Alaska DNR says it will accept underground carbon storage applications Feb. 16; AOGCC to pursue Class VI primacy

The Alaska Department of Natural Resources (DNR) told the House Resources Committee on Feb. 3 that it transmitted draft regulations for carbon capture, utilization and storage (CCUS) to the lieutenant governor on Jan. 17 and will be prepared to accept applications for underground carbon storage effective Feb. 16.

DNR Deputy Director Haley Payne, who leads the Division of Oil and Gas, told the committee, “we are now poised to begin to accept applications for underground carbon storage effective February 16.” The department described how implementation will split responsibilities between DNR as the landowner/licensing authority and the Alaska Oil and Gas Conservation Commission (AOGCC) as the subsurface regulator.

The legislation enabling the program, cited in the hearing as HB 50, gives DNR authority to license and lease the state’s pore space for CO2 injection and to issue pipeline right-of-way permits. The AOGCC will issue the injection permits (Class VI well permits) and manage long-term subsurface regulatory oversight across all lands in the state. AOGCC staff on the committee call said they expect to submit a Class VI primacy application to the U.S. Environmental Protection Agency (EPA) “sometime this summer” and that federal review typically takes about 12–24 months once an application is filed.

Why it matters: HB 50 creates a state framework to host permanent geological storage of CO2 and to charge operators for use of state pore space. The program sets the state’s commercial floors and regulatory gates before companies invest in exploration and injection infrastructure.

What DNR and AOGCC will do

- DNR will accept exploration license applications, collect application and rental fees, hold public best-interest findings, and negotiate commercial terms. Payne said DNR used oil-and-gas authorities as models for fee and lease language and transmitted a regulation package on Jan. 17.

- AOGCC will act as the subsurface regulator, issue Class VI injection permits, manage site completion certifications, and run the long-term monitoring period after regulatory closure.

Key program details described in the hearing

- Minimum injection depth: DNR described CO2 injection targets “somewhere that’s got to be at least 2,600 feet below the surface.”

- Exploration license: 5-year term with work-commitment reporting; exploration-phase data are used to support the Class VI permit application.

- Conversion and commercial floors: HB 50 sets minimum commercial terms that DNR can negotiate from. The committee was told the statutory floors include $2.50 per ton for CO2 injected and $20 per acre for rental charges; DNR may negotiate higher terms.

- Fees and financial assurances: DNR amended mineral-fee regulations to set a $500 application fee and a $250 transfer-of-interest fee for carbon leases, matching analogous oil-and-gas fees. HB 50 also created a carbon storage closure trust fund funded by operators to pay for long-term monitoring; DNR described the fund as an insurance-like source for post-closure costs but did not provide a definitive annual-dollar number in committee.

- Minimum qualifications and bonding: The draft regulations include minimum qualifications (disclosed in committee as $841,000) to show technical and financial ability to carry out projects and to satisfy bonding requirements across agencies. DNR said transfer or assignment of operator responsibility would require agency approval and replacement of surety.

- Monitoring and closure: Under federal Class VI guidance, the regulatory default monitoring period after injection ceases is 50 years or until the operator demonstrates the plume has stabilized. DNR and AOGCC stressed that during the regulatory period, responsibility rests with the operator.

Where projects are likely and who pays

- Sources of CO2: Committee discussion noted large stationary CO2 sources on the North Slope tied to gas handling, some coal-fired plants in the interior, and natural-gas combustion sources in Southcentral Alaska.

- Geography and infrastructure: DNR said it expects early activity in known basins—areas that host oil-and-gas infrastructure—because those places already have geological data and CO2 sources. The agency also noted ongoing interest in transboundary shipping concepts and international partnerships.

Regulatory timeline and public engagement

- DNR described a public scoping and comment process that began after HB 50’s passage in 2023. The draft regulations were published in October, drew 21 comments, and were transmitted to the lieutenant governor on Jan. 17. DNR plans to host public best-interest findings and make model lease and application documents public. Payne said DNR is building a technical GIS database with public data to help potential applicants do desktop screening.

Committee questions and technical concerns

Committee members asked about the expected timing for EPA Class VI primacy (AOGCC estimated 12–24 months after formal submission), how operators would demonstrate geologic suitability, the role of depleted gas reservoirs versus deep saline aquifers and coal seams as storage targets, assignment of long-term monitoring responsibilities, and whether state trust or general funds would be used (DNR said the carbon storage closure fund is operator-funded and that no general-fund request has been made for that trust at this time).

Representative Sadler asked whether depleted natural-gas reservoirs would be the most attractive early targets, noting their known geology and existing seismic data. Payne answered that depleted reservoirs are attractive because of prior characterization but cautioned the need to verify prior wells were plugged to standards that prevent leak pathways.

What’s next

DNR said it will begin accepting applications on Feb. 16 and posted a carbon-storage portal on the Division of Oil and Gas website. AOGCC staff said they are finalizing a regulatory package to submit for Class VI primacy to EPA and are preparing a memorandum-of-understanding approach modeled on other states to avoid duplicative review.

Ending

DNR urged prospective operators to use the department’s online technical resources and said model agreements and application forms would be posted publicly. The committee did not take formal votes; the update was an informational briefing on implementation steps required under HB 50.