Legislature(2025 - 2026)BARNES 124
02/03/2025 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Carbon Storage Program Update | |
| Presentation(s): Carbon Offset Program Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 3, 2025
1:02 p.m.
MEMBERS PRESENT
Representative Maxine Dibert, Co-Chair
Representative Carolyn Hall
Representative Donna Mears
Representative Zack Fields
Representative Dan Saddler
Representative Julie Coulombe
Representative Bill Elam
MEMBERS ABSENT
Representative Robyn Niayuq Burke, Co-Chair
Representative George Rauscher
COMMITTEE CALENDAR
PRESENTATION(S): CARBON CAPTURE UTILLLIZATION AND STORAGE UPDATE
- HEARD
PRESENTATION(S): CARBON OFFSET UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HALEY PAINE, Deputy Director
Division of Oil and Gas
Alaska Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint regarding the Carbon
Capture Utilization and Storage (CCUS) program.
CHRIS WALLACE, Senior Petroleum Engineer
Alaska Oil and Gas Conservation Commission (AOGCC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding the Carbon
Capture Utilization and Storage program.
TREVOR FULTON, Carbon Offset Program Manager
Office of Project Management and Permitting
Alaska Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint regarding the Carbon
Offset Program.
ACTION NARRATIVE
1:02:28 PM
CO-CHAIR MAXINE DIBERT called the House Resources Standing
Committee meeting to order at 1:02 p.m. Representatives Hall,
Mears, Fields, Saddler, Coulombe, Elam, and Dibert were present
at the call to order.
^PRESENTATION(S): Carbon Storage Program Update
PRESENTATION(S): Carbon Capture Utilization and Storage Update
1:04:23 PM
CO-CHAIR DIBERT announced that the first order of business would
be a presentation by Haley Pain, Deputy Director of the Division
of Oil and Gas, Alaska Department of Natural Resources (DNR)
regarding the Carbon Capture Utilization and Storage (CCUS)
program
1:05:21 PM
HALEY PAINE, Deputy Director, Division of Oil and Gas, Alaska
Department of Natural Resources, presented an update concerning
the Carbon Capture Utilization Storage (CCUS) program [hard copy
included in the committee packet]. She explained that the
purpose of her presentation was to review the topics, provide
updates, and answer questions. She said that her program was
referred to as "the rock bill." She referred to Governor Mike
Dunleavy's 2023 introduction of a packet of bills referred to as
the "carbon management bills" which included a carbon offset
bill and a bill which enabled DNR to license Alaska's pore space
to store carbon deep underground. She referred to slide 2 which
provided an outline of her presentation and read as follows
[original punctuation provided]:
1. Carbon capture, use & storage (CCUS)
2. Agency roles under House Bill 50 (2024)
3. Department of Natural Resources (DNR)
implementation of House Bill 50 (2024)
4. DNR regulations
5. Summary
MS. PAINE explained that CCUS is a suite of technologies that
enables the capture and storage of carbon dioxide. She moved to
the next slide and explained the technologies illustrated,
pointing out that CO2 has been used for enhanced oil recovery
for decades, and the carbon capture technology is based on that
science. She described the primary points in slide 3, titled
"What is CCUS?" which read as follows [original punctuation
provided]:
Carbon capture, utilization and storage is a process
that:
• Captures carbon dioxide (CO2) emissions from:
• industrial processes
• point sources like coalfired power plants, or
• directly from the air, and
• Reuses or stores it so it will not enter the
atmosphere
1:09:35 PM
MS. PAINE moved to slide 4, titled "Core Purposes of HB 50
(2024)," which read as follows [original punctuation provided]:
Make Alaska's subsurface resources available for
maximum use
1. Enables DNR to lease state lands for geologic
storage of carbon dioxide and issue right-of-way
leases for carbon dioxide transportation pipelines
2. Empowers the Alaska Oil and Gas Conservation
Commission (AOGCC) to regulate the geologic storage of
carbon dioxide on all lands in the state, including
protection of correlative rights
MS. PAINE discussed what considerations would be taken into
account with an exploration license for carbon storage such as
porosity and permeability and a secure cap rock. She explained
that HB 50 (2024) outlined responsibilities for DNR and the
Alaska Oil and Gas Conservation Commission (AOGCC), shown in
slide 5, titled "Agency Responsibilities," which read as follows
[original punctuation provided]:
DNR Landowner
• Manage the state's pore space resources for the
benefit of Alaskans
• Issue carbon storage exploration licenses & leases
• Commercial payments
• Work commitments and annual reporting
• Permitting and compliance of operations
• Multiple-use management
• Review right-of-way permits for CO2 pipelines
• Perform long-term monitoring of facility after
regulatory closure
• Carbon storage closure trust funds
AOGCC Subsurface Regulator
• Quasi-judicial agency with regulatory powers over
subsurface of all lands in state
• Issue storage facility permits
• Safeguard human health and the environment from
underground injection
• Class VI well primacy
• Protect other mineral interests and amalgamate
property rights
• Waste prevention determinations
• Assess storage capacity and volumes
• Review and issue site completion certifications
1:14:15 PM
MS. PAINE responded to a question from Representative Mears
regarding primacy of Class VI wells by explaining that AOGCC has
provided that since it was unable to seek Class VI primacy
through SB 48 (2023), they subsequently turned to developing the
regulatory packet for submitting a Class VI application. The
target date for submission to the Environmental Protection
Agency (EPA) is the summer of 2025.
1:15:30 PM
MS. PAINE, in response to questions from Representative Elam,
explained that the largest stationary sources of CO2 are located
on the North Slope and are associated with gas handling,
recycling, and keeping Prudhoe Bay pressurized. There are also
gas and coal-fired plants in Central and Interior Alaska that
are additional sources of CO2. As a source for earning revenue,
she explained that the framework was being set up by DNR, but no
applications had been received.
1:17:19 PM
MS. PAINE responded to Representative Saddler's question by
explaining that both AOGCC and DNR have been working
expeditiously to effectuate the Class VI primacy because of its
time-sensitive nature. She pointed out the federal government
drives the timeline once the application is submitted. The
AOGCC is hopeful that the process will take 12 to 24 months once
the application is in place.
1:18:34 PM
MS. PAINE addressed a question from Representative Coulombe by
explaining that DNR provides the framework for CCUS, but the
operators bear the actual costs for exploration and development.
The exploration phase would be within five years, and the trust
fund related to CCUS is operator funded.
1:20:34 PM
MS. PAINE, in response to a question from Representative
Saddler, explained what conditions would be taken into
consideration when choosing sites for CCUS. Depleted gas
reservoirs in Alaska fit many of the criteria. Other targets
used for carbon capture are deep saline aquifers and unmineable
coal seams. There is a rigorous process for going from the
application stage to getting an exploration license.
1:24:04 PM
MS. PAINE, in response to a question from Representative
Coulombe, explained that there has been interest expressed by
several countries including Japan for using carbon capture sites
in Alaska.
1:25:22 PM
MS. PAINE explained the role of AOGCC as the subsurface
regulator for Alaska, pointing out their part in all levels of
subsurface permitting, site closure certification, and
monitoring extending out for 50 years. She discussed how DNR
had worked to put the program in place. This is graphically
illustrated on slide 6, titled "DNR Steps To Implement HB50
(2024)." Slide 7, titled "Regulations Development Timeline,"
illustrated the timeline for enacting the CCUS regulations,
listing the steps followed by DNR from passage of the bill on
May 15, 2024, to the regulations effective date of February 16,
2025.
1:30:26 PM
MS. PAINE responded to questions from Representative Hall and
Representative Coulombe regarding the public comments. She
explained that there was an expected level of public engagement.
The comments made during the scoping phase of the process tended
to be from industry and entities interested in carbon storage.
The comments to the draft regulations were more concerned with
clarification as well as interest in the post-operational period
which extends to 50 years. She showed slide 8, titled "Carbon
Storage Regulations," which read as follows [original
punctuation provided]:
• Amended 11 AAC 05.110
• $500 application fee for carbon storage lease
or license
• $250 transfer of interest fee
• Amended 11 AAC 80.045
• Define field gathering line for purposes of
carbon dioxide transportation
• Amended 11 AAC 84 to add new Article 9, Carbon
Storage Licensing and Leasing
• Final regulations effective Feb. 16, 2025
1:34:45 PM
MS. PAINE addressed a question from Representative Saddler
regarding a possible secondary business that might emerge for
the purpose of monitoring the capped wells for the post
operational period. Even if the monitoring was done by a second
entity, it would still have to be bonded and meet DNR standards
for Class VI well programs.
1:37:45 PM
MS. PAINE described the amendments made to existing regulations
and the creation of an entirely new article. She showed slides
9 and 10, titled "Article 9 Regulations." She summarized the
amended carbon storage regulations and described the regulations
set forth in Article 9 regarding carbon storage licensing and
leasing. She compared the regulatory framework to Chapter 82
and Chapter 83, which guide oil and gas from lifecycle analysis,
to lease administration, to closure. These regulations require
that a company must demonstrate the ability to undertake and
complete large-scale projects as well as show the ability to
obtain and comply with state and federal permits. A company
must also meet specific financial requirements. She pointed out
that there is a constitutional directive to make things
competitive and ensure the maximizing of the state's resources.
1:42:26 PM
MS. PAINE responded to a question from Representative Saddler
regarding "best interest findings" by describing some of the
negotiating process as well as the public process which is
involved.
1:43:41 PM
MS. PAINE, in response to a question from Representative
Coulombe, explained that the trust fund was basically an extra
insurance policy which is in place to address unforeseen
situations that might arise in the future. The specific uses of
the funds are set out in regulations.
1:45:52 PM
MS. PAINE responded to a question from Representative Fields
regarding primacy by describing how changes in jurisdictions can
work, using an example from Louisiana.
1:47:26 PM
CHRIS WALLACE, Senior Petroleum Engineer, Alaska Oil and Gas
Conservation Commission (AOGCC), Answered questions regarding
how primacy can change from federal to state jurisdiction.
1:48:26 PM
MS. PAINE described how the DNR regulations deal with site
closure, specifically as they apply to abandonment,
dismantlement, removal, and restoration. The regulations allow
for a staged approach in cleaning up the site and a commitment
to satisfactory restoration. She addressed the question of
whether closed sites compromise drinking water by pointing out
how much deeper the wells go and the rigorous protections that
are in place. She showed slide 11, titled "Summary," which read
as follows [original punctuation provided]:
• DNR filed regulations with Lieutenant Governor
January 17, 2025, to enact provisions of HB50 (2024)
• DNR is prepared to receive applications starting
February 16, 2025, for carbon storage exploration
licenses
• Website under development with technical database to
assist in site screening set for 1st Quarter 2026
1:53:53 PM
The committee took an at-ease from 1:53 p.m. to 1:55 p.m.
^PRESENTATION(S): Carbon Offset Program Update
PRESENTATION(S): Carbon Offset Program Update
1:55:24 PM
CO-CHAIR DIBERT announced that the next order of business would
be a presentation by Trevor Fulton, Carbon Offset Program
Manager for DNR regarding the Carbon Offset Program.
1:55:57 PM
TREVOR FULTON, Program Manager, Carbon Offset Program , Alaska
Department of Natural Resources, presented a PowerPoint
regarding the Carbon Offset Program. He introduced his remarks
by referring to the governor's Senate Bill 48, signed in May of
2023, as the "tree bill." He explained that DNR has been
charged with administering the Carbon Offset Program and Carbon
Leasing programs. In addition, Senate Bill 48 also authorized
the Alaska Oil and Gas Conservation Commission (AOGCC) to work
on Class VI well primacy from the EPA. He showed slide 2,
titled "Overview: Senate Bill 48," which read as follows
[original punctuation provided]:
Created with the passage of the Governor's Senate Bill
(SB) 48 (May 2023)
• Two programs: Carbon Offset Program and Carbon
Leasing
• Authority for Alaska Oil and Gas Conservation
Commission to pursue Class VI well primacy from the
Environmental Protection Agency for geologic
sequestration of CO2
• Criteria for project evaluation
• Requirement to keep project areas open for public
use and other resource development
• Limits project terms to 55 years
• Caps the commission given to project developers for
contracted work at 30%
• Designates 20% of project revenues to the Renewable
Energy Grant Fund
• Requires an annual report to the Legislature
MR. FULTON showed slides 3 and 4, titled "Overview: Carbon
Offset Program," which read as follows [original
punctuation provided]:
Program Goals
• Create nature-based, carbon-reducing projects
• Generate new revenue and other co-benefits
• Help meet voluntary market demand for
decarbonization
Projects
• Long-term management actions that increase carbon
stocks on state forestlands, tidelands, wetlands, and
other ecosystems
• One more use among the state's multiple-use mandate
Carbon Offsets
• Tradeable credits
• Used to "offset" emissions
2:01:35 PM
MR. FULTON responded to questions from Representative Saddler
and Representative Elam by describing the benefits of using
Alaska's forests, tidelands, and other ecosystems as a method of
capturing and storing carbon which creates greater carbon stocks
year over year on state land. Alaska is harnessing the carbon
reduction benefits of the natural resources. These carbon
benefits can be quantified and are proved to a third-party
entity known as the Carbon Registry or Carbon Crediting Program.
In this way, Alaska increases carbon stocks on state lands and
monetizes it.
2:03:50 PM
MR. FULTON addressed questions from Representative Coulombe and
Representative Elam by explaining how a factory or an emitter of
greenhouse gases uses carbon offsets. He explained that most
companies will first try to reduce their emissions, but when
they reach a point where other factors enter in, such as higher
expenses, they will look for carbon offset programs. Because
carbon emissions are not localized but are instead a global
issue, purchasing offsets in Alaska works toward balancing, or
offsetting, the carbon levels. At this point in time, carbon
offsets in most states are voluntary although they are mandatory
in California.
2:07:05 PM
MR. FULTON responded to a question from Representative Fields
regarding mariculture's potential role in carbon offsets by
describing the work and research being done in what is referred
to as the "blue carbon sector" which includes mangrove
restoration, sea grass, and wetland restoration. Some of those
methodologies are in place in other parts of the world, and DNR
is keeping track of those projects. He added that the carbon
leasing program might be a better fit for mariculture than the
carbon offset program in which an aqua culture lease might
extend to include carbon leasing. He pointed out that companies
which have set goals of becoming net zero or carbon neutral by a
specific date will use carbon offset purchases to help them
reach their goal.
MR. FULTON explained that a ton of carbon would be produced by
driving a car approximately 2,500 miles or taking a round-trip
flight from Anchorage to Los Angeles. Through the use of fossil
fuels, the average American creates about 16 tons of carbon a
year. He showed slide 5, titled "Carbon Offsets," which read as
follows [original punctuation provided]:
Definition
"Carbon Offset: a way for a company or person to
reduce the level of carbon dioxide for which they are
responsible by paying money to an organization that
works to reduce the total amount produced in the
world, for example by planting trees."
- Oxford Dictionary
Carbon offsets are measured in metric tons of CO2
equivalent and are bought and sold on the global
voluntary carbon market.
MR. FULTON moved to slide 6, titled "Carbon Offset Project,"
which illustrated the cycle of carbon offsets starting with the
release of emissions; to carbon being pulled from the atmosphere
by trees and plants; to the certification and tracking carbon
credits; to carbon credits sold to buyers to offset carbon
emissions.
2:13:54 PM
MR. FULTON returned to slide 5 to address a question from
Representative Saddler who asked for clarification of the phrase
"for which they are responsible." He acknowledged that the
companies believe using carbon offsets is good for business and
voluntarily hold themselves accountable as opposed to something
being imposed on them.
2:15:05 PM
MR. FULTON, in response to a question from Representative Hall,
explained that globally there are four carbon registries which
operate as non-profits and which have similar fee structures for
the hundreds of thousands of carbon credits they administer.
2:16:12 PM
MR. FULTON responded to a question from Representative Elam
regarding how many jobs might be created for Alaskans by this
program, explaining that it depends on the program, but
generally the job generation is not as robust as the revenue
generation. Globally, carbon marketing is approximately a 2-
billion-dollar industry, but by 2030 this is projected to be a
10-to-50-billion-dollar industry. For Alaska, 20 percent of the
earnings from the carbon offset program would go into the
renewable energy fund, and 80 percent would go into the general
fund.
2:19:34 PM
MR. FULTON pointed out that Senate Bill 48 was written to be
broad in scope in order to include more than just forest
projects. He showed slide 7, titled "Program Scope," which read
as follows [original punctuation provided]:
• Nature-based projects, not just forest based
• Department of Natural Resources manages 100+ million
acres of land, 40,000 miles of coastline, and all
freshwater resources of the State
• Other opportunities could include:
• Biochar
• Reducing wildfire
Ocean/river deacidification
• Enhanced rock weathering
2:23:10 PM
MR. FULTON responded to Representative Saddler's comments
regarding the net results of crushing rock for carbon capture by
pointing out that mining companies might be able to use
extracted rock for those purposes.
2:24:55 PM
MR. FULTON addressed questions from Co-Chair Dibert and
Representative Coulombe regarding forest management and the
forest fires by explaining that there is a risk or buffer pool
in the carbon registry for the purpose of covering possible
catastrophic incidents. He explained that one of the intents of
the original bill was to encourage better forestry management.
2:28:03 PM
MR. FULTON moved to slide 8, titled "Program Status," which read
as follows [original punctuation provided]:
May 2023
SB 48 enacted
July 2024
Regulations adopted and effective
August 2024
Request for Proposals (RFP) issued seeking a project
development partner for forest carbon projects
November 2024
Contract awarded to Terra Verde, an Alaska-based
carbon project developer and forestry consultant
Current
Tanana Valley forestlands being evaluated for project
feasibility; future areas to be assessed include Kenai
Peninsula, Mat-Su Valley, and Haines
MR. FULTON showed slide 9, titled "Tanana Valley Project," which
showed a graph illustrating the process for registering and
putting carbon offset projects in place. Using the Tanana
Valley Project as an example, he talked through the timeline
outlined on the slide, which read as follows [original
punctuation provided]:
• Target dates are approximate
• Next steps include evaluation, best-interest
finding, field work, modeling, and verification
• ~18 months from project listing to credit issuance
• Consider each step a go/no-go "stage-gate"; some are
State decision points, others are registry decisions
2:32:46 PM
MR. FULTON responded to a question from Representative Fields
regarding whether the state could work with other landholders
such as the federal government to set aside and help manage
forests, in part, to mitigate forest fire hazards. He
acknowledged the value of such partnerships but explained that
under the carbon registry protocols, Alaska could do this only
on lands where the state has management responsibility. He
moved to the final slide, titled "Carbon Leasing Program," which
read as follows [original punctuation provided]:
Purpose
• Provides process for third parties to lease State
land for carbon management purpose
• Creates private sector carbon management
opportunities
• Third parties develop projects; State compensated
for the use of land through lease fees and/or a
percentage of project revenue Status
• May 2023
SB48 signed
• June - July 2023
Public scoping for draft regulations
• Q3 2023 - Q4 2024
Regulations drafted and submitted to Department of Law
for review
2:36:26 PM
MR. FULTON, in response to a question from Representative
Coulombe, explained that both the Alaska Mental Health Trust and
some Native corporations have been in the process of putting
carbon offset programs in place. He concluded his presentation
by explaining that the state followed different procedures
beginning with best interest findings.
2:40:37 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:40 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2025-02-03 HRES DNR Carbon Storage Presentation.pdf |
HRES 2/3/2025 1:00:00 PM |
Carbon Capture, Utilization and Storage program (CCUS) |
| HRES 2.3.2025 DNR Carbon Offset Program Update.pdf |
HRES 2/3/2025 1:00:00 PM |
Carbon Offsets Program |
| 2024 DNR Carbon Program Annual Report to the Legislature.pdf |
HRES 2/3/2025 1:00:00 PM |
|
| DNR Carbon Storage Report 1.27.2025.pdf |
HRES 2/3/2025 1:00:00 PM |