Legislature(2023 - 2024)BUTROVICH 205

03/22/2023 03:30 PM Senate RESOURCES

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

Audio Topic
03:30:21 PM Start
03:30:56 PM SB90
03:40:30 PM SB49
04:08:25 PM Discussion: Ceraweek 2023
04:43:19 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
Enrique Fernandez, Chairman, Alaska Minerals
Heard & Held
-- Testimony <Invitation Only> --
Kevin Connors, Assistant Director, Regulatory
Compliance and Energy Policy, Energy and
Environmental Research Center (EERC)
Presentation: Cambridge Energy Research
Associates (CERA) Update by
Commissioner-Designee John Boyle, Department of
Natural Resources
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled 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                                                               
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                                                               
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                                                               
enhanced oil recovery  compared to CO storage.  He explained that                                                               
CO   injection  recovery   involves  managing  a   reservoir  and                                                               
pressures  within  the  reservoir;  the  activity  is  considered                                                               
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                                                               
Wyoming's natural  gas processing facilities utilizes  a pipeline                                                               
to transport CO  to Montana and North Dakota. He added that North                                                               
Dakota  has  been capturing  CO  since  2000  in  a lignite  coal                                                               
gasification plant  utilizing a pipeline to  transport CO  to oil                                                               
fields in southern Saskatchewan.                                                                                                
CO-CHAIR  GIESSEL asked  about the  federal credits  North Dakota                                                               
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                                                               
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                                                               
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                                                               
MR. CONNORS denied  a specific tax other than  the fee associated                                                               
with CO  storage. The benefit is that carbon storage attracts new                                                               
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                                                               
fees  associated. He  shared that  the  North Dakota  Legislature                                                               
considered a higher  fee for out-of-state CO.  The state benefits                                                               
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                                                               
that  pipelines for  CO  enhanced recovery  operations allow  for                                                               
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.                                                                                  
4:06:14 PM                                                                                                                    
CO-CHAIR BISHOP  queried Mr. Connors  experience  with coal power                                                               
plants  and  feasibility  studies related  to  carbon  direct-air                                                               
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                                                               
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.                                                               
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