Climate fix or pollution pipeline?

Ridge resident Dan Dinstel remembers his introduction to the Snowy River project, a proposal to inject 150 million tons of carbon dioxide thousands of feet below southeastern Montana's sagebrush steppe.

It came in the form of an announcement in the Eagle, that the Bureau of Land Management would be hosting a public meeting to discuss a pitch to combat climate change by "safely injecting carbon dioxide - the most common greenhouse gas - deep underground, permanently preventing it from entering the atmosphere."

The announcement caught Dinstel and others in the area by surprise, given that there had been little if any outreach to Carter County residents in the two-year period between the time oil and gas company Denbury Inc. began working with the BLM and the "public scoping" meeting last October.

Dinstel, who grew up in Carter County and then returned after retiring from an engineering career in Alaska, set about researching the geological, political and energy landscapes of the Snowy River project. He told Montana Free Press this month that he's troubled by what his efforts unearthed, as well as by details that have been excluded from the 228-page environmental assessment - a project application, essentially - that Denbury submitted to the BLM in February.

Dinstel knows the project is located near a large Denbury-owned carbon dioxide pipeline and that the company is seeking the BLM's approval to drill 15 wells and inject them over a 20-year period with enough carbon dioxide to match the annual emissions of 1.6 million cars.

Dinstel also knows that Denbury became a wholly owned subsidiary of oil behemoth ExxonMobil following a $5 billion acquisition last year that ExxonMobil pursued to access Denbury's extensive CO2 pipeline network, expand its own carbon reuse and sequestration expertise, and help "meet the decarbonization needs of industrial customers while also reducing emissions in our own operations."

What Dinstel doesn't know is how high-ranking federal officials are thinking about the first geologic carbon sequestration project to be proposed in Montana. But he said he suspects that Snowy River is garnering a close look, despite the chilly reception it has received in Carter County due to concerns Dinstel and others have raised about the efficacy of the sequestration technology and potential impacts to wildlife, grazing resources and water supplies.

"The decisions are being made somewhere other than the Miles City Field Office," Dinstel said. "We just feel like it's getting run down our throats whether we like it or not."

Dinstel, to be clear, doesn't like it.

Neither ExxonMobil nor Denbury responded to multiple requests for comment, so the project's timeline and price tag remain unclear, as does the amount the BLM stands to receive by leasing federal land and subsurface "pore space" to the project.

To environmental advocacy organizations, the environmental assessment's most glaring omission is the source of the carbon dioxide that would be injected into the project's wells, 12 of which would be located on BLM land, and three on state land.

Snowy River opponents zero in on the project's CO2 source because they suspect the project offers no net climate benefit and will only facilitate the further extraction of carbon-releasing fossil fuels as companies like Denbury and ExxonMobil capitalize on well-intentioned but poorly implemented tax incentives.

The BLM told a project opponent in a Feb. 20 email reviewed by MTFP that the project's CO2 source "is unknown at this time," but at least one environmental group says it has an idea about the CO2's source based on comments a Denbury representative made during a March 6 meeting and the project's proximity to the company's existing CO2 pipeline network. The Montana Environmental Information Center wrote in comments on the project that most of the CO2 is likely to come from Shute Creek, a 38-year-old natural gas-processing facility in southwest Wyoming that became one of the world's largest CO2 capture operations after ExxonMobil retooled the plant in 2008.

According to a 2022 report prepared by the Institute for Energy Economics and Financial Analysis, most of the CO2 captured at Shute Creek has been used for enhanced oil recovery, i.e., the injection of CO2 into existing oil wells (including some in eastern Montana) to increase the amount of oil that can be extracted from them. About half of the CO2 that has arrived at Shute Creek from the nearby LaBarge gas field, roughly 120 million tons, has been vented into the atmosphere. That vented CO2 - which, for scale, is about three times the amount of CO2 Finland generated in 2021 - contributes to the climate change that plays a role in Montana's shrinking snowpacks, intensifying wildfires and dwindling summertime streamflows.

Project planners insist Snowy River would generate "net-negative" emissions, but opponents argue it will incentivize the extraction of CO2-rich natural gas in Wyoming without the integral benefits that other carbon capture projects promise, such as power generation, ethanol production or cement manufacturing.

"Rather than capturing CO2 from industrial processes such as the combustion of fossil fuels, the project will simply move naturally occurring CO2 from one geologic formation to another, losing some amount to the atmosphere in the process while using an additional amount for Enhanced Oil Recovery that results in further anthropogenic carbon emissions," MEIC wrote in its comments. "This project will not help to mitigate climate change."

Wade Sikorski, a Willard resident and longtime member of both MEIC and the Northern Plains Resource Council, told MTFP he believes the amount of energy required to capture, pressurize, transport and inject the CO2 is the project's "Achilles' heel."

He said he doesn't doubt the project will be profitable for ExxonMobil, but "they're not going to be doing anything useful."

Part of the reason Montana doesn't yet have a project like Snowy River despite years of conversation surrounding carbon sequestration is that such projects are expensive. According to a 2023 report by the Congressional Budget Office, carbon capture and sequestration projects have been limited nationwide because "the cost to implement CCS [carbon capture and storage] technology exceeds its value in most potential settings."

But energy observers say federal policy changes in recent years could be changing that calculation, for better or worse.

Dinstel said he suspects that a federal tax incentive known as 45Q plays a substantial role in Denbury's interest in the Snowy River project and in ExxonMobil's acquisition of Denbury.

Congress established 45Q in 2008 to encourage investment in greenhouse gas reduction technologies, but it wasn't widely claimed. Congressional bills including the Bipartisan Infrastructure Law and Inflation Reduction Act increased the credit's value fivefold and loosened the requirements to claim 45Q, which allows companies to shave $85 off their tax bill for every ton of carbon dioxide they store in secure below-ground repositories.

"They're proposing to inject 150 million tons of carbon dioxide over the life of this project, and currently the price tag is $85 a ton," Dinstel said. "You punch that into your calculator and you better not be having a Walmart calculator. You're going to have a lot of zeros - it's going to be nearly $13 billion dollars."

Montana Petroleum Association Executive Director Alan Olson attributes burgeoning interest in carbon sequestration projects like Snowy River to President Joe Biden's broader climate agenda and 45Q revisions.

"If the economics aren't there, it won't happen. But if there's an incentive to capture greenhouse gasses, let's take it," Olson said. "It's not any different than giving incentives to wind and solar."

Congress' expansion of 45Q is consistent with the White House's current strategy on climate change: Avoiding emissions remains the "first priority," but carbon capture and sequestration "are likely needed to prevent the worst impacts of climate change."

The friction inherent in the Biden administration's approach is also playing out in corporate and nonprofit boardrooms across the country as policymakers and stakeholders contemplate the role that legacy greenhouse gas emitters and "carbon management" technologies should play in America's energy future. Organizations like MEIC advocate a rapid and decisive transition away from fossil fuels and toward cleaner energy sources and battery storage. Others, like the Great Plains Institute, a Minneapolis-based nonprofit working to "accelerate the transition to net zero carbon emissions to the benefit of people, the economy and the environment," see carbon sequestration as one of many technologies that will be required to adapt to climate change.

"I think we need to explore every technology and every option that we have at our fingertips to meet the energy and climate challenge," Patrice Lahlum, GPI's vice president of carbon management, told MTFP. "We want to see this country get to 'yes.'"

Lahlum added that she thinks the carbon management field is now positioned, in terms of market adoption, similarly to renewable energy 20 years ago. Familiarity with carbon sequestration projects will go a long way toward building support for them, she said.

It would be nice, she added, if such projects are one day seen as no more remarkable than currently common energy infrastructure like electricity substations: "You drive past [them] every day and you don't even notice it."

Like most people interviewed for this story, Lahlum said the federal government's process for reviewing geologic carbon sequestration projects isn't particularly fast, despite rising interest in their development. It takes time to ensure that proposals to inject CO2 thousands of feet into the earth will be protective of underground sources of drinking water, Lahlum said.

"It's a lengthy process, it's an arduous process and a rigorous process - as it should be," Lahlum said of governmental review of Class VI injection well applications.

While the BLM is handling the land-use piece of the Snowy River application, examining potential impacts to drinking water and seismic activity falls to the U.S. Environmental Protection Agency. Region 8 EPA spokesperson Marisa Lubeck said Denbury has not yet submitted an application for the Snowy River project to the EPA. That means that groundbreaking on the project's wells and 40 miles of pipeline, if it occurs at all, is still several years out.

With the exception of Wyoming, which assumed oversight of Class VI well permitting for projects inside its own borders in 2020, there are no long-term CO2 sequestration wells currently operating west of North Dakota. As of late March, permits for four wells in California were under EPA review. Wyoming, which has made carbon capture and sequestration a centerpiece of its energy policy in a bid to sustain the Cowboy State's continued combustion of fossil fuels, anticipates it will receive 30 Class VI applications for review in 2024, on top of the three it approved last year.

Although much of the scrutiny focused on Snowy River pertains to its effects on the atmosphere and subterranean rocks and water, there are also a host of potential impacts related to surface disturbance that stakeholders have flagged in comments to the BLM.

During the scoping period for the project, commenters expressed concerns about impacts to the county's roads, law enforcement requirements, BLM grazing leases and wildlife. The project is located in prime habitat for mule deer and sage grouse - both energy development-shy animals that are in the throes of regional population declines.

Additionally, Carter County Museum curator Nathan Carroll said he's concerned the project could disturb the area's paleontological sites, which are largely intact and have yet to be rigorously studied. The project area isn't exactly speckled with dinosaur bones the way sites to the north are, but it holds a wealth of fossilized marine life that congregated near methane seeps on the ocean floor some 75 million years ago, he said.

Carroll said he's tried to educate himself on various aspects of the project to fill in information gaps left by Denbury and the BLM, but he seems to only unearth more questions.

"Every day I see if I can't answer this one question a little bit, and it turns out that I just have five more questions," he said.

He wonders, for example, what Denbury's plan to safeguard public health would be if a CO2 pipeline were to rupture. Carroll said a Denbury-hosted training on the company's emergency response plan wasn't especially confidence-inspiring, and his concerns only compounded when he learned about the 2020 rupture of a Denbury-operated pipeline in Mississippi that so rapidly depleted oxygen levels in the area that dozens of people were hospitalized.

Carroll is also wary of Denbury's claim that injected carbon dioxide will remain underground, rather than drifting up to the surface through fissures and improperly sealed natural gas wells.

"For a project that's proposing to be a geological reservoir of CO2, we have yet to have a geologist from the BLM or somewhere else explain what the capture mechanisms are here," he said.

Former Montana Gov. Brian Schweitzer, who describes himself as one of the state's biggest clean energy boosters, also zeroed in on this component of the project.

Drawing on his earth science background, Schweitzer argued in an interview with MTFP that developing carbon sequestration technology is a "noble goal" that could help America - and other countries without the United States' financial and research resources - get a handle on greenhouse gas emissions. But he also said his support of this particular project hinges on its ability to hold on to the CO2 injected 5,200 to 8,400 feet below ground.

"It's not asking too much to ask a trained geologist if this is going to remain in the earth for millions of years," he said. "If the answer is yes, then the planet is better off."

The financial calculations that stakeholders are weighing aren't limited to the federal tax incentives and construction costs associated with Snowy River's build-out. The project is located in a region of Montana with limited economic development, even by rural Montana standards. Denbury's environmental assessment estimates that the project would generate tangible, if modest, economic benefits for the largely agricultural economies of two of Montana's least populated counties: Carter (population 1,382) and Fallon (population 3,011).

Denbury estimates the project would generate between 4 and 35 construction-related jobs during the staggered construction timeframe, with about a quarter of those jobs going to locals. The company's environmental analysis also estimates that seven permanent employees would be hired to maintain operations over the project's 20-year timeline.

Changes to county tax collections are murkier because the vast majority of the project is situated on federal land. Details regarding the amount BLM would be paid for leasing well pads and road and pipeline rights-of-way aren't yet available. It's also not known what, if anything, Denbury would pay the BLM for access to 100,000 subsurface acres of "pore space" the CO2 would be injected into. (Guidance issued by the BLM in 2022 suggests only that the agency will work with Interior Department appraisers to "determine an appropriate charge" for "use and occupancy of the pore space.")

Carter County benefits considerably from the oil, gas and CO2 pipelines that run through it, but no major expansions to existing pipelines are anticipated, meaning the project's ability to bolster local tax collections would be modest.

And despite the existing pipelines criss-crossing Carter County, the project area remains a place that Sikorski describes as "the prettiest part of Montana nobody knows anything about."

"It's such an expansive chunk of BLM [land] that hasn't been developed by energy yet, to the point where it isn't as accessible as an oil field is, either," Carroll said. "There's a kind of beauty to that, too. You can go out when Montana says you can," Carroll said, referencing the state's capricious weather and muddy soils.

The BLM's Miles City Field Office is accepting public comment on the project until May 17, 2024, at its e-planning website.

This story was updated to reflect a recent extension of time on the comment period.