Expensing of Tertiary Injectants

Tertiary recovery, sometimes called “enhanced oil recovery,” refers to a variety of methods used to increase the productivity of an oil and gas reservoir by injecting materials into the formation to increase the reservoir pressure, increase the mobility of the remaining hydrocarbons within the formation, or increase separation between injected fluids (used for secondary recovery) and the remaining hydrocarbons. Oil and gas companies are allowed to deduct the cost of the injectants immediately, rather than capitalizing and depreciating the cost over the life of the injectants’ usefulness, even though tertiary injectants may support production from a well for years.