Last day to comment: Natural Resources prepares to adopt carbon storage licensing, leasing regulations

Gov. Mike Dunleavy’s carbon storage revenue model is still in the works. The Department of Natural Resources will accept comments through the end of business today proposes to adopt regulations on “Carbon Storage Exploration Licensing and Leasing.”

The regulatory changes come as a result of Dunleavy’s legislation that allowed for the state to enter the carbon storage business, plus new regulation of natural gas storage and geothermal energy. House Bill 50 set up the regulatory framework for storing carbon gases in underground caverns; the carbon market is an effort to reduce greenhouse gases by issuing carbon credits that can be bought and sold, and for nations and companies to buy space in the underground caverns where they can pump carbon dioxide. It’s all part of the climate change agenda and companies are making billions of dollars off of it.

The regulations to be amended are in Title 11, Natural Resources, of the Alaska Administrative Code, dealing with Carbon Storage Licensing and Leasing, and include the following:

1. Proposed amendments:

1. 11 AAC 05.110. Leasable minerals. Includes carbon storage exploration license and lease application and administration fees, simplifies the section title, and adds a definition for leasable minerals.
2. 11 AAC 80.045. Field gathering lines exempt. Adds definition of “carbon dioxide” and amends definition of “field gathering line” to add new classification to transport carbon dioxide.
3. 11 AAC 80.055. Field gathering lines defined. Repeals definition and readopts it as subsection (b) to 11 AAC 80.045 with added classification for transport of carbon dioxide.
4. Proposed new Title 11, Chapter 84, Article 9, Carbon Storage Licensing and Leasing, to be adopted:

1. 11 AAC 84.1000. Minimum qualifications. Establishes minimum qualifications for who may apply for, obtain, or transfer interest in carbon storage exploration licenses and leases.
2. 11 AAC 84.1005. Carbon storage exploration license applications. Establishes what must be included in an application for an exploration license.
3. 11 AAC 84.1010. Call for competing proposals. Establishes the procedure for calls for competing proposals after an exploration license application is received.
4. 11 AAC 84.1015. Best interest findings. Establishes the procedure and criteria for issuance of a best interest finding before determining whether to issue a carbon storage exploration license or lease.
5. 11 AAC 84.1020. Competitive bidding procedure; assessment criteria. Establishes competitive bidding procedures and assessment criteria if competing proposals are accepted.
6. 11 AAC 84.1025. License administration. Establishes reporting and payment requirements for licensees.
7. 11 AAC 84.1030. Default by licensee; termination, revocation, and surrender of a license. Establishes procedures, rights, and responsibilities for default, termination, revocation, and surrender of a license.
8. 11 AAC 84.1035. Conversion of carbon storage exploration license to storage lease; lease provisions. Establishes the procedure and requirements for converting a license to a lease.
9. 11 AAC 84.1040. Transition from enhanced oil recovery operations to carbon storage operations; lease provisions. Establishes the procedure and requirements for issuing a carbon storage lease to an oil and gas lessee upon transitioning from enhanced oil recovery to permanent carbon storage operations.
10. 11 AAC 84.1045. Default by lessee, termination and surrender of a carbon storage lease. Establishes procedures, rights, and responsibilities for default, termination, and surrender of a carbon storage lease.
11. 11 AAC 84.1050. Carbon storage lease unitization. Establishes procedures and requirements for unitizing carbon storage leases.
12. 11 AAC 84.1055. Assignments. Establishes procedures and requirements for assigning an interest in carbon storage exploration licenses and leases, which must be approved by the commissioner.
13. 11 AAC 84.1060. Application for approval of assignment. Establishes the requirements for approval of an application of an assignment of interest in a carbon storage license or lease.
14. 11 AAC 84.1065. Plan of development; application requirements. Establishes requirements for a plan of development for carbon storage leases, which will be subject to regular review.
15. 11 AAC 84.1070. Plan of operations; application requirements; completion reports.Establishes requirements for a plan of operations to permit on-the-ground activities.
16. 11 AAC 84.1075. Surety requirements. Establishes requirements for bonding or other acceptable forms of surety of performance under the conditions of a carbon storage license or lease.
17. 11 AAC 84.1080. Damages. Requires a licensee or lessee to pay damages and indemnify the state in the case of claims made by surface owners in accordance with AS 38.05.130.
18. 11 AAC 84.1085. Long-term monitoring and maintenance of leased area. Establishes procedures for the Department of Natural Resources to assume long-term monitoring and maintenance of a storage facility after closure, including the use of the carbon storage closure trust fund established by AS 37.14.850.
19. 11 AAC 84.1090. Definitions. Defines terms used in the adopted regulations in 11 AAC 84.

The public may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Department of Natural Resources, Division of Oil & Gas, at 550 W. 7th Ave, Suite 1100, Anchorage, AK 99501-3563. Additionally, the Division of Oil & Gas will accept comments by fax at (907) 269-8939 and by electronic mail at [email protected]. The comments must be received not later than 5 p.m. on Dec. 2.