N Dakota CO2 bills challenge to oil producers

Several proposed North Dakota laws set for debate today could bolster rights for property owners but challenge the state oil industry's plans to use carbon dioxide (CO2) to boost future production.

Companies building pipelines to carry CO2 in North Dakota would need consent from as much as 85pc of landowners on the pipeline right of way to proceed under a draft of Senate Bill 2209 (SB2209) that will be discussed in the state senate's energy and natural resources committee hearing today. The right of eminent domain would also be stripped from CO2 projects — but not oil and gas projects — even if they are considered common carrier pipelines, under another bill, SB2212.

The catalyst for the legislative efforts in a traditionally energy industry-friendly state is the Midwest Carbon Express pipeline, a $4.5bn project proposed by Summit Carbon Solutions and backed by oil and gas producer Continental Resources. The project would carry CO2 from ethanol plants in North Dakota, South Dakota, Nebraska, Minnesota and Iowa for sequestration north of Bismarck, North Dakota.

The project has attracted the ire of environmental groups throughout the states who label it an attempt at greenwashing biofuel production and the oil and gas business as a whole. Indigenous groups and other landowners along the planned pipeline route have also joined in on the opposition in many states, suggestion measures similar to the ones in North Dakota.

While the Midwest Carbon Express pipeline project is aimed at eventual carbon sequestration, injecting CO2 into oil wells to mobilize otherwise stranded oil volumes is one form of enhanced oil recovery (EOR) being pursued in North Dakota, the US' third-largest oil producing state. The technique has been used for years in other fields, including the Permian basin in Texas and New Mexico, which is served by several pipelines that carry CO2. But sourcing enough CO2 for new projects in North Dakota could be a challenge, making pipelines critical for future projects.

The proposed legislation aimed at CO2 projects "would really tie the hands of the oil and gas industry," according to Lynn Helms, the head of North Dakota's Department of Mineral Resources (DMR), as operators explore other methods to sustain production in the mature but prolific Bakken field. "[Bills 2209 and 2212] would both make it extremely difficult, if not impossible, to build carbon dioxide pipelines in the state."

North Dakota would likely "sacrifice many billions of barrels of oil" that would otherwise be unreachable without CO2 injections, said Helms.

State senator Jeffrey Magrum (R), who introduced the bills, told Argus the bills are not aimed at the oil and gas industry but are focused on protecting property rights and the "misuse" of eminent domain. Another bill put forward by Magrum, SB2313, would also increase the compensation for landowners by 33pc if eminent domain is used.

About 3pc of North Dakota's CO2 needs can be sourced from within the state, but the balance must be imported from elsewhere, DMR said. North Dakota's first and only crude project using CO2 injection is in Bowman County, which brings in CO2 from Wyoming via pipeline.

The DMR estimates 30-60pc of the Bakken's oil could be extracted using enhanced oil recovery, compared to just 1-15pc without this technology. The regulator did not specify how much CO2 injection would contribute to this gain compared to other EOR methods, such as water injection.

By Brett Holmes