The Carbon Corner - Issue #5

Welcome to another week of The Carbon Corner!

This week we have a lot to discuss, including Texas’ pursuit of Class VI well-permitting primacy, ACR’s release of a new draft CCS Protocol 2.0 that is favorable to site developers, and much more.

Plans Advancing for Summit Carbon Solutions

This week, Summit Carbon Solutions invited media, legislators and others to tour the Ringneck Energy ethanol plant and discuss pipeline plans for the future. The company is moving forward with connecting 32 ethanol biorefineries across 5 states. These states include Midwest facilities in Iowa, Minnesota, Nebraska, South Dakota and North Dakota.

Residents in the area are slowly getting onboard with the project, with 45% of landowners voluntarily agreeing to easements. Walk Wendland, the President, CEO, and Chairman of the Board of Ringneck Energy expressed that by ‘allowing the carbon emitted by the plant to be captured (it) will make an efficient plant even more environmentally friendly.’

The project has, so far, been plagued by public opposition, but recently buoyed by the improvement of 45Q subsidies and new equity commitment. At this stage, it seems poised to advance as the stakeholders look to sell the public on the positive environmental aspects of the unprecedented sequestration project.

Texas Fights for EPA Class VI Permitting Primacy

Texas is adding itself to the list of US states seeking primacy over the EPA’s Class VI injection well-permitting process, a move which would put it in the company of North Dakota and Wyoming.

Currently, those two states are the only ones granted permitting authority by the EPA for wells injecting carbon dioxide for geologic storage. However, The Texas Railroad Commission is attempting to join with these states. The EPA application process is lengthy (having taken North Dakota 5 years), but Texas intends to complete it to become a major investment hub for CCS technology and commercial deployment.

Deputy director of policy at Carbon180, Rory Jacobson, believes many states are pursuing Class VI primacy because the projects are not being approved quickly at the federal level.

Others site developers are specifically choosing to start projects in states with primacy to expedite the process. If Texas’s application is approved, we could see a big shift in CCS projects in the state and as said by Senator Kelly Hancock, “(could) become a global leader in carbon capture and sequestration.”

Voluntary Registry ACR Releases CCS Protocol Update

This week, American Carbon Registry (ACR) drafted a second version of “The Methodology for the Quantification, Monitoring, Reporting, and Verification of Greenhouse Gas Emissions Reductions and Removals from Carbon Capture and Storage Projects.”

The draft protocol would permit many industrial feedstocks to earn offset credits via CCS alongside biogenic emission. Importantly, it considers the 45Q tax credit to be ‘stackable’ with other offset credits earned under the voluntary protocol, enhancing the revenue available for project developers to offset capital and operating costs.

Previously, the industry viewed this as a key source of uncertainty that the new protocol seems to resolve.

The ACR’s CCS Protocol 2.0 draft is still in the revision phase, but will hopefully be released to the public soon.

CCS Represents Last Hope for San Juan Coal Power Facility

With hopes of preserving the San Juan Facility, a large coal plant in New Mexico, the city of Farmington has gone to court seeking full ownership. This plant is owned by a group that includes PNM, Tucson Electric Power Co., Los Alamos County, N.M., and the Utah Associated Municipal Power Systems.

For Farmington to gain full ownership of the plant, all other owners must agree to it, which some have refused to do. Because of this response, the city has spent $2.2 million in legal fees to fight its decision.

As said by Tom Fallgren, PNM Vice President of Generation, “They (Farmington) have no coal, no equity, no transmission and there’s a new environmental law going into effect in January [prohibiting the plant from operating]. Enchant has been unable to supply the necessary elements to secure a transfer.”

This provides insight into the likely outcome for the city, which has spurred the hedge fund’s development firm, Enchant Energy, to consider other areas and plants to use for CCS. A total of $1.6 billion has been set aside to fund the future project and the timetable adjusted from 2022 to 2027.

Plans for New Facility in Nebraska

Carbon America and Bridgeport Ethanol have signed an agreement to develop a CCS project in Nebraska. This project is expected to store 175,000 tonnes of CO2 annually and will be the first of its kind in the state.

The project will bolster Carbon America’s efforts in the space and will be their third CCS project to finance, build, own and operate this year.

The announcement adds to a string of pre-development rumors regarding co-located CCS sites planned near regional ethanol facilities in Nebraska and Kansas. Major pipeline projects, like Summit and Navigator, will only partially serve the region.

Western Midstream Expands CCS Activity with Oxy LOI

Western Midstream Partners, LP (WES) executed a letter of intent with Occidental Petroleum Corporation (Oxy) to extend CCS opportunities around their existing asset bases in Texas Delaware and Colorado DJ Basin. The vision is for WES to explore CO2 transportation services and Oxy to design, own, and operate CO2 offtake facilities for sequestration and enhanced oil recovery.

Michael Ure, President and CEO of WES commented on the project saying, “We’re excited about the potential to expand our service offerings to include the transportation of CO2 and further our sustainability goals by creating a pathway to reduce greenhouse gas emissions and creating a framework to provide steady returns for our respective stakeholders.”

We view this as yet another sign of the midstream segment’s redoubling of CCS involvement following the sanctioning of major site development, including by Oxy and its affiliates.

Come visit us at https://schaperintl.com to find out more about partnering with us to advance your site development.

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