A proposal to conduct large-scale gas drilling operations in the Southern Tier; 6,500 land leases were sought for a plan to extract methane and store carbon dioxide

A proposal to conduct large-scale gas drilling operations in the Southern Tier;  6,500 land leases were sought for a plan to extract methane and store carbon dioxide

A newly formed company with roots in Texas wants to drill thousands of new natural gas wells across the Southern Tier in order to store carbon dioxide underground as well as extract methane from the Marcellus and Utica shale formations.

Southern Tier CO2 to Clean Energy Solutions LLC is seeking leases from landowners who own at least 30 acres in Broome, Tioga and Chemung Counties. It recently mailed out 6,500 information packages inviting people to sign up for what it hopes will be a massive carbon capture project.

“With your lease and the leases of thousands of like-minded landowners, we will begin a series of pilot wells…” the cover letter said. “This is your chance to finally realize the benefits of your underground resources. By joining forces, we can make the Southern region a leader in sustainable energy and a major contributor to the fight against global climate change.”

For more than a decade, Chesapeake and other drilling companies have leased tens of thousands of acres across the Southern Tier at prices ranging from less than $5 per acre to more than $3,000 per acre, excluding royalties, for high-volume hydraulic fracturing of natural gas. the new. Wells.

But New York state officials, citing environmental and public health drawbacks, later banned hydraulic fracturing when more than 300,000 gallons of water per well is required. High-volume fracking typically requires at least 1 million gallons per well, and often much more.

Southern Tier Solutions (short for the company’s unwieldy name) will not use any water or chemicals in the drilling process, according to its president, Bryce Phillips.

Instead, STS plans to inject carbon dioxide — the main driver of climate change — into rock formations, which readily absorb it. This process releases methane gas, which can then be sold or burned.

Initially, Phillips said, the carbon dioxide required for the process would have to be purchased and delivered by rail from sources along the Gulf Coast. Eventually, STS intends to create “a network of 200-300 MW power plants throughout the Southern Tier.”

A proposal to conduct large-scale gas drilling operations in the Southern Tier;  6,500 land leases were sought for a plan to extract methane and store carbon dioxide
Orca, the world’s largest live air capture station, opens in 2021 in Iceland.

In addition, “direct air capture” (DACs) facilities will be built nearby to remove carbon dioxide directly from the air. (Only 27 DAC plants were operational worldwide as of July, while at least 130 more were in development.)

The incentive to make a massive shift in energy production is tied to federal tax credits under Section 45Q of the IRS tax code, according to STS.

The United States currently has dozens of gas, coal, and nuclear power plants that are nearing retirement. STS asserts that the EPA will approve permits for new plants only if they demonstrate they will capture and eliminate greenhouse gas emissions.

“At present, there is not a single plant operating in the United States that can capture and eliminate carbon emissions,” STS says on its website. “We expect to be among the first.”

The federal Inflation Reduction Act of 2022 includes tax credits of $85 per metric ton of stored carbon dioxide, or $60 per metric ton if storage is combined with STS-type methane extraction plans.

DAC plants are eligible for tax credits of $180 per metric ton, or $130 per metric ton if the captured gas is used to extract methane.

Phillips said he plans to make public presentations across the Southern Tier in the coming weeks to explain the company’s complex standard lease and answer other questions.

About a dozen people attended the first-of-its-kind hearing yesterday at the Hilltop Inn in Elmira. Many of those who received information packages inviting them to sign leases asked for more details. (Another session is scheduled for 11-4 on Sunday, November 12 at the Hilltop Inn.)

On its website, STS invites select landowners in Broome, Tioga and Chemung counties to click through to request a draft lease.

The company’s website allows landowners to request a copy of the proposed lease, which includes a nominal upfront bonus of $10 and future payments for carbon dioxide captured and methane extracted in connection with their land. (The bonus is not $10 per acre, just $10).

“We are not here to revisit the financial disaster that companies suffered in the previous shale boom at the hands of regulatory policymakers,” the company’s website says in its detailed Q&A section.

“The permitting process poses STS’s greatest operational challenge,” the website states.

In fact, state agencies issuing permits must now take into account in their decision-making the goals and objectives set forth in the Climate Leadership and Community Protection Act of 2019. The law calls for reducing the nation’s total greenhouse gas emissions by 40 percent by 2030 and 85 percent By 2050.

The Climate Action Council, tasked with developing strategies to achieve these goals, released a scoping plan last December that includes extensive discussions on carbon capture (or carbon sequestration).

“We are 100 percent aligned with the goals of the CLCPA,” Phillips said in an interview today.

The approach being promoted by Phillips and STS is to link carbon sequestration with a huge new wave of natural gas exploration.

The company says it envisions a series of ten or more centers in the southern tier, each “supported by 50,000 to 100,000 acres of lease space.” Each center will include a DAC unit, an electrical power plant, carbon dioxide/methane separation equipment, a “subsurface network of carbon dioxide and (methane) supply and distribution lines” connecting multiple well pads to the generating station, and DAC, separation and storage facilities.

The website says: “The strong pace of development requires drilling a large number of wells within a limited period.” “…The plan is ambitious and achievable, but the biggest obstacle we face is running out of time.”

STS was created in April. It has no offices in the southern region, and its main address is listed as a Houston office for Incfile, an incorporation and compliance service that handles paperwork for many companies. Phillips is listed as the company’s controlling person and his address is listed as a PO Box in Fort Worth, where he lives in a home that Zillow estimates is worth $3.5 million.

Phillips said at the meeting held in Elmira yesterday that he has an extensive background in the oil and gas industry. Records show he is president of Phillips Land Associates, which has business relationships with fossil fuel heavyweights such as XTO Energy Inc., Oxy USA Inc. and Hyde Oil & Gas Corp. The STS website does not provide details.

Phillips said today that STS will decide by early March whether to proceed with drilling trial wells in New York. He said that the company will not move forward unless it signs leases for an area of ​​at least 100,000 acres.

He estimated the cost of the experimental wells at about $60 million, and said it would be covered by “the guys who own the entity (STS). “We are not looking for partners.”

But complete construction of the entire project could cost between $12 and $16 billion. “There are some big banks and private equity firms on the sidelines that like what we’re thinking,” Phillips said.

So far, at least 1,000 landowners have expressed interest in the lease, and dozens have signed agreements, he said. “I didn’t hear anyone say no,” Phillips said.

But Joan Koster of Parker told WaterFront she received the STS invitation package in the mail about three weeks ago and would never agree to sign.

“We own over 130 acres of prime land in a town obsessed with fracking,” Koster said. “None of our neighbors who live on smaller tracts of land received an invitation. So I suspect they chose the recipients carefully and quietly.

“I led (the fight against) fracking in northern Broome County last time. I’m too old to fight that fight again.”

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