Sen. Cramer, EERC's John Harju Highlight ND Class VI Primacy at EPW Hearing on CCUS

Statement

At a Senate Environment and Public Works Committee hearing on carbon capture, utilization, and storage (CCUS), U.S. Senator Kevin Cramer (R-ND) and John Harju, Vice President for Strategic Partnerships at the University of North Dakota's Energy and Environmental Research Center (EERC), discussed North Dakota's Class VI well primacy, the effectiveness of current and proposed tax credits to reduce carbon emissions, permitting timelines, and net-negative carbon oil production through enhanced oil recovery (EOR).

Senator Cramer and Mr. Harju began with a discussion on carbon reduction related tax credits. Mr. Harju discussed analysis comparing the cost effectiveness on a ton-per-dollar basis for carbon reduction between Democrats' proposed $10,000 tax credit for purchasing electric vehicles and the 45Q tax credit for CCUS projects.

"Senator Whitehouse talked about a value proposition which we know he's talking about some sort of profit opportunity in all of this, but with regard to the tax credit system, there are different values. Not every credit is created equally. Not every carbon-reducing technology is created equally. Have you ever done an analysis on the benefit of say a 45Q credit versus a credit for say electric vehicles, for example, in terms of a dollar per ton or a ton per dollar comparison?" asked Senator Cramer.

"I was recently asked to give a comparative assessment of a conceptualized $10,000 EV credit in terms of what that would equate to on a ton of carbon basis. My valuation gave me a price of somewhere between $200-300 per ton of CO2 avoided over the life of that vehicle. The average vehicle is considered to run somewhere in the neighborhood of about 120,000 miles. They will have a fuel efficiency of about 23 miles per gallon. A gasoline-fired vehicle emit about 50 tons of CO2 over its entire lifetime. Electric vehicles are not zero. Considering that they take their power from the grid using normalized grid signatures and the fact that there's a lifecycle associated with production of battery and so on, they'll actually emit somewhere in the neighborhood of about 15 tons of CO2 over the life of that vehicle, again on a normal life. So your net savings would be about 35 tons. At $10,000 you're approaching $300 per ton there," responded Mr. Harju.

"If [45Q] went up to $80 it would still be a bargain," noted Senator Cramer.

Senator Cramer asked specifically about primacy over Class VI, wells used for geologic sequestration of carbon dioxide, highlighting North Dakota's first-in-the-nation status and current projects.

"[North Dakota has Class VI] primacy, now Wyoming has [it], and others are trying to get [it]. Since you work across the country and with the federal government, can you give us a little bit of a comparison as to why this primacy is important to a state? What's the benefit of state primacy compared to states that don't have it and rely on the federal government for permitting?" asked Senator Cramer.

"The proof is in the permits. To the best of my knowledge, I believe that the federal government has issued one Class VI permit. The State of North Dakota has issued three with several pending and we've only had primacy since 2018," responded Mr. Harju.

"Why is the state doing better than the federal government?" asked Senator Cramer.

"In the case of states, they're much more familiar with local geology and the opportunities that the state affords. Regardless of the permitting authority, the federal oversight is really on the wells themselves so the Class VI program really does not deal with pore space access and some of the other ancillary things necessary for the construction and operation of a CCUS site. Our state actually passed comprehensive geologic storage rules prior to the existence of the Class VI program and ultimately needed to go secure that primacy even though we previously had fully comprehensive rules, including pore space ownership, unitization provisions, etc.," said Mr. Harju.

When discussing the permitting process timeline, Senator Cramer and Mr. Harju highlighted the significant gap in the time it takes to secure permits at the state versus federal level.

"In the state of North Dakota, the average thus far for each of those permits has been seven months. My recollection of the one federal permit, it was on the order of five or six years and it's State of Illinois," responded Mr. Harju.

Senator Cramer concluded by asking how EOR reduces emissions specifically looking at the amount of carbon stored compared to the downstream emissions from the oil produced.

"Can you explain how enhanced oil recovery functionally works?" asked Senator Cramer.

"Denbury has done a fairly extensive analysis of their own operations and they estimate that roughly a quarter of their operations, especially those that are industrially sourced or anthropogenic CO2, that each of those is a net carbon negative oil production operation. Our own research at the Bell Creek Field in southeastern Montana, further verifies that long-term secure geologic storage. Our average storage volumes over the course of a project suggests that it's going to be on the order of approximately one half ton of CO2 stored for each barrel of oil produced," responded Mr. Harju.

After the hearing, Senator Cramer thanked Mr. Harju for testifying as a star witness in the hearing.

"John Harju brings a wealth of knowledge and experience on carbon capture, innovative research, and energy solutions. I'm really grateful for his willingness to testify and we're fortunate that he calls North Dakota home," said Senator Cramer.

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