Legislature(2023 - 2024)BUTROVICH 205
03/06/2023 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Development Issues in Today's Carbon Capture Utilization Storage Marketplace | |
| Presentation: Alaska Ccus Workgroup and a Roadmap to Commercial Deployment | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 6, 2023
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): DEVELOPMENT ISSUES IN TODY'S CARBON CAPTURE
UTILIZATION STORAGE MARKETPLACE
- HEARD
PRESENTATION: ALASKA CCUS WORKGROUP AND A ROADMAP TO COMMERCIAL
DEPLOYMENT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DAVID GREESON, President
Proven Project Development Group
Houston, Texas
POSITION STATEMENT: Presented Development Issues in today's
Carbon Capture Utilization Storage Marketplace.
FRANK PASKVAN, Affiliate Professor
Institute of Northern Engineering
University of Alaska Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Presented Alaska CCUS Workgroup and a
Roadmap to Commercial Deployment.
ACTION NARRATIVE
3:30:21 PM
CO-CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Wielechowski, Kawasaki, Dunbar, Claman,
Kawasaki, Co-Chair Bishop, and Co-Chair Giessel. Senator Kaufman
arrived during the introductions.
^PRESENTATION(S): DEVELOPMENT ISSUES IN TODAY'S CARBON CAPTURE
UTILIZATION STORAGE MARKETPLACE
PRESENTATION(S): DEVELOPMENT ISSUES IN TODAY'S CARBON CAPTURE
UTILIZATION STORAGE MARKETPLACE
[Contains discussion of SB 49.]
3:30:54 PM
CO-CHAIR GIESSEL stated the committee was beginning the
discussion of the governor's SB 49 relating to carbon capture,
utilization, and storage with presentations from two experts in
the field. She welcomed David Greeson to begin his presentation.
3:31:54 PM
DAVID GREESON, President, Proven Project Development Group,
introduced himself, reviewed his credentials in the carbon
capture industry, and conveyed his interest in helping to figure
out how to continue to use fossil fuels.
MR. GREESON began the presentation with an overview of the
carbon capture process based on the diagram on slide 3. The
drawing on the upper left represents a power plant where
something is being combusted. This is a source of flue gas and
CO2 is emitted into the atmosphere. To prevent that emission,
the flue gas is sent to a post-combustion carbon capture system.
Today's state-of-the-art technologies capture more than 90
percent of the CO2 in that flue gas. He noted that most
technology providers are guaranteeing 95 percent CO2 capture.
The clean flue gas that has less than 1 percent CO2 is emitted
into the atmosphere. The remaining pure CO2, which is close to
food grade, is ready for secure geologic storage.
He mentioned a project in North Dakota where the pure CO2 can be
injected directly into the storage facility beneath the power
plant and noted that many other carbon capture projects in the
Lower 48 have landowner issues associated with running pipelines
to connect the source and the carbon capture system with the
storage facility.
3:37:46 PM
MR. GREESON advanced to slide 4, State Policy Should Focus on
Deployment - Not More Research, and spoke to the following:
• DOE is shouldering the burden on research
• Congress has enacted incentives for first movers
• States should focus on filling the gaps to
deployment
• Policies and local incentives that make sense
3:39:41 PM
MR. GREESON conveyed that policymakers asked him to talk about
opportunities for states to enhance decarbonization. He directed
attention to the chart on slide 5 that shows the energy-related
carbon dioxide emissions by state, as of 2016. It shows that
Texas, followed by California and Florida are the largest CO2
emitters whereas Alaska is a low emitter. If the US is to have
an impact on decarburization, he said it is those states on the
far left of the chart that need to think about incentivizing
capture and storage.
3:41:18 PM
MR. GREESON turned to slides 6 and 7 to discuss the economics of
carbon capture. He said the charts came from a peer-reviewed
report by the National Petroleum Council. The numbers show the
estimated cost of carbon capture by facility type. He described
natural gas, ethanol, and ammonia processing as the low-hanging
fruit. The off-gas from processing natural gas is 90 percent
CO2, from ethanol it's 90-95 percent CO2, and from ammonia it
can be as much as 99 percent CO2. He said hydrogen producers and
cement plants are next with CO2 concentrations in the flue gas
generally in the 20-30 percent range. Refinery FCC (fluidized
catalytic cracking) facilities and those farther to the right
are clustered in the 10 percent range for flue gas
concentration.
He directed attention to the chart on slide 7 that reflects the
large difference in economics between a typical carbon capture
system for ethanol versus a power plant. He relayed that in the
US, the wind industry is getting about $61/tonne in tax credit
subsidies for its low-carbon power production. After the
increase last year, the credit for fossil fuel or point-source
carbon capture is $85/tonne. He opined that the cost
differential made sense because wind facilities provide
intermittent power, which is less valuable. He stated that the
delivery of pipeline-ready CO2 from an ethanol plant is about
$30/metric tonne. For the average power plant, the cost is about
$104/metric tonne; some power plants can deliver for about
$50/metric tonne, and for others the cost is closer to
$150/metric tonne.
MR. GREESON opined that the older and more expensive facilities
probably would not be considered for investment in carbon
capture; it would be plants in the $50-75 range that would be
considered. The reason is that markets in the US are not
offering more for carbon-free products, power in particular. The
$85/tonne tax credit has to pay for all the carbon capture; if
CO2 can be captured and delivered for $50-60/tonne, it leaves
$20-25/tonne for transport to the storage facility and the
storage itself.
3:48:43 PM
MR. GREESON advanced to slide 8, NPC Study Estimated Cost of
CCS. The chart reflects the breakdown for the CCS components to
arrive at the total assumed value of $110/tonne. Transport and
storage are estimated to be about one-third of the cost. Storage
fees on the Gulf Coast are projected to run from $7-14/metric
tonne and transporters are quoting prices from $14-30/ tonne. So
far, no firm transactions have been made in this range.
3:50:03 PM
MR. GREESON advanced to slide 9, CapEx as a Function of CO2
Concentration. The chart shows that the cost of carbon capture
is directly related to the concentration of CO2 in the flue gas.
The typical power plant configuration for natural gas combined
cycle (NGCC) is about 3 percent; the stream is very dilute and
hard to capture. Coal fired plants hit the sweet spot of about
11 percent. Moving to the right, cement and steam methane
reforming (SMR) have higher concentrations of CO2. The steam
methane reforming estimate is 22 percent, which is the average
of two tailpipes. One tailpipe has a concentration of about 10
percent and the other is nearly pure CO2.
MR. GREESON advanced to slide 10, CCS is Expensive - There is
Reason for Hope. The chart shows that when there's enough
replication and enough effort is focused on lowering the cost,
it will happen. He spoke to the following points:
• Solar technology was not even close to economic
just 10 years ago
• Today, costs are close to the value of
intermittent power
3:53:54 PM
MR. GREESON advanced to slide 11, Policies Developers Look For.
He spoke to the following policies:
• Primacy on Class VI permitting
• Public lands opportunity for storage solves a lot
of problems for CCUS developers
• One creditworthy landowner
• Storage cost certainty
• Consistent with other public interest missions
of the state
• Long-term liability for stored CO2
3:57:41 PM
SENATOR WIELECHOWSKI asked how long it takes states to get Class
VI primacy.
MR. GREESON replied that it took Wyoming three years.
SENATOR KAWASAKI asked what the overall market was for carbon
capture and storage.
MR. GREESON answered that there's currently a huge push for
carbon capture projects in the US. Congress increased the tax
credit to $85/tonne and direct pay is allowed for the first five
years of the 12-year program, which moderates the risk of
entering the market. The overseas market is more difficult
because there isn't a comparable tax credit.
SENATOR KAWASAKI asked whether the Petro Nova project near
Houston, Texas was still operating.
4:00:52 PM
MR. GREESON answered that the current owners recently announced
they were actively working on restaffing and restarting the oil
company. He explained that the project started before there was
a tax credit so the carbon capture had to pay for itself. That
wasn't a problem when the price of oil was $110/barrel, but the
price dropped to $30/barrel before construction was completed.
It ran for about six years, three with carbon capture.
SENATOR KAWASAKI asked if the federal tax credits were necessary
for a project to be economic.
MR. GREESON answered yes; not everybody is capturing CO2 so that
cost can't be passed along to the consumer.
4:04:54 PM
SENATOR DUNBAR asked how it will pencil out if Alaska has to
import the carbon it stores and the estimates for transport are
$27/tonne.
MR. GREESON answered that long-haul pipelines from North
American sources would be one possibility, and tanker shipping
the CO2 is another option. He cited existing examples in the
Lower 48 and the North Sea. He also mentioned a carbon capture
project in Greece that shipped the CO2 to the Middle East for
enhanced oil recovery.
^PRESENTATION: ALASKA CCUS WORKGROUP AND A ROADMAP TO COMMERCIAL
DEPLOYMENT
PRESENTATION: ALASKA CCUS WORKGROUP AND A ROADMAP TO COMMERCIAL
DEPLOYMENT
[Contains discussion of SB 49.]
4:07:28 PM
CO-CHAIR GIESSEL welcomed Frank Paskvan to discuss carbon
capture use and storage in the Alaska context.
4:07:58 PM
FRANK PASKVAN, Affiliate Professor, Institute of Northern
Engineering, University of Alaska Fairbanks, Fairbanks, Alaska,
advised that the presentation was based on a Society of
Petroleum Engineers' paper that he and his co-authors prepared
for the western region annual meeting that will be held in
Anchorage in May 2023. Today he intended to discuss the Alaska
CCUS Workgroup, why the group is interested in carbon capture,
others who are interested in carbon capture, and Alaska
opportunities in this space. He noted that UAF joined the Plains
CO2 Reduction (PCOR) Partnership based in North Dakota in 2019,
and he started working on carbon capture in 2021.
MR. PASKVAN stated that he is a reservoir engineer who does
reservoir modeling and field appraisals. He has experience in
subsurface and gas injection for enhanced oil recovery.
4:11:26 PM
MR. PASKVAN began the presentation on slide 2, Alaska CCUS
Workgroup Focus. He spoke to the following:
The CCUS workgroup mission is to accelerate commercial
carbon capture projects in Alaska.
Why?
• To attract new investments and
• To create options to decarbonize activities vital to
the State's economy including power generation,
refineries, and oil and gas production.
MR. PASKVAN described the CCUS workgroup's four subcommittees:
• Develop a State legal and regulatory framework
• Track and respond to funding opportunities
• Perform public education and outreach
• Develop a Roadmap to accelerate commercial CCUS
4:12:56 PM
MR. PASKVAN advanced to slide 3 and further described the Alaska
CCUS Workgroup:
• Kicked off July 2022, continuation of group
working Alaska's Department of Energy (DOE)
request for information (RFI) response
• 110 attending meetings
• 3050 members meet up to 4 times a month
• Diverse representation on the Workgroup
• University of Alaska Fairbanks has lead role
• Leadership represents Academia, Industry, and
State Government
• DOE funds support the UAF-led Workgroup via PCOR,
a Regional Carbon Sequestration Partnership
4:15:51 PM
MR. PASKVAN advanced to slide 4, CCUS Impact on Emissions. He
spoke about the dual challenge of increasing energy demands and
addressing the risks of climate change, and that carbon capture
and storage (CCS) can greatly reduce emissions. He pointed to
the chart on the right that illustrates different styles of
electrical generation systems and the proportional amount of CO2
that's released per gigawatt hour of electricity generated. The
traditional unabated coal plant emits CO2 at a rate of about
1,100 tonnes per gigawatt hour (t/GWh), whereas a modern coal
plant with a second-generation carbon capture system emits less
than one-tenth of the CO2. With beneficial use, the heat and
carbon dioxide that's emitted could be used to enable an Alaska-
based agricultural facility. This could bring the opportunity
for both energy and food security to the state. He directed
attention to the box on the upper right of the chart that
indicates that CCS also prevents pollution through post-
combustion capture of not just CO2, but also noteworthy levels
of SO2, NOx, and both PM10 and PM2.5.
He pointed to the examples of different power plants on the X
axis of the chart, and noted that a second generation CCS abated
coal plant emits just 100/tGWh of CO2 compared to a wind plant
that's backed up with natural gas that emits 250/tGWh. He also
noted the box on the lower left of the slide that cites the
[Intergovernmental] Panel on Climate Change (IPCC) estimate that
the cost to establish clean energy security is more than twice
as expensive without carbon capture, use, and storage.
4:22:08 PM
SENATOR CLAMAN commented that for Alaska to become a significant
player in CO2 capture, it will need to import significant
amounts of CO2 for storage.
MR. PASKVAN responded that this is about the world facing the
dual challenge and Alaska establishing the laws and framework
that allows the state to do its part. Right now Alaska's
emissions for stationary sources is 14 million tonnes per year,
so that's what the state needs to take care of. CCS systems in
Alaska may be used for enhanced oil recovery initially instead
of for pure sequestration, but the technology will continue to
evolve.
MR. PASKVAN advanced to slide 5 that provides an example of
carbon capture, use, and storage. The two images on the top left
illustrate capturing CO2 either from a fossil or biomass fueled
power station at an industrial facility or directly from the
air. To Senator Claman's question, he said he could envision a
wind farm that captures CO2 directly out of the atmosphere and
permanently stores it in an underground geologic formation like
a depleted gas reservoir. He noted that Southcentral has more
than a few depleted gas fields that could be used for this
purpose.
4:26:24 PM
MR. PASKVAN advanced to the diagram of the carbon capture and
storage process on slide 6. It includes geologic storage
potential, stakeholder engagement and community outreach, and
the regulatory framework. It shows the CO2 captured at the power
plant is either injected into a depleted gas field or piped
offshore and injected into a saline aquifer. He noted that both
storage options were available in Alaska.
CO-CHAIR GIESSEL noted that DNR questioned whether there were
saline aquifers in Cook Inlet.
MR. PASKVAN responded that the Alaska Oil and Gas Conservation
Commission's (AOGCC) rules that protect underground sources of
drinking water have exemptions for the injection projects
offshore in Cook Inlet. This water isn't deemed a source of
drinking water because of the distance from shore. He
highlighted that DNR, DEC, and AOGCC were looking at this
closely and were active participants in the Alaska CCUS
Workgroup.
4:28:56 PM
MR. PASKVAN advanced to slide 7, US Department of Energy
Perspective. He stated that Assistant Secretary of Energy Brad
Crabtree spoke to the following during his address to the Alaska
CCUS Workshop at Alaska Pacific University on February 21, 2023:
• US has a leading role in CCUS globally
BIL (Bipartisan Infrastructure Law)
• Addresses all elements of CCUS
• $12 billion for carbon management
IRA (Inflation Reduction Act)
• $300 billion in clean energy including 45Q
credits
• Co-investment government & industry
• Early project funding 80% Feds & 20% Industry;
Later Stages 50/50 plus loan guarantees
• Cook Inlet World Class Storage
• Alaska grid unique in USA, Potential for
Decarbonization
• Impressed Alaskans are agents of opportunity
MR. PASKVAN advanced to slide 8 to discuss examples of funding
opportunities for carbon capture projects. The slide shows
notices of intent. On the left, $810 million was available for
10 large-scale pilot programs throughout the US. On the right,
$1.7 billion was available for 6 carbon capture demonstration
project programs. He pointed to the next slide that shows which
US states either have or are in the process of developing
sovereign legislation. The 13 states that already have
comprehensive legislation are shown on the left and the states
that have Class VI primacy or are seeking it are shown on the
right. He credited DNR with the extensive research to develop
this slide; it reflects how active the topic of CCUS is
throughout the US.
4:31:35 PM
MR. PASKVAN advanced to slide 9, Sovereign Legislation
Survey. It shows a graphic of the states with comprehensive
legislation. It's an indication of how active this topic is
currently.
CO-CHAIR GIESSEL offered her understanding that North
Dakota achieved Class VI primacy several years ago and was
sequestering gas from Wyoming. She also mentioned hearing
that Japan had communicated with North Dakota about
shipping CO2 from Japan to North Dakota for sequestering.
She asked what he knew about Governor Dunleavy's
discussions about sequestering CO2 from Japan in Cook
Inlet, which would not require a pipeline.
MR. PASKVAN responded that the opportunities to invest and
make projects happen are in places that already have both
Class VI primacy and comprehensive CCS legislation in
place. For example, North Dakota is already an active hub
for taking CO2 from other locations.
4:35:27 PM
SENATOR KAUFMAN noted that a bullet point on slide 11 of
the previous presentation mentioned long-term liability for
stored CO2. He asked what the maintenance requirements
might be to retain carbon that was injected and stored over
a long term.
MR. PASKVAN responded that if the state were to achieve
Class VI primacy, managing the injection well would be part
of the ongoing operation and there would be associated
costs. The state would also have a long-term relationship
with the EPA that manages the monitoring, recording, and
verification (MRV) to ensure that the CO2 goes where it is
supposed to go, that it doesn't migrate, and that it
doesn't affect any other zones. The EPA also verifies the
volumes of stored CO2. That is part of the process that an
investor would have to establish to earn the 45Q tax
credit.
4:38:08 PM
MR. GREESON added that the Class VI permit hearing that
North Dakota went through addressed the issue of long-term
reservoir maintenance on the record. He suggested the
committee look at that discussion and analysis.
CO-CHAIR GIESSEL noted that executive branch departments
will present that information to the committee later in the
week, which will include information about the integrity of
the reservoirs that are available in Cook Inlet.
SENATOR CLAMAN asked what the typical timeline is to apply
and get primacy and whether it's important for the state to
have primacy before it actively pursues bringing CO2 to
Alaska.
MR. PASKVAN replied that achieving Class VI primacy takes
2-4 years, and to show developers Alaska is open for
business, it's necessary to get Class VI primacy and
establish a regulatory framework for CCUS. He added that
for a project to be eligible for the 45Q tax credits,
construction must start by 2032. He said Alaska is in EPA
Region 10 and the EPA has never done a Class VI injection
in that region, so it would be a significant risk for an
investor to consider Alaska compared to another
jurisdiction such as North Dakota where it might take just
a year.
4:41:28 PM
CO-CHAIR GIESSEL highlighted that Section 31 of SB 49
empowers AOGCC to seek Class VI primacy.
SENATOR CLAMAN asked if there was any point in looking at
carbon credits before the state had Class VI primacy.
MR. PASKVAN confirmed investors will look elsewhere if the
state doesn't have Class VI primacy and the regulatory
framework of CCUS. He said the federal 45Q tax credits
provide $85/tonne for geologic storage and $180/tonne for
direct air capture (DIC). He added that he was aware of
investors that were interested in DIC in Alaska because
it's more feasible than in warmer climates.
4:43:31 PM
SENATOR KAWASAKI asked him to expand on the discussion
about the long-term liability associated with CO2 storage
in either a saline aquifer or a shale cap, and whether the
storage is permanent.
MR. PASKVAN answered that CO2 has been stored on the North
Slope for decades. The gas that's produced in both Prudhoe
Bay and Point Thomson has quite a lot of CO2 and that gas
is reinjected into the reservoir. It's a very effective
enhanced oil recovery technique, due in large part to the
CO2. He directed attention to the diagram on slide 10 that
shows the injection of CO2 under multiple layers of shale
into a permeable formation. This requires drilling a
geologic appraisal well to determine the quality of the
injection formation, the storage volume, and the reservoir
seal on top. Alaska has decades of experience with those
processes at Prudhoe Bay and the process has proven to be
secure. He noted that, as written, SB 49 assigns the
management of this job to AOGCC.
4:47:16 PM
SENATOR DUNBAR recapped the estimated timeline to start
construction and to achieve Class VI primacy then asked how
soon Alaska could start to generate revenue from carbon
storage.
MR. PASKVAN answered that these are capital investments
that take 5-6 years for an investment decision. Last fall
he learned that EPA is encouraging developers to co-apply
to EPA and at the state authority that assumes Class VI
primacy. He also understands that AOGCC submitted a letter
to EPA expressing interest in the process so it can qualify
for a portion of the $50 million EPA aside for any state
that is interested in seeking primacy.
SENATOR DUNBAR restated his question about how long it will
take for Alaska to start generating revenue from carbon
storage.
MR. PASKVAN replied that it depends on the project, but the
earliest timeline he'd seen was 5-6 years. He added that
carbon capture is a long-term effort and Alaska can get in
early and create new long-term opportunities for
investment.
4:51:45 PM
SENATOR KAUFMAN asked if he'd seen a level 1 master project
schedule with the key milestones [listed on slide 11].
MR. PASKVAN answered that he'd been working on a case study
under a non-disclosure agreement, but he could say that it
was a capture project that potentially would generate clean
electricity that would be available at a lower cost than
the current system. The timeline was on the order of six
years.
4:52:55 PM
SENATOR KAUFMAN said it would be easier for people to
understand what needs to be in place to move forward if
they could see an example of a level 1 master schedule with
primary deliverables for a carbon project.
MR. PASKVAN responded that a schedule of that nature would
be included in the public version of the study he
described. He said it should be available in the near
future.
CHAIR GIESSEL noted the short time that was remaining and
asked him to discuss the opportunities outlined on slide
13.
4:54:51 PM
MR. PASKVAN advanced to slide 13, Alaska CCUS Opportunity
Roadmap. He spoke to the following:
North Slope
Advantaged by low-cost natural gas
Natural gas-fired capture
Direct Air Capture (DAC)
Subsurface data integration & site-specific data
gathering needed
40 year track record of successful CO2 sequestration
& use, ~15 TCF
Major Gas Sales 2015 LNG plan sequestered CO2 back
in reservoir
Interior
Existing coal plant infrastructure
Coal-fired capture
Basic regional subsurface data gathering needed
Southcentral
Proximity to Port, potential for import
Capture not attractive at natural gas plants or
refineries due to gas supply shortage & high price.
Coal or Hydrogen power with CCS can address natural
gas shortage, food security, lower emissions
Imported CO2 storage (US West Coast or Asia-Pacific)
Subsurface data integration & site-specific data
gathering needed
4:59:45 PM
MR. PASKVAN noted that he was ending the presentation by
showing the same slide that he started with; it talks about
what the workgroup is doing and the reasons for doing so.
CO-CHAIR GIESSEL thanked the presenters.
5:00:30 PM
There being no further business to come before the
committee, Co-Chair Giessel adjourned the Senate Resources
Standing Committee meeting at 5:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alaska CCUS Workgroup Peer Review Paper.pdf |
SRES 3/6/2023 3:30:00 PM |
|
| SRES CCUS_Greeson and Paskvan_Presentation 3.6.23.pdf |
SRES 3/6/2023 3:30:00 PM |