Alaska Gov. Dunleavy’s plan to lease land for carbon storage comes with questions

Cook Inlet
The state says depleted fields in Cook Inlet basin have potential to store up to 50 gigatons of carbon dioxide. (Sabine Poux/KDLL)

Members of the Alaska Senate Resources Committee revisited one of Gov. Mike Dunleavy’s priority bills last month, to get the state into a fledgling industry: carbon storage. The bill is part of a carbon management plan the governor unveiled last year that he said could earn the state hundreds of millions of dollars.

Department of Natural Resources Commissioner John Boyle called in to the committee meeting to echo the governor’s support for a potential new revenue source.

“I really see this as providing the greatest opportunity for the state of monetization,” he said.

Burning fossil fuels produces a lot of carbon dioxide. It’s one of the major drivers of climate change. In recent years industries have sprung up around trying to keep CO2 out of the atmosphere. 

And that’s where carbon storage comes in. It’s a method of pumping CO2 into rock formations deep underground, and locking it in the ground so it doesn’t end up in the atmosphere. 

Haley Paine, deputy director of the Alaska Division of Oil and Gas, said pumping gas underground isn’t a new idea. It’s a routine step in oil drilling that’s been practiced in Alaska for decades.  

“I think the market around it is new, but I think the engineering, the geology and the technology is really kind of firmly established.”

Who would foot the bill for this technology? Oil companies themselves might pay to pump carbon back into the ground, facing pressure to reduce their carbon emissions. Some companies have made promises to operate at net zero, which usually means paying to store as much carbon as they emit. Expanded federal carbon storage tax credits are also driving industry interest.

Paine said Alaska isn’t the first to consider this new venture. States like North Dakota, Wyoming and Louisiana are also exploring options to lease underground space on state land for carbon storage.

“We’ve started to study a lot more what our own pore space would take to license and lease and then look at a lot of other states and work closely with them to understand the regulatory programs that they set up,” she said.

Pore space is the underground space between solid rock and soil that can potentially hold gas.

The Northern Journal reported in December a group of lawmakers and administration officials had recently visited North Dakota to learn about what’s involved in the industry, also known as carbon capture, utilization and storage, or CCUS.

According to DNR, there is significant underground carbon storage potential in Cook Inlet and on the North Slope. The department estimates leases could bring in more than a billion dollars over 40 years.  

But there are some big questions with carbon storage, like where does the carbon come from? And how do you get it to the storage site?

Right now, the state’s ideas are far from materializing.

Paine said one idea is to capture CO2 from the exhaust from industrial power generators around the state, like the natural gas-fired generators that power drilling operations on the North Slope.

But this kind of carbon capture technology is still a ways away, said Mark Foster, an energy consultant and former state utilities regulator.

“It is not being done regularly, anywhere,” Foster said. 

He said there are pilot projects underway, but it’s generally considered too expensive to be worth it.

Foster said most of the state’s ideas — carbon capture, even a suggestion to ship CO2 up to Alaska to be stored — are prohibitively expensive right now. 

He said carbon storage could make sense if Alaska successfully pulled off its decades-long dream of selling North Slope natural gas. That’s because there’s a lot of CO2 mixed in with the natural gas underground and suppliers would likely need a place to store it.

“I think the big opportunity to the extent there is a large opportunity is really associated with the North Slope natural gas commercialization,” Foster said. “That’s the elephant.”

Plans to export North Slope natural gas also come with hefty price tags, and it’s unclear whether that will ever happen. 

“It sounds wholly uneconomic and extremely unlikely,” said Larry Persily, longtime journalist and former head of a federal office focused on advancing Alaska natural gas transportation projects. He said a carbon storage industry naturally hinges on having carbon to store, and right now, it’s not clear where that would come from.

“If you don’t have the CO2 to put underground, well, who wants to lease your land to put something underground that doesn’t exist?” Persily said.

Paine said despite the hurdles, the state is hopeful Alaska will become a carbon storage hub, even if it takes some time for that to happen.

“We’re taking into account where these future markets are going, and we want to participate in them,” she said. “There’s not really a harm in setting the stage. And we have the expertise to manage it, if or when it does begin to really take off.”

She said the state hopes setting up the framework for a carbon storage industry may also encourage new industries that are focused on low-carbon production, such as blue ammonia, a low-emissions version of ammonia that is used in fertilizer. In recent years, talks about reopening the major Nikiski fertilizer plant that shuttered in 2007 have mostly gone nowhere, due to the high cost of natural gas.

“We’re not just thinking about the projects that we have right now, we’re also looking into the future. And, what sort of industrial markets can we develop here?”  Paine said.

Carbon storage bills in the House and Senate are awaiting hearings in committees before the chambers can vote. 

Kavitha George is Alaska Public Media’s climate change reporter. Reach her at Read more about Kavitha here.

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