Legislature(2023 - 2024)BUTROVICH 205
03/22/2023 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB90 | |
| SB49 | |
| Discussion: Ceraweek 2023 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 90 | TELECONFERENCED | |
| += | SB 49 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 49-CARBON STORAGE
3:40:30 PM
CO-CHAIR GIESSEL announced the consideration of SENATE BILL NO.
49 "An Act relating to the geologic storage of carbon dioxide;
and providing for an effective date." She invited Kevin Connors
to testify on SB 49.
3:41:17 PM
KEVIN CONNORS, Assistant Director of Regulatory Compliance and
Energy Policy, Energy and Environmental Resource Center,
University of North Dakota, Grand Forks, North Dakota, provided
invited testimony on SB 49. He explained that he worked in
regulatory and program development for both class II and class
VI oil wells. He described the Energy and Environmental Resource
Center (EERC) as a non-teaching business unit within the
University of North Dakota. He stated that the EERC is industry
focused with a great reputation regionally and worldwide. He
added that EERC serves as the North Dakota energy research
center. He stated that the CO partnership is a research-focused
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consortium with 20 years of applied experience. The consortium
includes the energy, agriculture, ethanol, coal, electricity,
oil, gas, service, and technology industries with 240 members.
He added that the centers unprecedented growth confirms the
interest in advancing technologies.
MR. CONNORS explained that the P-Corp partnership includes a
large regional consortium with ten states and four Canadian
provinces, including Alaska. He stated that the P-Corp
partnership began in 2019 and is currently in its fourth phase.
He noted that EERC partnered with the University of Alaska
Fairbanks Institute of Northern Engineering and the University
of Wyoming School of Energy Resources. He stated that the
mission of the P-Corp partnership focuses on the commercial
deployment of the technologies. He mentioned the contribution of
the Interstate Oil and Gas Compact Commission (IOGCC) to SB 49.
He remarked that IOGCC formed a task force in 2002 comprised of
experts, state regulators, the P-Corp partnership, the
Department of Energy and other key industry stakeholders. The
task force sought to ascertain whether the federal government is
the most appropriate regulator for dedicated geologic storage of
carbon dioxide. The task force recommended that the states
regulate the activity under a resource management framework,
similar to the regulation of oil and gas. He added that the
IOGCC developed a model statute and regulations. Portions of the
language included in SB 49 is rooted in the model statute
developed by the IOGCC task force.
3:46:54 PM
MR. CONNORS revealed that he works directly with commercial
project developers of Carbon Capture Storage (CCS) in North
Dakota and the surrounding region. He stated that he works on
greenfield, characterization, feasibility, project design, and
permitting. He added that operational projects receive
monitoring and reporting that follows with those activities. He
remarked on witnessing new industries emerging despite the
challenges. He expressed familiarity with the regulatory
frameworks similar to SB 49. He highlighted the priority of the
Alaska Oil and Gas Conservation Commission (AOGCC) to apply for
and obtain class VI primacy. He explained that when states
regulate predictability and permitting, they provide regulatory
certainty to the industry.
MR. CONNORS highlighted three key pieces of geologic storage:
industry, geology and policy. He stated his full support for SB
49, which initiates the application for class VI primacy. He
informed the committee that similar legislation was adopted in
other states. He stated that SB 49 provides a resource-
management framework that allows for an effective, all-
encompassing regulatory program. Only two states in the nation
have primacy: North Dakota and Wyoming. He noted that Louisiana
applied and is awaiting approval. He declared that the
Environmental Protection Agency (EPA) authority can take several
years. He added that EPA is the permitting and regulatory
authority and approximately 40 permits were submitted to EPA.
MR. CONNORS mentioned that EPA approved multiple permits in
Illinois over a four to five year period. In contrast, North
Dakota, with primacy, issued four permits within the last year.
The permitting process was shortened to eight months. He stated
that primacy allowed the industry emerging in North Dakota a
predictable and known permitting process. He alleged that states
have an advantage by regulating the activity. The regulation
process enables the deployment of technology and allows for
economic opportunities and solutions for Alaska's energy
industry.
3:51:28 PM
CO-CHAIR GIESSEL asked if there were questions.
3:51:41 PM
SENATOR KAWASAKI asked about class II wells, which are common in
Alaska. He queried how frequently class II wells transition to
class VI wells.
MR. CONNORS answered that EPA established class VI rules in
2010. He revealed that a federal code identifies the transition
of oil well classes. He stated that the transition is tied to
pressure and project intent. He spoke about potential challenges
associated with the transition to a mineral-bearing zone, which
requires permission from the mineral owner to use their minerals
as a storage horizon. He remarked that he had not witnessed a
transition in the oil well class. The future may include the use
of depleted oil and gas reservoirs, but most states mandate
optimal recovery of oil and gas resources. Transitioning to a
class VI reservoir means that production ceases. He opined that
a path toward continued production and storage is associated
with enhanced oil recovery. He recognized the storage aspects of
CO-enhanced oil recovery. He anticipated great benefits to
2
enhanced oil recovery compared to CO storage. He explained that
2
CO injection recovery involves managing a reservoir and
2
pressures within the reservoir; the activity is considered
storage.
3:54:25 PM
CO-CHAIR BISHOP asked how long North Dakota waited to receive
the class VI certification.
MR. CONNORS answered that he led the effort, and it took about
five years.
CO-CHAIR GIESSEL asked if the carbon storage is collected from
currently functioning power plants. She wondered if North Dakota
employed technology to capture carbon from the air.
MR. CONNORS responded that a combination of supplies are
utilized including lignite coal. He furthered that electricity
generation from ethanol plants and corn belt capture are also
utilized. He explained that the states in the corn belt lack the
appropriate geology for large-scale geologic storage, so
captured CO requires transport. He mentioned that CO capture in
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Wyoming's natural gas processing facilities utilizes a pipeline
to transport CO to Montana and North Dakota. He added that North
2
Dakota has been capturing CO since 2000 in a lignite coal
2
gasification plant utilizing a pipeline to transport CO to oil
2
fields in southern Saskatchewan.
CO-CHAIR GIESSEL asked about the federal credits North Dakota
obtains.
MR. CONNORS replied that the Section 45Q tax credit is available
to the project developer, which incentivizes advancing projects.
He revealed that the Section 45Q tax credit is $85/ton for
saline storage, and $60/ton for CO as it is stored in
2
association with enhanced oil recovery. He added that higher
incentives exist for direct air capture. The Section 45Q tax
credits incentivize commercial development and deployment and
are made available to the capturer or the storage provider
depending on the business arrangement.
CO-CHAIR GIESSEL assumed that North Dakota gleaned revenue from
the core space.
MR. CONNORS replied that the North Dakota core space is
privately owned. He expounded that surface owners own the core
space, which is leased, and private landowners are compensated.
He furthered that North Dakota saw economic benefits as the
state exports more than it consumes. North Dakota provides
energy to multiple states via the coal fleet and oil and gas
industries. He cited North Dakota's goal to reach carbon
neutrality. He shared that North Dakota's agriculture and energy
industries provide the pillars of the state's economy and
carbon-intensive industries. He revealed that North Dakota
considered carbon capture utilization and storage as a solution
to reducing the carbon intensity of the industries. North Dakota
reaps the benefits of economic interest and advancement because
of the practices. He stated that North Dakota receives
investment interest because of the early work with CCS projects.
4:01:23 PM
SENATOR WIELECHOWSKI asked what the average landowner receives
per acre and ton. He wondered if North Dakota captures revenue
via taxes.
MR. CONNORS replied that there is a fee associated with CO
2
storage used to pay for the administration of the regulatory
program and the long-term transition of a closed site. He
explained that CCS did not yield a direct economic benefit to
North Dakota, however, the agriculture and energy industries
benefit economically and pay into state revenues. He revealed
that state revenue is gained from taxing the oil, gas, coal, and
agriculture industries. The revenue is allocated to school
systems and other programs.
SENATOR WIELECHOWSKI requested the per acre and ton value. He
asked if the state taxed the industry directly for carbon
storage.
MR. CONNORS denied a specific tax other than the fee associated
with CO storage. The benefit is that carbon storage attracts new
2
industries. The state does not receive direct revenue but
creates great opportunities for industries to thrive.
SENATOR WIELECHOWSKI asked how a state might receive revenue
from CCS. He asked if the industry is taxed when they inject
carbon into the wells.
MR. CONNORS restated that CO storage is not taxed other than the
2
fees associated. He shared that the North Dakota Legislature
considered a higher fee for out-of-state CO. The state benefits
2
from attracting new industries because of interest in carbon
capture and the hydrogen economy. He stated that sales tax
incentives exist for industries seeking to capture CO. He added
2
that pipelines for CO enhanced recovery operations allow for
2
further tax incentives. North Dakota allows industries to thrive
with a business-friendly environment and safeguards ensuring
that CO storage and transport are done safely.
2
4:06:14 PM
CO-CHAIR BISHOP queried Mr. Connors experience with coal power
plants and feasibility studies related to carbon direct-air
capture.
MR. CONNORS replied that he had experience with both. He added
that project developers were encouraged to characterize
geological prospects. The projects were supported from
characterization through feasibility and permitting. He
mentioned a coal-fired power plant that is permitted to store
four million metric tons of CO underneath the facility. He added
2
that the project received federal funding. He mentioned helping
an electric company characterize its geology for a geologic
storage project that was approved in January of 2023.
CO-CHAIR BISHOP requested a further conversation with Mr.
Connors.
MR. CONNORS agreed to have another conversation.
4:07:59 PM
CO-CHAIR GIESSEL held SB 49 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 90 Support Letter AMA 03.17.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Support Letter CAP 03.13.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Support Letter RDC 03.13.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Ver. A 03.22.23.PDF |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Fiscal Note DCCED 03.17.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Sponsor Statement Ver A 03.21.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Support Doc Alaska Minerals Commission Report January 2023.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Support Doc Economic Benefits of Alaska's Mining Industry 03.22.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |
| SB 90 Support Doc Mining in Alaska Map 03.22.23.pdf |
SRES 3/22/2023 3:30:00 PM |
SB 90 |