Carbon Storage
Summary
In 2024, legislation was enacted to allow the State to lease its pore space for underground carbon storage projects. The principal statutes authorizing this program are found under Title 38, Chapter 5, Article 15A, Carbon Storage Exploration Licenses; Leases (AS 38.05.700 - AS 38.05.795).
The program is designed to first allow for exploration licensing, which is modeled after the oil and gas exploration license program. A license grants an exclusive right to explore a defined area for reservoirs suitable for underground carbon storage. It does not permit on-the-ground exploration activities, such as collecting seismic surveys, constructing drill pads, or drilling of wells, which are subject to various federal, state, and local authorizations. During the exploration term, a license holder may apply for a carbon storage facility permit from the Alaska Oil & Gas Conservation Commission (AS 41.06.105 - AS 41.06.210). Upon receiving a facility permit, the land under license may be converted to a lease (AS 38.05.715). The carbon storage lease will authorize the use of the State's pore space for underground carbon storage.
Regulations for implementing these statutes are in development. You may review the draft regulations on the Online Public Notice System. Please note that the regulations may change from the draft form before the final regulations are adopted by the Lieutenant Governor. Final regulations will be published on the Online Public Notice System and here on this website.
Please note this program is distinct from the Carbon Offset Program, which authorizes the Department of Natural Resources to use the state's surface resources, such as forests, for tradable carbon offset credits. For more information about that program, please visit their website within the Office of Project Management & Permitting.
The State of Alaska has significant potential for using its pore space as a carbon storage resource. Half of royalty revenue received by the Department of Natural Resources from carbon storage will be deposited in the Alaska Permanent Fund (AS 37.13.010(a)(2)). Stay tuned to this page for more information and developments of this program.
The Public Process and How to Participate
After regulations are adopted, the Department of Natural Resources (DNR) can begin receiving applications for carbon storage projects on state lands. DNR has several steps to license and ultimately lease its pore space for underground storage. The Alaska Oil & Gas Conservation Commission (AOGCC), a separate agency, has permitting requirements also. During these processes, there are requirements for public notice and opportunities for comment.
Application for an Exploration License
When DNR receives a complete application, it will take a hard look at the proposed project and the qualifications of the applicant to carry out the project, as required under AS 38.05.710(a) and 11 AAC 84.1000. Once this evaluation is completed, DNR will publish notice and solicit for competing proposals, per AS 38.05.710(b). If competing proposals are received and accepted, then a best interest finding (BIF) will be issued before a competitive bidding process is conducted.
If no competing proposals are received and accepted, then a BIF will be issued for the proposed exploration project area. Within the BIF, DNR will evaluate the geologic conditions of the area, its current project uses, reasonably foreseeable cumulative effects of carbon storage operations, and mitigation measures to protect against impacts. This analysis is shared with the public in a preliminary Best Interest Finding, where comments are sought to assist DNR in determining whether the licensing of the pore space is in the state’s best interest.
An exploration license does not authorize on-the-ground activities such as seismic surveys or drilling test wells. Further permits for specific activities are required and have public notice requirements. Public notices will be published on the Division of Oil & Gas Newsroom. Sign up to receive public notices by email here. Public notices will also be published in newspapers.
Applications for Class VI Wells and Storage Facility Permits
Well and facility permits are issued by AOGCC, not DNR. Before DNR may convert an exploration license to a lease, a license holder must obtain a storage facility permit from AOGCC. AS 41.06.125 requires notification for surface landowners and anyone with mineral rights within one-half mile of the boundaries of the storage reservoir. Sign up for AOGCC notices here.
