02/20/2023 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB50 | |
| Presentation(s): Ccus Peer State Review | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 50 | TELECONFERENCED | |
| *+ | HB 49 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 20, 2023
1:02 p.m.
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative George Rauscher, Vice Chair
Representative Kevin McCabe
Representative Dan Saddler
Representative Jennie Armstrong
Representative Donna Mears
MEMBERS ABSENT
Representative Stanley Wright
Representative Maxine Dibert
Representative Josiah Patkotak
COMMITTEE CALENDAR
HOUSE BILL NO. 50
"An Act relating to the geologic storage of carbon dioxide; and
providing for an effective date."
- HEARD & HELD
PRESENTATION(S): CCUS PEER STATE REVIEW
- HEARD
HOUSE BILL NO. 49
"An Act authorizing the Department of Natural Resources to lease
land for carbon management purposes; establishing a carbon
offset program for state land; authorizing the sale of carbon
offset credits; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 50
SHORT TITLE: CARBON STORAGE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/27/23 (H) READ THE FIRST TIME - REFERRALS
01/27/23 (H) RES, FIN
02/10/23 (H) RES AT 1:00 PM BARNES 124
02/10/23 (H) Heard & Held
02/10/23 (H) MINUTE(RES)
02/15/23 (H) RES AT 1:00 PM BARNES 124
02/15/23 (H) Heard & Held
02/15/23 (H) MINUTE(RES)
02/17/23 (H) RES AT 1:00 PM BARNES 124
02/17/23 (H) Heard & Held
02/17/23 (H) MINUTE(RES)
02/20/23 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
LYDIA SHUMAKER, representing self
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 50.
KEN GRIFFIN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 50.
ANTHONY PENNINO, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
JOHN HENTGES, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
KASSIE ANDREWS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 50.
TODD LINDLEY, representing self
Valdez, Alaska
POSITION STATEMENT: Testified in opposition to HB 50.
LAUREN HENDRIX, Director
Marketing and Proposals
ASRC Energy Services
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
KARA MORIARTY, Lobbyist
Alaska Oil and Gas Association
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
FRANK PASKVAN, Affiliate Professor
Carbon Capture Use and Storage
University of Fairbanks
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
BERT HOUGHTALING, representing self
Big Lake, Alaska
POSITION STATEMENT: Testified in opposition to HB 50.
CHRISTINE RESLER, CEO
ASRC Energy Services
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
VIKKI JO KENNEDY, representing self
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 50.
LIAM ZSOLT, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 50.
CRAIG WILSON, Principal
Stantec
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint on carbon capture and
storage, titled "CCUS Peer State Review."
ACTION NARRATIVE
1:02:19 PM
CHAIR TOM MCKAY called the House Resources Standing Committee
meeting to order at 1:02 p.m. Representatives McCabe, Rauscher,
Saddler, Armstrong, Mears, and McKay were present at the call to
order.
HB 50-CARBON STORAGE
1:03:14 PM
CHAIR MCKAY announced that the first order of business would be
HOUSE BILL NO. 50 "An Act relating to the geologic storage of
carbon dioxide; and providing for an effective date."
1:03:50 PM
CHAIR MCKAY opened public testimony for HB 50.
1:04:34 PM
LYDIA SHUMAKER, representing self, expressed opposition to HB
50. She directed attention to page 18 of the proposed bill,
which indicated the purpose of the bill would be to implement a
framework for protecting the health, safety, and property in the
state, in the public's interest economically and
technologically. She argued that carbon dioxide (CO2) capture,
utilization, and storage (CCUS) is not economical. She gave the
example that a spokesperson for Archers Daniel Midland (ADM), an
agribusiness company in Illinois, has reported that the total
carbon storage worth at ADM is valued at $441 million, of which
$281 million came from the U.S. Department of Energy, with only
11 people employed. She argued that joining a fiat currency,
with the hope for carbon currency once tax credits have ended,
is not economical. She expressed the opinion that CO2 capture
projects would cost more to citizens than operating status-quo
with the oil and gas industry.
1:07:41 PM
KEN GRIFFIN, representing self, testified in opposition to HB
50. He expressed the opinion that the proposed plan would be a
disaster for the state, as it will take money from taxpayers and
move it to the government; therefore, the government would grow,
not the economy. He argued that there are no profitable CCUS
projects, as these projects only exist because of subsidies from
the government via the taxpayer. He gave the example that a
CCUS plant operated by Chevron in 2021 had 5 million tons [of
CO2] and had to pay a $300 million carbon tax credit. He
explained that the technology does not exist to make CCUS
economically feasible, and the state needs projects that would
help grow the economy. He suggested shelving any planned
projects until an economic impact study is done.
1:11:25 PM
ANTHONY PENNINO, representing self, shared that he has worked on
projects in the North Slope for 25 years. He expressed support
for HB 50, as it would be a way to increase oil and gas
development on the North Slope. He argued that it would bring
new industries to the slope because of the potential creation of
decarbonized electricity. He commented that he worked on CCUS
projects in the Lower 48 and expressed the opinion that these
projects can be successful.
1:13:20 PM
JOHN HENTGES, representing self, expressed support for HB 50.
He shared that he is the Alaska project manager for Storegga, a
United Kingdom-based carbon sequestration company; however, he
is testifying as a private citizen. He thanked members of the
diverse Alaska CCUS Workgroup that provided input towards HB 50.
He shared that Storegga has been working with the Department of
Natural Resources (DNR) to share lessons around CCUS regulations
in different countries. He explained that Alaska is a prime
candidate for carbon storage because of its geology and long
history of well-regulated, successful oil and gas operations.
He expressed confidence that CCUS projects could be done safely,
and these projects would play a significant role in diversifying
the state's economy.
REPRESENTATIVE SADDLER questioned Mr. Hentges' affiliation. He
further asked if his testimony as a citizen diverges from his
professional position.
MR. HENTGES answered in the negative, and he apologized for the
confusion.
1:17:26 PM
KASSIE ANDREWS, representing self, testified in opposition to HB
50. She stated that she has sent the committee an opinion piece
discussing the 45Q [incentive] tax credits [for carbon
reduction]. She advised that the article cautions against use
of such credits. After she sent the opinion piece, she stated
that she received a comment from a committee member, which
related that the state would not be involved with these credits,
as the bill would only set up the framework to provide a
"scourge solution." She questioned the result of when there are
no credits, as the bill would modify the statutes allowing for
CO2 pipelines. She suggested that the state would have
something to do with the credits, as it would be creating the
idea for residents that there is value in carbon. She expressed
the opinion that there is no value in carbon. She explained the
idea of a free market economy, which is driven by available
supply and the monetary value of the supply. She opined about
the affiliation of previous speakers, and the effects carbon
credits might have on Alaska's oil and gas industry. She
pointed to the Willow project and expressed the understanding
that a deciding factor in its approval was the social cost of
greenhouse gas emissions. She expressed the opinion that this
is an example of a gross overreach in government regulation.
She stated that the Alaska Independence Party voted unanimously
to oppose HB 50. She suggested that once the government and
"big business" agree CO2 has a monetary value, the next step
would be a tax on people and their usage.
1:21:05 PM
TODD LINDLEY, representing self, expressed opposition to HB 50,
and he advised that the bill be tabled until there is a proper
evaluation. He argued it makes no sense that an oil business
would participate in a carbon storage offset program, as these
facilities would increase costs from $60 to $120 per ton of CO2.
He expressed the understanding that the sustainable development
goals [in the proposed legislation] are in conflict with natural
resource clauses in the state constitution. He argued that 87
percent of the state's tax revenue would disappear if HB 50
passes.
1:23:38 PM
LAUREN HENDRIX, Director, Marketing and Proposals, ASRC Energy
Services, testified in support of HB 50. She expressed the hope
that Alaska will stay in the forefront of making carbon capture
safe and economical. She said that DNR has been engaging with
the Alaska CCUS Workgroup, which is a workgroup that seeks to
discuss a clear and safe path forward. She relayed that a
consortium has applied for the carbon capture funding released
by the U.S. Department of Energy. She expressed the hope that
HB 50 will give the Alaska Oil and Gas Conservation Commission
(AOGCC) the authority to pursue Class VI well primacy, which
would enable faster permitting. She explained that opening to
CCUS opportunities would make Alaska a leader in the field, and
it would also create jobs and support the economy.
1:25:14 PM
KARA MORIARTY, Lobbyist, Alaska Oil and Gas Association (AOGA),
expressed support for HB 50. She stated that AOGA supports the
advancement in research into CCUS, and it concurs with the
administration, in that Alaska is uniquely positioned to be an
industry leader. She explained that many of AOGA's members have
net-zero goals, and CCUS and oil and gas development are not
mutually exclusive. She said that AOGA supports policy which
backs researching technology, developing demonstration,
recognizing the range of carbon mitigation technology, providing
operators with a choice to deploy CCUS, establishing a
competitive pricing environment, recognizing market-bank
solutions, allowing the deployment toward net-zero emissions
goals, encouraging new carbon capture facilities, and addressing
the long-term storage of CO2. She said that AOGA is supportive
of the general framework of HB 50.
1:27:57 PM
REPRESENTATIVE MCCABE questioned the number of member companies
in AOGA that are seeking to adopt environmental, social, and
corporate governance (ESG) goals. He questioned what these
members would do if the state does not provide space for them to
store carbon.
MS. MORIARTY expressed uncertainty concerning the number of AOGA
member companies with net-zero targets, and she stated that she
would report back to the committee with the information. She
pointed out that AOGA's companies in other states are focused on
a variety of goals, and this depends on where they operate. She
continued that some states, such as Wyoming and North Dakota,
have already adopted a CCUS framework with projects currently
underway. She offered that it could be argued that Alaska is
behind in establishing CCUS in the state.
REPRESENTATIVE SADDLER directed attention to previous testimony
that had expressed concern over CCUS impacting taxpayers in the
state, which would be the oil companies in Alaska. He
questioned situations where taxpayers, or the oil companies,
have ended up paying the price to support CCUS systems.
MS. MORIARTY expressed uncertainty and stated that she would
report back to the committee.
1:31:40 PM
FRANK PASKVAN, Affiliate Professor, Carbon Capture Use and
Storage, University of Fairbanks, expressed support for HB 50.
He shared that he leads the Alaska CCUS Workgroup and explained
the mission of the workgroup. He stated that it is not seeking
state funding for CCUS projects; rather it seeks to establish a
legal and regulatory framework to allow businesses to thrive.
He stated that before the bill was drafted, the workgroup was
used as a platform for diverse input on a framework. He pointed
out that the workgroup has a white paper published on a
University of Alaska Fairbanks' website. He continued that the
CCUS industry is expanding and reiterated that the workgroup is
in support of HB 50.
1:35:24 PM
REPRESENTATIVE MCCABE offered his understanding that the oil
industry on the North Slope produces 10 million tons of CO2. He
asked whether the companies would have to spend money to barge
out the carbon if the state cannot provide carbon storage.
MR. PASKVAN answered that this is happening in the Lower 48. He
pointed out the example of ethanol. He stated that in some
states the plants do not have a framework to store the carbon
created from turning corn into ethanol, which forces the plants
to pipeline the carbon to states that do allow storage.
CHAIR MCKAY clarified that gas in the North Slope is considered
stranded; therefore, it must be reinjected into active
reservoirs. He said that HB 50 would not change the operations,
it would just require the CO2 be injected into Class VI wells
and depleted reservoirs.
1:38:03 PM
BERT HOUGHTALING, representing self, stated that he is in
support of capturing carbon and reinjecting it into the ground,
but he is not in support of more regulations that would stop the
growth of resource development. He suggested that the state's
constitution directs the maximization of all resources, and HB
50 would stifle growth; therefore, he opposes it.
1:40:42 PM
CHRISTINE RESLER, CEO, ASRC Energy Services, expressed support
for HB 50 and stated that she has participated in the Alaska
CCUS Workgroup. She explained that the CCUS process involves
moving streams of CO2 and reinjecting it into the ground for
permanent storage. She commented that Alaska has many fossil
fuels and CCUS would be a way to keep such fuels competitive.
She argued that HB 50 would not cause ancillary taxes. She
thanked the state for being proactive in proposing the bill.
She explained that a consortium has organized to apply to be a
capture hub and obtain funding from the U.S. Department of
Energy.
1:43:56 PM
REPRESENTATIVE SADDLER asked her to list the ways the bill would
benefit ASRC and other businesses like it.
MS. RESLER responded that it would allow the industry to assess
its ability to lower its carbon footprint. She suggested that
having a regulatory framework would benefit Alaska.
1:44:51 PM
VIKKI JO KENNEDY, representing self, pointed out that Alaska has
a large amount of tundra. She asked how the state is going to
supply a carbon capturing system at the rate the tundra is
emitting carbon. She stated that she is not ready to provide a
stance on HB 50.
1:47:31 PM
LIAM ZSOLT, representing self, shared that he is the Director of
Innovation and Technology Development at ASRC Energy Services.
He added that he also serves on the board of the Alaska Industry
Support Alliance; however, he expressed support for HB 50 on
behalf of himself. He explained that CCUS is important, as well
as the 45Q tax credits. He pointed out that the argument on
whether greenhouse gas emissions are real is outside the scope
of HB 50. He expressed the understanding that the scope of the
proposed bill is to put regulations in place to enable the
industry to grow. He offered that both Alaskans and the oil
companies care about the carbon footprint; therefore, the
companies will seek out ways to offset the emissions and ways to
produce them in a low carbon way. Furthermore, he explained
that a healthy and sustainable oil and gas industry is promoted
by enabling companies to use a CCUS framework, which would
enable many ways to find value in lowering CO2 from fuel
emissions.
REPRESENTATIVE MCCABE offered his understanding that investors
will not invest in Alaska oil because of its carbon footprint.
He asked if the bill is the industry's attempt to become more
attractive to investors.
MR. ZSOLT responded that HB 50 could "work fabulously to that
end." He explained that if the hydrocarbon producers in Alaska
are able to offset emissions in the state, then they would be in
a more favorable position with investors.
1:52:38 PM
CHAIR MCKAY added that carbon storage is essential for liquefied
natural gas pipelines in Alaska.
1:53:15 PM
REPRESENTATIVE SADDLER questioned the worst thing that could
happen if the legislature were to pass HB 50.
MR. ZSOLT expressed the opinion that there is little downside to
the bill. He reiterated that the bill would create a regulatory
environment that allows CCUS business in the state.
1:54:28 PM
CHAIR MCKAY, after ascertaining that there was no one else who
wished to testify, closed public testimony on HB 50.
[HB 50 was held over.]
1:54:39 PM
The committee took an at-ease from 1:54 p.m. to 1:56 p.m.
1:56:51 PM
^PRESENTATION(S): CCUS Peer State Review
PRESENTATION(S): CCUS Peer State Review
CHAIR MCKAY announced that the final order of business would be
a presentation on carbon capture, utilization, and storage
(CCUS).
CRAIG WILSON, Principal, Stantec, gave a PowerPoint
presentation, titled, "CCUS Peer State Review" [hardcopy
included in the committee packet]. He paraphrased slide 3,
which read as follows [original punctuation provided]:
CCUS legislation is relatively new for most
jurisdictions
Most legislation is designed to support UIC Class VI
primacy and follows EPA guidance
11 states have CCUS legislation in place
8 states have fully developed CCUS legislation
5 foreign states were also reviewed
Several common legislative themes emerged from the
review
MR. WILSON stated that after a review of the 11 states with
carbon capture frameworks, regulatory themes on CCUS emerged, as
seen on a chart on slide 4.
2:01:39 PM
MR. WILSON, in response to a committee question, expressed
uncertainty about how each state manages its revenues from
carbon storage and any profits made. He explained that the
permitting requirements are handled at the regulation level by
the individual agencies, and this is typically set to cover
costs. He further explained that the long-term liability funds
are not in use yet, as the program is new. He elaborated that
the amount would be dependent on whether a state accepts
liability for the storage of CO2. He advised that CCUS
legislation is still in its infancy. In response to a follow-up
question, he stated that neither Wyoming nor North Dakota have
shared information around their economic modelling. He
explained that the funding for CCUS programs varies, as there
are permitting fees, licensing fees, surface rentals, and
injection fees. He said that Alaska is not unique in wishing to
be revenue neutral.
MR. WILSON, in response to a committee question, conveyed that
the state would not have to meet the U.S. Environmental
Protection Agency's (EPA's) 50-year liability guideline. He
explained that when EPA came out with the Class VI well program
a decade ago, there had been discussion around this; however,
EPA hedged the matter. He stated that it was decided that an
operator would be liable for CO2 for 50 years, with liabilities
under the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA) and the Resource Conservation and
Recovery Act (RCRA.) In response to a follow-up question
concerning if RCRA would apply to the original producer of the
CO2, or the state, he said, "That would be a question for
lawyers."
MR. WILSON, in response to a question concerning whether any
states lease state land for CCUS, answered that Texas funds its
education system by leasing public lands used for CCUS. He
advanced to slide 6 to present a chart of what the Wyoming CCUS
program looks like. He moved to slide 8 to detail underground
injection control programs.
2:13:33 PM
MR. WILSON, in response to a committee question concerning
drinking water contamination, stated there is a requirement that
operators identify that reservoirs are away from a drinking
water aquifer. He explained that CO2 is a super critical liquid
at depths and will flow friction free. He further explained
that CO2 is not a toxic material, and the issue with CO2 in the
aquifers is carbonic acid. He advised that if the pH of the
drinking water is increased, metals could leech out.
MR. WILSON expressed uncertainty in response to the comparison
of the costs of using a Class II well versus a Class VI well.
2:18:48 PM
MR. WILSON, concluding the presentation, said that if Alaska
wants to have CCUS, the first step would be obtaining Class VI
primacy. He advised that HB 50 would take this step by
authorizing the Alaska Oil and Gas Conservation Commission
(AOGCC) to seek primacy. In response to a committee question,
he stated that EPA has 33 permits pending. On whether Alaska
should wait on the EPA permitting process until it receives
primacy, he answered that any company could submit a permit to
the EPA now, and EPA has current Class VI primacy in Alaska. He
added that if the state were to have its own Class VI program,
permitting would be faster.
MR. WILSON, in response to a committee question, stated that HB
50 would set up the framework for CCUS in Alaska, but it would
not mandate it. In reference to 45Q tax credits, he stated that
the tax credits are necessary to make a project economical. He
answered that other states offer state-level tax credits, and
this varies across the country.
2:30:19 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:30 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 50 Peer-State Review Report.pdf |
HRES 2/10/2023 1:00:00 PM HRES 2/17/2023 1:00:00 PM HRES 2/20/2023 1:00:00 PM |
HB 50 |
| HB 50 Stantec CCUS Peer-State Review Presentation 02.17.2023.pdf |
HRES 2/17/2023 1:00:00 PM HRES 2/20/2023 1:00:00 PM |
HB 50 |
| HB 50 Usibelli Support.pdf |
HRES 2/20/2023 1:00:00 PM |
HB 50 |