HOUSTON, May 22 (Reuters) - U.S. pipeline operator

Kinder Morgan Inc ( KMI ) has acquired oil and gas producing

assets in West Texas and is planning to tap U.S. carbon capture

incentives to increase output from the properties, according to

people familiar with the matter.

The purchase shows how the U.S. Inflation Reduction Act's

$60 per metric ton tax credit for carbon sequestration is

spurring oil and gas deals by increasing the attractiveness of

older oil-producing areas, one of the people said. The company

paid about $100 million for the oilfield, according to one of

the people, which first produced oil in the 1920s and still

pumps about 1,100 barrels per day.

Kinder Morgan ( KMI ) has a small oil production business that

produces about 50,000 barrels of oil per day by injecting carbon

dioxide into the wells to push out more oil. The U.S. tax credit

for carbon sequestration made the field more economic, one of

the people said.

The deal with closely held Avad Energy Partners includes

some 265 wells in a mature area of the largest U.S. oil field,

according to Avad marketing documents and people close to the

matter.

Kinder Morgan ( KMI ) declined to comment. An Avad Energy

spokesperson did not immediately reply to a request for comment.

The acquisition includes some 11,600 acres of land that has

potential to increase oil production using the enhanced oil

recovery technique involving carbon dioxide injection, the

people said.

Kinder Morgan ( KMI ) separately plans to sell several of its older,

conventional oilfields in the area, one of the people said, to

concentrate on the higher-potential properties.

"This is showing KMI is staying in E&P business," one of the

people said using the acronym for exploration and production.

"They have huge CO2 sources in West Texas" that can be used to

produce more oil.

Another 100 million to 300 million barrels of oil could be

recovered over time from the field by using enhanced oil

recovery, that person said.