Two days ago, Amy Sisk reported in the Bismarck Tribune article, Project Tundra, carbon dioxide pipeline developer to partner on storage:
The companies behind two carbon dioxide storage projects slated for west-central North Dakota have agreed to work together.
Summit Carbon Solutions is developing a multistate pipeline to pick up carbon dioxide from Midwestern ethanol plants. Under a new agreement with Minnkota Power Cooperative, it will have access to the storage site the co-op is planning for its Milton R. Young Station near Center.
Minnkota received a state permit in January to establish an underground storage facility to permanently hold climate-warming emissions from its coal-fired power plant. The Project Tundra site is meant to store up to 100 million tons, and Summit is planning to build a small pipeline branch that extends to the area.
The agreement signed Thursday also sets up the framework for the companies to jointly pursue developing another 200 million tons of carbon dioxide storage. . . .
Note the language "an underground storage facility to permanently hold climate-warming emissions." That seems to be the option for the 45Q tax credit to help coal producers that receives a higher return.
Back in March, Jeff Beach reported in AgWeek in Continental Resources ventures into carbon capture with 5-state ethanol project:
Continental Resources, which helped drive a resurgence in North Dakota’s oil industry, is investing in what is being billed as the largest carbon capture project in the world — taking greenhouse gas emissions from ethanol plants and storing it underground in North Dakota.
Iowa-based Summit Carbon Solutions on Wednesday, March 2, announced a $250 million investment from Continental Resources, which also will contribute it's expertise in North Dakota's geology.
In an interview, Harold Hamm, the founder of Continental Resources said the storage area in Mercer and Oliver counties west of Bismarck, is an "ideal place" for carbon storage, a key component of North Dakota's goal to be carbon neutral by 2030.
"We believe that this is the right thing to do for the right reasons, for the environment, for ag, for industry, for the country, and that's why we're here," Hamm said. . . .
Summit also is banking on a federal tax credit of $50 for every ton of carbon dioxide that is permanently stored. Summit says the 31 ethanol plants will provide about 8 millions tons of carbon dioxide and the project will have the capacity to store 12 millions tons with a possible expansion of up to 20 million tons. . . .
While liquid carbon dioxide can be used for enhanced oil recovery, Summit has said that is not in its business plan .
At one point, using carbon extracted from the Milton R. Young Station coal plant for enhanced oil recovery was thought to be a possibly use for the it, but revision of the tax credit caused permanent sequestration to be more lucrative. Prairie Public Broadcasting's Dave Thompson reported in 2020's 'Project Tundra' altering its focus:
The state’s Industrial Commission recently approved an additional $5 million to help fund a front-end engineering and design study for additional work on “Project Tundra,” the project to capture carbon dioxide from the Milton R. Young power plant near Center.
As originally proposed, the CO2 would have been stored in nearby geological formations, or taken by pipeline to western North Dakota for enhanced oil recovery. But that focus has changed.
"Because of the change in the market situation for commercial CO2, especially because of the price of oil and gas dropping temporarily, and the maturity of our oil fields, they're looking at the sure near-term opportunity as geologic storage," Mike Holmes of the Lingnite Energy Council told the Commission.
Holmes said the owner of the Young plant, Minnkota Cooperative, is looking at storing the CO2 in underground formations at the plant, and at the nearby Center Mine.
"Long range, they still are looking at the benefit of being able to continue the lignite industry, but also oil and gas, through enhanced oil recovery," Holmes said.
The total project cost for Project Tundra is now $46 million. The Industrial Commission has committed $20 million, and the rest will come from Minnkota, the federal Department of Energy, and other partners.
Holmes said Project Tundra will likely become the biggest CO2 capture project in the country.
"In fact, Petronova, which was the front runner, is now temporarily shut down because of low oil prices," Holmes said. "Their economic model was simply for enhanced oil recovery."
We can only wonder at what point oil production might be more profitable using that CO2 for enhanced oil recovery than taking those tax credits. Though oil prices are quite high, the Bismarck Tribune reports North Dakota's daily oil output tanked to 300,000 barrels amid latest blizzard.
And there's that situation the Associated Press's James McPherson reported in ND Oil Industry Wants End to Price-Based Tax Triggers:
North Dakota’s oil industry wants lawmakers to change the framework for taxing crude production that abolishes the price-based triggers that have been in place for decades.
Unless oil prices suddenly decline, North Dakota’s treasury may start reaping the benefits of a tax increase on drillers that could bump state tax collections by billions of dollars. The present situation with high crude prices is in contrast situation to just a few years ago when low oil prices threatened to trigger a tax break for drillers that would have cost the state lost revenue.
Abolishing oil-tax triggers gives drillers certainty and keeps the industry’s jobs and revenue flowing, said Ron Ness, president of the North Dakota Petroleum Council, a group that represents several hundred companies working in the state’s oil patch.
Companies could leave North Dakota, the nation's No. 3 oil producer, and focus drilling in other states that have a better and more certain tax climate, he said.
“Taxing oil more gets you less,” said Ness, who wants a flat tax on oil production.
“The roller coaster prices we’ve seen really mean that we need to be concerned about keeping investment (in North Dakota), “ Ness said. “Predictability where possible is key.”
The potential for an oil tax increase is possible because of a state law that adjusts North Dakota’s oil extraction tax, depending on whether the three-month average price of a barrel of oil is above or below a specified “trigger” price. Legislators first endorsed the concept in the mid-1980s, during a time of depressed oil prices.
North Dakota has two primary taxes on oil production — a production tax and an extraction tax, the latter of which was part of an initiated measure voters approved in November 1980.
The prospect of big tax cuts on the industry due to depressed oil prices had North Dakota lawmakers scrambling in the 2015 session to modify the tax framework. Had oil prices slipped below a five-month average of $55.09, the state stood to lose hundreds of millions of dollars.
The resulting legislation was among the most contentious of the session and passed just a few days before lawmakers adjourned. GOP lawmakers said it would provide a more predictable tax policy. Democrats argued it was a giveaway to the oil industry and would ultimately cost the state billions of dollars in tax revenue.
The current trigger is part of that 2015 legislation that abolished some price-based incentives for the oil industry in exchange for a lower oil tax rate — from 11.5% to 10%. But the bill also raised the total oil tax to 11% if oil prices rise to $90 a barrel for three consecutive months.
The increased tax rate is erased if oil slips below the threshold.
The monthly averages are figured using West Texas Intermediate prices, the U.S. benchmark set at Cushing, Oklahoma. The trigger price is now $95 a barrel. It is adjusted annually for inflation, using a price index for industrial commodities compiled by the U.S. Labor Department’s Bureau of Labor Statistics.
WTI crude was fetching about $100 a barrel Wednesday, and has been above the price trigger since Feb. 28. Oil prices have surged with Russia’s invasion of Ukraine.
The price-triggered tax increase would swell state tax collections by $372 million to $4.09 billion for the current 2021-23 budget cycle, according to a revenue analysis done last month by the Legislative Council, which is the research arm of the North Dakota Legislature. . . .
Some day soon, the snowdrifts will melt in North Dakota. So too, will those state tax revenues should the oil industry get its way, despite that initiated measure voters approved in November 1980.
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