WV Senate panel OKs DNR to lease spaces under state park lands for CO2 storage

The legislation is designed to accommodate carbon capture, use and sequestration technology. Unproven at commercial scale, such technology removes heat-trapping carbon dioxide from the atmosphere and uses it to create products or store it permanently underground to stave off impacts of warming in the atmosphere. Such technology retrofits commercial power plants to mitigate coal and gas asset emissions.

The version of SB 627 adopted by the Economic Development Committee would prohibit the DNR from allowing the disturbance of the surface of state park property for any drilling or injection activity. That prohibition wasn’t in the original version of SB 627, and environmentalists have welcomed its addition. The head of the Division of Natural Resources told the committee he viewed the version of SB 627 it approved as a step toward opening a new stream of revenue for the state.

But witnesses testifying before the committee on the bill acknowledged many unknowns about the outlook for potential carbon sequestration in the state, fueling persistent environmental concerns.

‘We don’t have a perfect understanding’

West Virginia state geologist and West Virginia Geological and Economic Survey director Jessica Moore noted that carbon capture is “an expensive process.

“So it is not happening a lot at the current moment,� Moore said.

Moore noted the underground units the state is eyeing for carbon sequestration are much deeper than it has explored for gas and oil — at least 7,000 feet below the surface.

Advances in directional drilling could allow vertical drilling just outside a state park’s boundaries, Moore said.

“[Until] you get to the horizon of interest and then make that lateral turn,� Moore said.

Moore said there is potential for steel pipelines to be required underneath parks.

Moore referenced carbon leakage issues at an Archer-Daniel-Midland Co. carbon injection site in Decatur, Illinois, where the Chicago-headquartered agricultural supply chain manager and processor reported leaks last year that raised water safety concerns. The Archer-Daniel-Midland project was the first large-scale integrated carbon capture and storage demonstration project funded by the Recovery Act of 2009 to move into a construction phase.

“And that CO2 leak just got into a shallower zone. So we hope that these containers are secure,� Moore said, referring to underground cap rock. “Certainly, any container that held oil and gas for hundreds of millions of years had some element of containment to it, and so when we’re targeting those reservoirs, we assume that those containment mechanisms will still be in place.�

But Moore acknowledged such containment configurations “are not perfect.�

“We don’t have a perfect understanding of them,� Moore said.

Moore noted that under permits for wells used for carbon sequestration, pore space structure and plume-mapping modeling is required.

“And the more you do something, the more you understand, the better your model gets,� Moore said. “So we would hope that we would not see any pore space incursion from these plumes.�

SB 627 follows EPA granting key authority to DEP

The U.S. Environmental Protection Agency in January granted a West Virginia Department of Environmental Protection application for primary enforcement authority over wells essential for storing carbon emissions underground.

The EPA granted the DEP that authority, known as primacy, over wells used to inject carbon dioxide into deep rock formations, known as Class VI wells. Class VI is one of six classes of injection wells regulated under the EPA’s Underground Injection Control program that regulates the injection of fluids like water, wastewater, brines from gas and oil production and carbon dioxide into the subsurface for storage or disposal.

The approval is just the fourth the EPA has issued to a state for primacy over Class VI wells, after North Dakota, Wyoming and Louisiana.

West Virginia Surface Owners’ Rights Organization cofounder Dave McMahon indicated to the Economic Development Committee his group is concerned with that approval, contending the state has done a poor job of plugging other wells given the many thousands of unplugged wells statewide.

McMahon also noted the prevalence of undocumented wells throughout the state could complicate underground carbon sequestration efforts.

DNR could bypass competitive bidding under SB 627

Before entering a lease per SB 627, the DNR must receive sealed bids, after legal advertisement in each county where lands to be affected are located and on the agency’s website for at least 14 days prior to entering the lease. Pore space development would be leased to the “highest responsible bidder� that gives bond for performing the lease. Proceeds from the lease would go to the DNR.

But the DNR could bypass a competitive bidding process to award a pore space lease with Department of Commerce and Department of Economic Development written notice the lease is a “necessary component� of an economic development project.

Department of Commerce general counsel Garner Marks told the committee geological studies in a Northern Panhandle project area indicated the state couldn’t “take financial interest in storage capacity there.

Marks reported a five-to-10-year project “lead-up� and projected annual royalty payments to the DNR could total $33.5 million, with 10 million tons of carbon dioxide slated to be stored.

Per existing state lease agreements for pore spaces under state wildlife management areas, the state would lease the pore space and be paid royalties based on the amount of carbon sequestered, Marks said.

The plume where carbon would be sequestered generally is 7,000 to 10,000 feet underground, with gas flowing throughout the plume, Marks said.

DNR, environmental and coal advocates react to SB 627

DNR Director Brett McMillion said he saw “significant potential� in SB 627 to raise state revenue, noting the agency already has leases with companies on wildlife management areas and state forests.

McMillion said the version of SB 627 the Economic Development Committee approved gave him “much less� heartburn than its original version regarding potential effects on state parks.

“They still should be there for all of our grandchildren to come,� McMillion said.

The West Virginia Rivers Coalition, which staunchly opposed the original version of SB 627, welcomed the committee amendment prohibiting the DNR from allowing the disturbance of the surface of state park property for any drilling or injection activity.

But Rivers Coalition executive director Jennie Smith said after the committee meeting the group remains concerned about the potential for lateral drilling beneath state parks, the depth at which future drilling adjacent to those lands would be permitted, and the safeguards in place to prevent carbon leakage.

Sen. Craig Hart, R-Mingo, opposed the committee-approved version of SB 627, arguing that, despite the coal-fired power planned for recently announced carbon capture projects, the state was risking making coal “less economical through commoditizing carbon dioxide� — a move he likened to “market manipulation.�

Coal-fired plants have become increasingly expensive to maintain, undercut by new, more cost-effective renewable power generation.

Under the gas and oil industry-backed House Bill 4491, the Legislature’s 2022 law setting up a state regulatory program for underground carbon dioxide storage, any carbon dioxide injected and sequestered per a state-issued underground injection control permit will not be considered a pollutant. The existence of such a carbon dioxide sequestration facility is not considered a public nuisance under HB 4491.

Marks reported Houston-headquartered energy transition company Fidelis New Energy LLC has pore space leases with the DNR on wildlife management area properties.

The West Virginia Economic Development Authority approved a forgivable $62.5 million loan in 2023 for Mountaineer GigaSystem LLC, a Fidelis subsidiary, for a Mason County project to consist of:

• A hydrogen production facility that yields 640 metric tons per day of hydrogen
• A 75-megawatt-electric biomass power plant
• Carbon capture equipment
• A supporting carbon sequestration pipeline and wells
• Supporting infrastructure for barge and train offloading and warehousing

Mountaineer is to deliver hydrogen power to industrial and business users such as chemical producers, transportation companies, power providers and data center operators interested in decarbonizing and co-locating on the facility site, according to the agreement.

Last month, Gov. Patrick Morrisey announced a partnership between Fidelis and Akron, Ohio-based energy and environmental technology company Babcock & Wilcox to develop a facility operated by the latter at the Mountaineer GigaSystem site. The facility will provide power to a planned 2,300-acre Monarch AI Data Center System, which is to consist of the Monarch Compute Campus at North Point Pleasant and an expansion campus, according to the Governor’s Office.

The Mountaineer GigaSystem site is expected to house a chemical looping process that takes West Virginia coal and generates hydrogen, steam, electricity or syngas, a gas mixture used to make ammonia, methanol and other industrial chemicals. The initial phase of the project is anticipated to use 200 tons of coal per day, but subsequent phases could use up to 2,900 tons of coal per day with multiple phases planned, the Governor’s Office said.