How carbon capture and storage could usher in a massive fracking spree
The promoter of a multi-billion-dollar plan to drill thousands of gas wells in New York’s Southern Tier to store CO2 and extract methane insists his business partners and financial backers must remain anonymous.
“I can’t go into that with you. That is a third rail at the moment,” Bryce Phillips told WaterFront.
Phillips, a 56-year-old Texan, sounded more open about his professional team in a pre-taped radio interview aired Dec. 5 on Albany-based WCNY’s Capitol Pressroom program. When asked to describe his backers, he told the radio audience, that his company was owned by CO2 To Clean Energy Solutions “out of Wyoming.”
But Phillips later explained to WaterFront that his corporate parent, a limited liability company with that exact name, does not have a website and is not currently active in Wyoming “in any visible way.”
Phillips is president of Southern Tier CO2 to Clean Energy Solutions LLC, which does have a website. Southern Tier Solutions has made a splash in the region by mailing information packages to 6,500 landowners in Broome, Tioga and Chemung counties inviting them to lease their property for intense energy development.
The company wants to drill thousands of new natural gas wells across the Southern Tier, near the Pennsylvania border, in order to store carbon dioxide underground and to extract methane from the Marcellus and Utica shale formations.
In response to questions from their constituents about the unsolicited offers, state Sen. Lea Webb (D-Binghamton) and Assembly member Donna Lupardo (D-Endwell) held a press conference and wrote the state Department of Environmental Conservation with questions of their own.
“We’re talking about carbon capture facilities, we’re talking about thousands of new gas wells, we’re talking about pipeline infrastructure, and with everything this community has been though with the Marcellus and Utica shale, we obviously have some questions,” Lupardo says.
Fracking with CO2 is a new regulatory issue that the state Department of Environmental Conservation would need to examine and eventually permit. Phillips says he’s met with staffers for Webb and Lupardo but not with those or any other elected state officials. Neither has he made a concerted effort to win over state and federal regulators.
Instead his energies have been focused on convincing landowners to sign leases that allow his company to drill wells on their land for a flat $10 and the prospect of future payouts from CO2 storage and methane extraction.
Those payments would flow, he says, once the company achieves its vision of drilling thousands of wells linked by a series of CO2 and methane pipelines. Initially, Phillips says, the CO2 required for the operation will have to be purchased and delivered by rail from sources along the Gulf Coast.
Eventually, STS intends to connect those pipelines to “a network of 200-300-megawatt power plants throughout the Southern Tier.” In addition, direct air capture facilities (DACs) will be built nearby to remove CO2 from the air, which would minimize or eliminate the plants’ greenhouse gas emissions. (Only 27 DAC plants had been commissioned worldwide as of July, when at least 130 others were in development.)
“With your lease and the leases of thousands of more like-minded landowners, we’ll commence a series of pilot wells …,” a cover letter from STS states. “This is your opportunity to finally realize the benefits of your subsurface resources. By uniting our efforts, we can make the Southern Tier a sustainable energy pioneer and a major contributor to the fight against global climate change.”
Phillips’ anonymous team figures the entire project would cost well over $10 billion and take decades to develop. He argues that it would help the state meet the goals of its 2019 climate law by providing “the electrical backbone for the state of New York” without spiking greenhouse gas emissions.
Southern Tier Solutions’ pitch to New York landowners comes as the Biden Administration is pouring billions into carbon storage initiatives.
The incentive to make a monumental shift in energy production is related to federal tax credits under Section 45Q of the IRS tax code, according the STS.
The United States currently has dozens of gas, coal and nuclear plants nearing retirement. STS asserts that the Environmental Protection Agency won’t approve permits for new plants unless they show they will capture and dispose of their greenhouse gas emissions.
“At present there is not a single plant operating in the U.S. that both captures and disposes of their carbon emissions,” STS says on its website. “We anticipate being among the first.”
The federal 2022 Inflation Reduction Act includes tax credits of $85 per metric ton of CO2 stored, or $60 per metric ton if storage is combined with the type of methane gas extraction STS plans. DAC plants are eligible for tax credits of $180 per metric ton, or $130 per metric ton if captured gas is used to extract methane.
Companies like ExxonMobil and Chevron and their congressional allies including Sen. Joe Manchin pushed for the higher tax credits for CO2 storage included in last year’s federal climate legislation. (Those credits are a key part of STS’ financial projections.)
“Removing legacy carbon pollution from the air through direct air capture and safely storing it is an essential weapon against the climate crisis,” U.S. Secretary of Energy Jennifer Granholm said last year in announcing a $3.4 billion program to support new DAC hubs.
Meanwhile, Wyoming Gov. Mark Gordon (R) is touting carbon storage as a way to address climate change without harming his state’s fossil fuel industry. Wyoming generates 71% of its power by burning coal, a major source of CO2 emissions.
Phillips concedes that his New York project is extraordinarily ambitious, a moonshot that might flop.
“There is no way unless you have widespread community support and support from local and state governments, and also the federal government, that this will ever work,” Phillips told WCNY listeners. “We’re really looking at (leasing) a minimum of about 100,000 acres. We’d like to see that in the works by March or April.”
The leased parcels also need to be connected to each other, he added.
“We need blocks of between 30,000 and 50,000 acres,” he added. “Ultimately, we’d like to see a million (acres).”
If those initial leasing goals are met, the company would begin drilling test wells to inject “supercritical” CO2 (a quasi-liquid) into the Marcellus and Utica shale formations. In theory, the shale will absorb (and store) the CO2, forcing out marketable methane.
Critics of the use of supercritical CO2 as a fracking fluid question whether CO2 stored in shale formations will stay put indefinitely. It may tend to leak out over time. They also note that earthquakes have been attributed to gas drilling projects that relied on the fluid form of CO2.
Phillips estimated the cost of the pilot wells at $60 million, which he says would be covered by “the guys that own the entity [STS]. We’re not out looking for partners.”
But full buildout of the entire project could cost $12-16 billion. “There are some big banks and private equity on the sidelines that like what we’re thinking,” Phillips said in November.
He says the process won’t conflict with the state’s ban on high-volume hydrofracking, which prohibits the use of more than 300,000 gallons of water per well. STS wells wouldn’t need nearly that much water.
Several environmental groups expressed alarm about the project STS proposes.
Sandra Steingraber, a key voice in the push for New York’s fracking ban, argues against carbon capture and storage (CCS) in general, whether or not it is associated with the extraction of methane from shale formations.
“In sum,” Steingraber wrote in a fracking compendium released in October, “CCS functions as a fossil fuel subsidy, entrenches fossil fuel demand, impedes the phase-out of fracking, requires massive public investment, captures far less carbon dioxide than claimed, and suffers from incomplete emissions accounting. It also harms the environment and further endangers public health through its emissions of conventional pollutants and need for massive buildout of pipelines.” (Her section on carbon capture and storage is on pages 88-94 of the compendium.)
Streingraber concludes that CSS “enables fracking” and is an expensive, dangerous diversion away from renewable energy investments.
Alex Beauchamp, northeast region director of Food and Water Watch, said: “After almost ten years of relief from the destructive fracking industry, fossil fuel profiteers have once again come knocking in New York … What’s more, the corporation’s proposal to use proven-to-fail carbon capture technology to skirt state regulation is absurd and dangerous for our climate and communities.”
Before the state’s fracking ban went into effect in 2014, energy companies like Chesapeake and Fortuna paid up to $5,000 per acre to lease land from Southern Tier residents. Phillips defended STS’s decision to offer only a tiny fraction of that—a flat $10 regardless of the size of the parcel.
“I cannot imagine a situation where this area will be developed where operators will write checks similar to back in those days,” he says. “It’s economically unsound … I think that was just the heyday, just the boom, and everyone got ahead of each other and everybody wanted to show off …”
Phillips says he’s an old hand in the oil and gas industry, one who’s worn various hats ranging from landman to geologist to operations manager across various westerns states since the 1990s. While his Fort Worth, Texas, residence was reportedly offered for sale at $7.9 million last year, he hasn’t yet settled in the Southern Tier, or opened an office in the region, or even gotten a business phone number.
Does that suggest that Southern Tier Solutions is, as they say in Texas, “all hat and no cattle”? When will Phillips and his secret team decide to stay or go?
“As long as we see it’s moving forward and there’s not a line in the sand that’s drawn by some regulatory agency,” he says. “We’re here until somebody shows us the door, or in 50 years we’ll wrap it up.”
As of November, at least 1,000 landowners have expressed an interest in the lease, and several dozen have signed agreements, he says. “I haven’t heard anyone say ‘no.’ ”
But Joan Koster of Barker, New York, says she received an STS invitation package in the mail this fall and would never agree to sign.
“We own over 130 acres of prime land in a town that is gung-ho for fracking,” Koster says. “None of our neighbors on lesser amounts of land got an invite. So I suspect they picked the recipients carefully and quietly.”
“I led the [fight against] fracking in northern Broome County last time. I am getting too old to do this fight again.”
Peter is a career journalist who spent 17 years reporting at the Atlanta Journal-Constitution, which nominated him for the Pulitzer Prize three times. He later edited a pair of business newspaper/websites. He founded the WaterFront blog to report on environmental issues in 2017.
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