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Alaska’s carbon future: CCUS potential
State taking steps to support carbon capture, utilization and storage on state lands; Legislature hearing bills to set up program Steve Sutherlin Petroleum News
Federal legislation has added incentives to entities that are considering facilities for carbon capture, utilization and storage, or CCUS. Section 45Q of the Unites States Internal Revenue Code provides a tax credit for CO2 storage.
The state of Alaska is responding, with legislation under development in Juneau to allow the Department of Natural Resources to implement leasing of state lands for carbon capture and utilization projects.
Carbon capture refers to the taking of flue gas or exhaust gas from processes, powerplants, natural gas processing, coal plants and concentrating the carbon as a very pure form of CO2, according to Justin Freeman, Coffman Engineering VP carbon capture, utilization, and storage, and hydrogen.
Another source of CO2 is direct air capture, scrubbing the CO2 out of the atmosphere, Freeman said in a panel discussion March 17 at Meet Alaska 2023 in Anchorage.
The CO2 is then transported and either injected into geological formations that are saline aquifers - meaning that the water is high in salinity and doesn’t have a beneficial use - or putting it into oil fields as a mechanism to extract more oil, he said.
The CO2 can also be injected into depleted oil and gas fields - not actually extracting additional minerals, just using the depleted core space to sequester CO2, Freeman said, adding, “The other component of that is that you can use CO2 as a feedstock for other industrial processes.”
CO2 is used in synthetic jet fuels and can be combined with hydrogen in concrete to increase the properties of the concrete while also sequestering the CO2 in building products, Freeman sad.
Alaska’s carbon potential Gov. Mike Dunleavy has taken notice of Alaska’s carbon potential and its potential to create new economic opportunity and monetize resources that heretofore have not been monetized, said Alaska Commissioner of Natural Resources John Boyle.
Dunleavy “thought it made sense for us to be involved in this space and be proactive,” Boyle said, adding that Dunleavy recognized that there are a number of companies in Alaska that are interested in pursuing carbon capture utilization and storage as a means to help achieve net zero targets.
“As it relates to carbon capture utilization and storage, the state owns, in most of the areas in the state, the most productive or conducive geologic basins for sequestering carbon,” Boyle said. “Our Alaska Supreme Court has held that the empty core space under the ground is a mineral resource of the state, that means that if the state enables companies to move forward and sequester carbon underground, 25% of the revenue that the state would derive from that activity actually accrues to our permanent fund, as well as shunting revenues into our general fund.”
“In essence, it really creates a lot of exciting opportunities for the state,” he said.
State officials have also watched many Alaska Native corporations successfully implement carbon offset projects on their lands, Boyle said.
“We’re really looking at alternatives and options that will enable us to manage our forests better that might enable us to increase opportunities for the forest products industry, while at the same time taking advantage of the economic incentives of 45Q credits and otherwise to implement carbon offset projects on our forested lands to realize more value there.”
US Carbon activity on the rise Halliburton is seeing a large increase in activity in North America with interest in carbon sequestration projects from the capture side all the way through to the sequestration side, said Rick Mauro, Halliburton, CCS segment lead for North America land.
“All the majors are currently active in looking at these types of projects, drilling stratigraphic wells to give them information to see whether or not their targets will actually accept the CO2 that they want to inject permanently, and looking at depleted fields,” he said. “From California to Ohio we’ve looked at projects.”
Besides the oil and gas companies, specific CCUS companies are looking to develop projects themselves, Mauro said. There is increasing activity in the Eastern Hemisphere, with active projects in Australia and the UK.
There is 40 million tons capacity of carbon capture, storage and utilization projects currently operating in the United States, Freeman told conference attendees.
A major refinery on the West Coast would generate about 4 million tons of emissions - including all the collective emissions of the facility, Freeman said. Therefore, the current CCUS industry would account for about 10 major refineries.
A lot of that capacity today is geared towards taking geologically sourced CO2, transporting it cross country in 5,000 miles of existing CO2 pipelines in the U.S. and injection to get oil out of the ground, he said.
Freeman said Shell has a successful joint venture with Chevron to treat heavy oil, using reformer process CO2 extraction, and injection into saline aquifers.
Natural gas processing has been successful, like ExxonMobil Sheep’s Creek in Wyoming, he said.
“As part of the natural gas processing they bring up CO2 with natural gas,” Freeman said. “CO2 is injected in oil fields.”
A Petro Nova coal plant extraction project - heavily funded by the Department of Energy - didn’t work so well, he said.
“Most of the projects to date that have been able to be financeable that have been able to clear the hurdle been tied back to enhanced oil recovery,” Freeman said.
“There are now more than 100 million tons of development projects that are in queue that are moving forward - the U.S. is being a leader in in that because of the tax credits - and a lot of projects being done in the Asia pacific area; China is very much onto this,” he said. “The Europeans and Northern Lights are doing an offshore injection where they’re coordinating across the entire European Union to create the base infrastructure to transport that CO2 by ship to these central facilities and inject in the North Sea.”
There are hundreds of projects that are in various stages of development, which are forecast to more than double world capacity of today by the end of the decade, Freeman said.
Four bills in legislative hopper In Alaska, there is a House bill and a Senate bill related to carbon offset projects on state lands, and there is a House bill and a Senate bill related to carbon capture and utilization projects, Boyle said.
“The bills lay out a broad statutory framework that would give the state flexibility to regulate and encourage carbon capture utilization and storage projects in the state.”
One bill authorizes the Alaska Oil and Gas Conservation Commission to make an application with the EPA to enable the state to permit and regulate the development of carbon injection wells.
“Part of the bill creates the framework for leasing state lands for companies interested in doing exploration work as it relates to carbon sequestration, and a lot of those regulations are modeled off of our existing oil and gas leasing framework so there could be competitive bids,” he said. “There are requirements for those parties to come in and do a certain amount to work in order to firm up their rights to that lease acreage and ultimately the state could permit that entity to inject carbon under the ground.”
For the state, there would be revenues coming in from the leasing side of things and there would also be fees charged to these entities per ton of carbon injected into the reservoirs, he said. A share would be put into a fund that the state would administer for monitoring operators and meeting its own obligations.
Once a carbon developer is finished injecting carbon dioxide into the ground there would be a least a minimum 10-year period to monitor it to make sure the plume is stabilized, and that it’s not migrating and is contained within the geologic field, Boyle said.
There is a process for the developer to apply to the state and at some point the ownership of CO2 under the ground, and the liability for the sequestered CO2 would eventually transfer from the project developer to the state.
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