DNR outlines CCUS and voluntary carbon offset programs; regulators say projects in North Slope and Cook Inlet under early assessment

The Department of Natural Resources told the House Finance Committee that its carbon management efforts include a newly established underground carbon capture, utilization and storage licensing program and a voluntary carbon offset program for state lands, and that initial industry activity is already occurring on the North Slope and in Cook Inlet.

DNR Deputy Commissioner John Crother said the CCUS program — the underground injection authority enacted by the legislature last year — has implementing regulations that were “about to be live” and that applications for license areas may follow soon. Crother said license areas carry rentals and that, if projects convert to long‑term injection, the state expects to receive per‑ton injection fees as provided in statute.

The nut graf: DNR told lawmakers they are seeing early, public interest in CCUS in Alaska’s two main basins — the North Slope and Cook Inlet — including projects publicly announced with Department of Energy support and interest from international companies.

Crother and Commissioner John Boyle told the committee they are seeing assessment activity already in both basins, with some projects aided by Department of Energy resources. Crother said one international firm, Sumitomo, and partners have publicly announced activity in Cook Inlet. Committee members asked where interest was coming from and how the state will set rental and injection rates; Crother said market structures and international comparisons are still evolving but that Alaska’s statutory terms are public and under review by potential applicants.

On voluntary carbon offsets — often described in the hearing as a “trees” program — the department retained a consultant, TerraVerde, to assess feasibility and has begun work in the Tanana State Forest. Crother told members that if a project is sanctioned and proceeds, expected credit generation would occur roughly 18 to 24 months after project initiation. Commissioner Boyle and Crother said the state has a designated carbon manager within DNR to engage markets and protocol bodies.

Committee members asked about near‑term revenue expectations. Commissioner Boyle said the program is “very early days” but that DNR sees active participants; he told Representative Stapp he believes it is “more likely than not” the state will realize revenue that exceeds administration costs, but declined to assign precise odds.

Members raised questions about possible enhanced oil recovery uses of injection wells. Crother said the department and the Alaska Oil and Gas Conservation Commission (AOGCC) have statutory and regulatory authorities — including lease conversion and permitting oversight — to monitor well activity, well reports and to manage conversions if a storage project diverges from lease purposes.

DNR also said the carbon framework contemplates non‑forest sources of sequestration under voluntary markets, including mariculture kelp projects, and that protocol development is still maturing for some approaches. Officials said they will continue to report progress to the legislature and to provide more information as lease or license applications arrive.

DNR asked the committee for patience as markets and protocols develop but emphasized the department is actively working to attract project proposals and to position Alaska as a potential storage destination.

Next steps: DNR will publish final regulations for CCUS, continue feasibility work on offsets, and provide the committee updates as applications and credit generation timelines crystallize.