a credit for every ton of CO2 they capture and permanently store, whether that CO2 ends up in a dedicated storage site or injected for EOR. The Inflation Reduction Act (2022) raised the credit and loosened eligibility; a 2025 update brought the EOR rate up to $85 a ton, matching the rate for straight storage, which one industry estimate suggested could cut CO2-EOR project breakevens by roughly 40%, from about $28 a barrel to about $16.
Does CO2-EOR actually reduce emissions?
It depends entirely on where the CO2 comes from. Using naturally occurring CO2 pumped from underground domes does not reduce emissions — it simply produces more oil. Using CO2 captured from an industrial source and then permanently stored underground can offset some emissions, which is the premise behind pairing 45Q tax credits with EOR; the actual climate benefit depends on the capture source, the fraction of injected CO2 that stays underground long-term, and the emissions from burning the additional oil produced.