Tamar Hallerman
GHG Monitor
04/20/12
The Department of Interior’s Bureau of Land Management does not yet have concrete plans for opening up its land to private development for CO2 sequestration, one agency official said this week, and so far no entities have applied for permits to characterize the federally-owned land for that purpose. Five months after BLM issued interim review guidance to field offices allowing the processing of land use proposals and permit applications from entities looking to conduct exploration and characterization activities on agency-owned lands, no individuals or groups have applied for a permit, said BLM Branch Chief for Rights-of-Way Lucas Lucero. “We have not received any applications yet pursuant to the policy,” Lucero said in an interview with GHG. “Nothing’s come in the door.”
The December 2011 guidance only greenlights characterization work like seismic imaging and test CO2 injection wells–-and not actual CO2 storage projects—on BLM’s 245 million acres of surface estate and 700 million acres of sub-surface mineral estate spanning a dozen of the country’s western-most states. But many land use experts saw the move as a first step to BLM eventually opening at least some of its lands up to long-term CO2 storage project development, as it had done in the past with proposals for wind and other energy development projects.
Lucero said there are currently “no immediate plans” for a follow-up policy for CO2 storage development projects. “We have no policy whatsoever in place to address [future development], but this [characterization guidance] would allow those who are interested in potential future sequestration to at least go out and collect some data and assess whether there are some specific public lands that would be suitable,” Lucero said, dodging questions about whether BLM was waiting for a legislative or regulatory ‘signal’ from Congress or the White House before moving forward.
Long-Term Liability Yet to be Resolved
Eric Martin, an associate at Stoel Rives, LLP in Portland, Ore., who specializes in permitting and natural resource development, said that the two-phase approach for energy development on federal lands is common from BLM. “On the positive side, the two-phase process eases the environmental review that’s required upfront before any sort of detailed geologic information is available. On the negative side, by not developing a second phase of the process, it increases the risk and creates a little bit of a disincentive for private entities to actually put their capital at risk and go out and characterize a site on federal land,” he said.
Martin, who is presenting on the topic at ExchangeMonitor Publications and Forums’ Eleventh Annual Carbon Capture, Utilization and Storage Conference in Pittsburgh at the end of the month, said that the agency is likely waiting for Congress to pass legislation addressing the long-term liability and stewardship of sequestered CO2, a measure that has all but stalled in recent years. “At least from reading the guidance that the BLM issued in December, there are two primary unresolved issues here, one dealing with liability for the injected CO2 and the second dealing with stewardship responsibilities over the long term,” Martin told GHG. “I think the BLM wrestled with how they were going to handle these two issues, and ultimately they decided that right now they are going to issue this guidance only for characterization, and once the liability and stewardship responsibilities get sorted out, perhaps through federal legislation, then they’ll deal with actual development of sequestration projects on federal land.”
Future Preference Possible?
In addition to the lack of final storage project guidance, potential CO2 storage project developers may have been deterred from applying for characterization permits because BLM did not specify whether they would get “preferred” status for an area they characterized once it is opened for development projects. “For me, the incentive to do this it goes back to the capitalistic system that we operate under—putting money at risk to try and develop something that you think will lead to financial reward in the future,” Martin said. “By not formulating the second phase and indicating whether entities out there characterizing geologic sequestration sites are first in line for getting the development permit, [BLM] now faces greater risk for [lesser interest].”
BLM’s model for wind project development gives project preference to entities that took the time and money to characterize a swath of agency-owned land. However, in its carbon sequestration guidance for characterization work, BLM said that established right does not exist. Lucero would not indicate whether BLM intends to provide those rights to developers at a later point. “We have the ability under our regulations to offer a variety of permits and leases either competitively or non-competitively, so we have that authority and flexibility under our regulations,” Lucero said.
CCS Task Force Recommended Projects
While BLM is not required by law to open up public lands to CO2 storage development, Obama’s Interagency Task Force on CCS in 2010 recommended that BLM, DOI and the U.S. Department of Agriculture “immediately formalize coordination and prepare a strategy to develop regulatory frameworks for onshore and offshore federal lands.” “The President laid out a goal of standing up some pilot projects, and when you look at the potential for sequestration on BLM-administered public land, there’s a lot of public lands that we manage out there, so there’s tremendous potential,” Lucero said. “This policy would help those who are interested in potentially doing that to at least go out assess which specific areas may be good locations for sequestering carbon.”
A 2009 National Energy Technology Laboratory report found that roughly 5 percent of the country’s onshore CO2 storage capacity—somewhere between 126 and 375 billion metric tons—falls under federal lands, with BLM controlling roughly 60 percent of the acreage that is available for lease, most of it in Montana, Wyoming and the Dakotas. The report highlighted the benefits of developing projects for federal lands—particularly the fact that the government is the single owner of large, continuous tracts of land, drastically simplifying the negotiating process for obtaining pore space rights for CO2 sequestration use. “Negotiating with a single landowner to secure the rights to extensive continuous parcels of land can provide cost and project timeline advantages, not only for potential future operations but also for early large-scale demonstration projects that will help accelerate commercial deployment of CCS technology,” the NETL report says. However, it also says that working with federal land in many cases means additional conditions and restrictions for developers.
Despite the extra regulatory burdens, Martin said BLM’s efforts to open up its land to CO2 storage characterization is significant. “Even through there is this large outstanding question about the second-phase of the permitting process, this guidance is important because the BLM has an incredible estimated resource,” he said. “It’s an immense storage potential, and this is really the first, and a necessary step, towards hopefully taking advantage of this geologic resource that we have.”
