Legal framework for carbon dioxide sequestration considered

The Natural Resources Committee heard testimony Feb. 11 on a bill that would create a legal and regulatory framework for the geologic storage of carbon dioxide in Nebraska.

Under LB650, sponsored by Norfolk Sen. Michael Flood, the Nebraska Oil and Gas Conservation Commission would regulate facilities that inject carbon dioxide through wells into underground geologic formations for permanent or short-term storage.

Flood said that by capturing and sequestering carbon dioxide generated by industrial facilities — particularly ethanol plants — Nebraska could increase the value of its products while also cutting greenhouse gas emissions that are tied to climate change.

He said the bill would supplement, not replace, the Environmental Protection Agency’s Underground Injection Control program, which authorizes the type of wells used to inject carbon dioxide deep underground.

LB650 would allow geologic storage only if a storage operator obtains a permit from both the commission and the federal program. Before the commission issues a permit, it would hold a public hearing and consult with the state Department of Environment and Energy and the federal permitting authority.

The commission must find that the proposed storage facility would not endanger surface waters or underground drinking water sources and that the storage operator would establish a testing and monitoring plan to assess the location and migration of injected carbon dioxide.

Under LB650, title to a storage reservoir would be vested in the owner of the overlying estate unless it has been severed and separately conveyed.

Before issuing a permit, the commission also must find that the storage operator obtained the consent of those who own portions of the storage reservoir comprising at least 60 percent of the reservoir’s physical volume.

The bill would authorize the commission to require that any portions of the reservoir owned by nonconsenting owners be included in a storage facility. Those owners would be “equitably compensated.”

LB650 would require storage operators to pay the commission two fees on each ton of carbon dioxide injected for storage. One would be used to defray expenses in processing permit applications, regulating storage facilities and determining storage amounts. The other would be used to defray expenses incurred in the long-term monitoring and management of a closed storage facility.

After carbon dioxide is injected into a storage reservoir, a storage operator could apply to the commission for a certificate of project completion. Once the certificate is issued, title to the storage facility and its carbon dioxide would transfer to the state and the storage operator would be released from all regulatory requirements associated with the facility.

Chuck Woodside, CEO of a company that operates ethanol plants in Minden and Ravenna, testified in support of the bill. For each kernel of corn used in the ethanol production process, he said, approximately one-third is converted to carbon dioxide through fermentation.

He said the ethanol industry has identified geologic storage of carbon dioxide as a way to reduce the fuel’s carbon footprint, making it more valuable in markets such as Oregon and California that score fuels based on their carbon impact.

Charles Gorecki, CEO of the University of North Dakota’s Energy and Environmental Research Center, also testified in support. He said the bill is based on similar legislation passed in Montana, North Dakota and Wyoming.

Although the EPA would issue permits for the special class of wells used in carbon sequestration, Gorecki said, LB650 would lay the groundwork should Nebraska seek a grant of primary regulatory authority, as North Dakota and Wyoming have done.

Kristen Hassebrook testified in support of LB650 on behalf of the Nebraska Chamber of Commerce and Industry. Although Nebraska’s ethanol industry would see the most immediate impact, she said, power plants, steel processors and manufacturers also could benefit from carbon capture technology.

A 2020 Rhodium Group study found that Nebraska could see $3.3 billion to $5 billion in capital investment if it pursues all of its immediate or near-term carbon capture opportunities, Hassebrook said.

Matt Joeckel, Nebraska state geologist, gave neutral testimony on his own behalf. Although only a few carbon capture and sequestration facilities are in operation worldwide, he said, the technology shows promise, and many experts agree that it should be one of many strategies for decreasing anthropogenic carbon dioxide emissions.

Joeckel said a recent research project concluded that carbon capture and sequestration is feasible in parts of Nebraska, roughly the western two-thirds of the state.

No opponents were present at the hearing and the committee took no immediate action on the bill.