A newly formed company with Texas roots 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 pursuing leases from landowners who own at least 30 acres in Broome, Tioga and Chemung counties. It recently mailed 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 more like-minded landowners, we’ll commence a series of pilot wells …,” a cover letter states. “This is your opportunity to finally realize the benefits of your subsurface resources. By uniting our efforts, we can make the Southern Tier a sustainable energy pioneer and a major contributor to the fight against global climate change.”
More than a decade ago, Chesapeake and other drilling companies 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 new natural gas wells.
But New York State officials, citing environmental and public health drawbacks, later banned fracking whenever it requires more than 300,000 gallons of water per well. High-volume fracking typically requires at least 1 million gallons per well, often much more.
Southern Tier Solutions (shorthand for the company’s unwieldy name) won’t use any water or chemicals in its drilling process, according to Bryce Phillips, its president.
Instead STS plans to inject CO2 — the main driver of climate change — into the shale formations, which readily absorb it. The process forces out methane, which can then be sold or burned.
Initially, Phillips said, the CO2 required for the operation will have to be purchased and delivered by rail from sources along the Gulf Coast. Eventually, STS intends to establish “a network of 200-300-megawatt power plants throughout the Southern Tier.”
In addition, “direct air capture” facilities (DACs) will be built nearby to remove CO2 directly from the air. (Only 27 DAC plants had been commissioned worldwide as of July, when at least 130 others were in development.)
The incentive to make a monumental shift in energy production is related to federal tax credits under Section 45Q of the IRS tax code, according the STS.
The U.S. currently has dozens of gas, coal and nuclear plants nearing retirement. STS asserts that the Environmental Protection Agency won’t approve permits for new plants unless they show they will capture and dispose of their greenhouse gas emissions.
“At present there is not a single plant operating in the U.S. that both captures and disposes of their carbon emissions,” STS says on its website. “We anticipate being among the first.”
The federal 2022 Inflation Reduction Act includes tax credits of $85 per metric ton of CO2 stored, or $60 per metric ton if storage is combined with the type of methane gas extraction STS plans.
DAC plants are eligible for tax credits of $180 per metric ton, or $130 per metric ton if captured gas is used to extract methane.
Phillips said he plans offer public presentations across the Southern Tier in the coming weeks to explain the company’s rather complex standard lease and to answer other questions.
About a dozen people attended the first such session yesterday at the Hilltop Inn in Elmira. Several who had received information packages inviting them to sign leases asked for further details. (Another session is scheduled for 11-4 on Sunday, Nov. 12, at the Hilltop Inn.)
The company’s website allows landowners to request a copy of a proposed lease, which includes a nominal upfront bonus of $10 and future payments for CO2 sequestered and methane extracted in connection to their land. (The bonus is not $10 per acre, just $10).
“We are not here to revisit the financial disaster suffered by the companies of the earlier shale boom at the hands of regulatory policymakers,” the company website says in its detailed Q&A section.
“The permitting process poses (STS’s) greatest operational challenge,” the website states.
In fact, state agencies that issue permits must now consider in their decision-making the goals and targets in the 2019 Climate Leadership and Community Protection Act. The law requires that total state greenhouse gas emissions to be reduced by 40 percent by 2030 and 85 percent by 2050.
The Climate Action Council, which is charged with…
Read More: Massive Southern Tier gas drilling spree proposed; 6,500 land leases sought for