Carbon capture and storage in South Dakota: the need for a clear designation of pore space ownership.

• Author: Grave, Blayne N.

Carbon capture and storage is a promising new tool to combat climate change whereby carbon dioxide is pipelined underground into a geological reservoir for permanent storage. Momentum is growing in support of carbon capture and storage at the federal level and has been addressed by states neighboring South Dakota. However, carbon capture and storage projects pose a number of unanswered issues, one of the most important of which is subsurface pore space ownership. Property rights are generally functions of state law, and South Dakota has not yet addressed this issue. The uncertainty with how pore space property rights will be recognized in South Dakota impedes the development of carbon capture and storage projects within the state and prevents the creation of a new, valuable use of land. This comment considers surrounding state legislation on pore space ownership and examines existing subsurface case law in South Dakota to support the notion that pore space ownership should rest with the surface estate.

1. INTRODUCTION

   Carbon capture and storage (CCS) is a process by which carbon dioxide is "captured" before it is released into the atmosphere and pipelined underground for permanent storage in subsurface geologic reservoirs. (1) Climate change is a driving force behind development of carbon capture and storage. (2) Pending climate change legislation creates incentives for CCS by establishing a cap-and-trade system (3) to reduce carbon dioxide emissions. (4) It is possible that the United States could not meet the proposed restrictions on carbon dioxide emissions without using CCS. (5) Furthermore, the Electric Power Research Institute believes that CCS is one of the most significant technologies needed to be commercially deployed to reduce carbon dioxide emission rates to 1990 levels. (6) CCS is a promising technology made increasingly relevant by financial incentives created to reduce carbon dioxide levels. (7)

   Regional carbon sequestration projects are researching potential locations where geologic storage of carbon dioxide may be appropriate. (8) At least one area of northwestern South Dakota has been specifically noted as being appropriate for such a storage project. (9) Given the momentum building around CCS at the national level, (10) and potential storage located in our state, (11) South Dakota needs to clarify subsurface property rights in order to promote development of projects within the state. (12)

   The critical issue that specifically needs to be addressed at the state level is the question of ownership of subsurface pore space used for storage of the sequestered carbon dioxide. (13) This question arises when the mineral estate has been severed from the surface estate. (14) Most jurisdictions have not yet determined which interest holder prevails and can therefore grant sequestration rights. (15)

   With the exception of federal lands, subsurface property rights issues are functions of state law and will therefore be jurisdiction-specific. (16) As CCS projects gain momentum, property rights issues, including ownership of pore space, will be increasingly important concerns. (17) The resolution of this issue also determines who is entitled to compensation in the event of condemnation. (18) For a carbon capture and storage project to be feasible in South Dakota, the question of pore space ownership must be answered. (19)

   This comment discusses carbon capture and storage generally and the subsurface property rights issue raised in South Dakota in particular. (20) Part II of this comment provides background on climate change and carbon sequestration. (21) Part II also discusses momentum building around CCS through federal legislation and assesses South Dakota's potential role as a storage site for sequestered carbon dioxide. (22) Finally, Part II provides an overview of proposed Environmental Protection Agency (EPA) regulation of geological sequestration. (23) Part III answers the question of pore space ownership in South Dakota by building on basic principles of South Dakota subsurface law and analyses of other jurisdictions' subsurface law. (24) Part III also examines a model act proposed by the Interstate Oil and Gas Compact Commission (IOGCC) Geological C[O.sub.2] Sequestration Task Force as well as legislation recently passed in Montana, North Dakota, and Wyoming. (25) Part IV concludes that in order to promote development of geologic sequestration projects within the state, the South Dakota Legislature should designate the surface estate as the owner of the pore space used to store sequestered carbon dioxide. (26)

2. BACKGROUND

   Climate change mitigation is a driving force behind carbon capture and storage. (27) The earth as a whole is getting warmer. (28) This is most likely due to human activities that cause greenhouse gas emissions, (29) the most significant of which is carbon dioxide. (30) The EPA recently declared that greenhouse gases are pollutants that endanger public health and welfare. (31) This declaration was a direct response to Massachusetts v. E.P.A. (32) wherein the United States Supreme Court ordered the agency to conduct a scientific review determining the threat posed by greenhouse gases. (33)

   Impacts of climate change include, but are not limited to, increased concentrations of ground-level ozone, increased drought, more frequent downpours and flooding, more frequent and intense heat waves and wildfires, rising sea levels, more intense storms, and harm to water resources, agriculture, wildlife, and ecosystems. (34) In addition, "[eleven] retired U.S. generals and admirals signed a report from the Center for Naval Analyses stating that climate change 'presents significant national security challenges for the United States.'" (35) This threat arises when violence escalates over scarce resources, such as water. (36) The violence, in turn, "drives massive migration to more stabilized regions of the world." (37) The dire consequences of global climate change are thus prompting governments to find ways to reduce greenhouse gas emissions. (38)

   Reducing concentrations of anthropogenic greenhouse gases can be accomplished in four basic ways:

   1) through energy conservation and energy efficiency; 2) by using technologies involving renewable energy, nuclear power, hydrogen, or fossil fuels containing lower carbon content, e.g., natural gas; 3) by indirect capture of C[O.sub.2] after its release into the atmosphere utilizing the oceans or terrestrial sequestration, e.g., reforestation, agricultural practices, etc.; or 4) by carbon capture and geological storage [CCS], whereby C[O.sub.2] is captured and stored in geologic formations through underground injection (instead of being released into the atmosphere). (39) Thus, carbon dioxide can be removed from the atmosphere and sequestered in more than one way. (40)

   1. Carbon Sequestration and Enhanced Recovery Projects

      "Carbon sequestration" can refer to either geological or biological sequestration. (41) This comment focuses on carbon capture and therefore geological sequestration. (42) Biological sequestration is another form of carbon sequestration whereby plants take up carbon dioxide through photosynthesis. (43) Biological and geological sequestration will become increasingly useful tools in mitigating climate change because each can achieve significantly lower levels of atmospheric carbon dioxide with currently available technology, and neither calls for major changes in how the nation uses or generates energy. (44) In fact, carbon sequestration, whether geological or biological, allows for continued reliance on coal and other carbon-heavy fuels. (45) "Indeed, CCS is advocated by those who view ongoing reliance on fossil fuels as inevitable with the world's energy picture in 2030, and even 2050 still showing heavy carbon dependency." (46) Carbon sequestration, therefore, is a useful tool for mitigating climate change during the shift away from energy sources derived from fossil fuel. (47)

      The EPA defines CCS as "the process of capturing C[O.sub.2] from an emission source, (typically) converting it to a supercritical state, transporting it to an injection site, and injecting it into deep subsurface rock formations for long-term storage." (48) Geological sequestration is related to CCS, but geological sequestration does not include the capture or transport of carbon dioxide. (49)

      Enhanced recovery of oil or gas involves injecting carbon dioxide underground similar to CCS, but the purpose behind this practice is not permanent storage. (50) The purpose behind enhanced recovery projects is to force out oil or gas that would otherwise be unobtainable. (51) Using CCS as a tool for mitigating climate change involves different technical issues, larger volumes of carbon dioxide, and therefore, larger scale projects than enhanced recovery projects. (52)

      In addition, enhanced recovery projects do not implicate the issue of pore space ownership:

      In the case of C[O.sub.2] enhanced oil recovery projects, the right to inject C[O.sub.2] into the subsurface oil reservoir generally is contained in and part of the oil and gas lease that would have been obtained to develop the project. During the operation of a C[O.sub.2] enhanced oil recovery project (EOR), a certain amount of the injected C[O.sub.2] remains in the oil reservoir, and should be considered stored C[O.sub.2]. Consequently, the right to use an oil reservoir for the associated storage of C[O.sub.2] during the operational phase of a C[O.sub.2] EOR project would be permissible under an oil and gas lease. (53) The issue of pore space ownership does arise when the enhanced recovery project ceases to recover oil or gas and becomes solely a site for the permanent storage of carbon dioxide. (54)

   2. THE MECHANICS OF CARBON CAPTURE AND STORAGE

      To understand the benefits of geological storage of carbon dioxide and the legal issues it poses requires a more thorough assessment of how CCS actually...