SENATE BILL 215

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

William E. Sharer and Leo Jaramillo and Meredith A. Dixon and Jack Chatfield

 

 

 

 

AN ACT

RELATING TO THE ENVIRONMENT; ENACTING THE GEOLOGIC CARBON DIOXIDE SEQUESTRATION ACT; PROVIDING FOR THE UNITIZATION OF FORMATIONS FOR SUBSURFACE SEQUESTRATION OF CARBON DIOXIDE; LIMITING LIABILITY OF OWNERS OF SEQUESTRATION FACILITIES FOLLOWING TRANSFER OF INTERESTS TO THE STATE; ESTABLISHING FEES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Geologic Carbon Dioxide Sequestration Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Geologic Carbon Dioxide Sequestration Act:

          A. "carbon dioxide" means carbon dioxide produced by anthropogenic sources or captured from the atmosphere, including "qualified carbon oxide" as defined pursuant to applicable federal law and "carbon dioxide stream" as may be defined in federal law and regulations pertaining to class VI carbon dioxide injection wells;

          B. "commission" means the oil conservation commission;

          C. "director" means the director of the division;

          D. "division" means the oil conservation division of the energy, minerals and natural resources department;

          E. "geologic sequestration" means the long- or short-term underground sequestration of carbon dioxide within a geologic stratum, formation, aquifer, cavity or void, whether naturally or artificially created, including deep saline aquifers, oil and gas reservoirs and unminable coal seams, such that carbon dioxide does not escape to the atmosphere;

          F. "operator" means a person who has the right to inject carbon dioxide for geologic sequestration into a sequestration facility, whether for the person's own account or for the account of others;

          G. "sequestration facility" means carbon dioxide injection wells, monitoring wells, science wells and any other wells used for the injection of carbon dioxide in subsurface geologic formations, including the underground equipment, pipelines, roads and surface equipment and buildings used for the purpose of geologic sequestration of carbon dioxide. "Sequestration facility" includes a facility that injects carbon dioxide for secure geologic sequestration pursuant to applicable federal laws, including a geologic sequestration project as may be defined in federal regulations pertaining to federal environmental protection agency class VI underground injection control wells for carbon dioxide injection wells; and

          H. "sequestration unit" means the geologic formation or formations proposed for the injection of carbon dioxide for geologic sequestration and the lands to be included within the unit. "Sequestration unit" does not include oil and gas units where carbon dioxide is injected for purposes of enhancing oil and gas production.

     SECTION 3. [NEW MATERIAL] APPLICABILITY--DIVISION AUTHORITY--RULEMAKING.--

          A. Geologic sequestration of carbon dioxide shall be permitted pursuant to the Geologic Carbon Dioxide Sequestration Act.

          B. The Geologic Carbon Dioxide Sequestration Act applies to sequestration facilities that commence injection of carbon dioxide after the effective date of this 2024 act; provided that sequestration facilities that commenced injection of carbon dioxide before the effective date of this 2024 act may apply to the division for unitization and a certificate of completion of injection operations and release of liability pursuant to the provisions of the Geologic Carbon Dioxide Sequestration Act.

          C. The Geologic Carbon Dioxide Sequestration Act does not apply to the injection of the carbon dioxide in connection with the enhanced oil and gas production operations.

          D. The division has the jurisdiction and authority necessary to enforce the provisions of the Geologic Carbon Dioxide Sequestration Act and may adopt and promulgate rules and issue orders for the implementation of the provisions of that act.

     SECTION 4. [NEW MATERIAL] ACQUISITION OF LANDS FOR GEOLOGIC SEQUESTRATION.--

          A. An operator that desires to form a sequestration unit shall attempt to acquire by option, lease, conveyance or other negotiated means the rights necessary for geologic sequestration within the proposed sequestration unit prior to resorting to the procedure for compulsory unitization of such interests pursuant to Section 5 of the Geologic Carbon Dioxide Sequestration Act.

          B. The lands to be included shall be the reasonably ascertained areal extent of migration of the sequestered carbon dioxide within the formation or formations based on known geologic information available at the time of the application. The sequestration unit shall also identify any necessary and reasonable areal buffer and subsurface monitoring zones as required by federal or state law, rules, regulation, order or permit.

          C. The commissioner of public lands and any state agency may grant to an operator rights for geologic sequestration on lands subject to its jurisdiction on such terms as it finds are reasonable and that provide compensation equal to the fair market value of the rights.

          D. The division may grant to an operator the right to form and to commence operations for the geologic sequestration of carbon dioxide in accordance with the Geologic Carbon Dioxide Sequestration Act.

     SECTION 5. [NEW MATERIAL] COMPULSORY UNITIZATION OF SEQUESTRATION FACILITIES--CONTENTS OF APPLICATION.--

          A. An operator may apply to the division for an order unitizing a geologic formation or formations for geologic sequestration of carbon dioxide to be included within the proposed sequestration unit. The division shall issue the order upon finding the requirements of this section and Section 6 of the Geologic Carbon Dioxide Sequestration Act have been satisfied.

          B. An application filed pursuant to this section shall contain:

                (1) if required by the federal government, a copy of a permit or draft permit for injection of carbon dioxide pursuant to any applicable federal law;

                (2) a description of the proposed geologic formation or formations and a plat of the surface lands proposed to be included in the proposed sequestration unit, including identification of the buffer and subsurface monitoring zones;

                (3) the names and addresses of the owners of the surface estate within the proposed sequestration unit and of lands within one-half mile of the exterior boundary of the proposed sequestration unit as disclosed by:

                     (a) the records of the county assessor of each county in which the proposed sequestration unit is to be located with respect to privately owned land; and

                     (b) the bureau of land management with respect to federal lands, the commissioner of public lands with respect to state trust lands and the applicable state agency owning the surface estate with respect to lands owned by the state but not subject to the jurisdiction of the commissioner of public lands;

                (4) the names and addresses of the owners of the mineral estate and mineral lessees within the proposed sequestration unit and for all lands within one-half mile of the exterior boundary of the proposed sequestration unit;

                (5) evidence of the following:

                     (a) geologic evidence establishing the capability of the formation to accept and sequester carbon dioxide;

                     (b) an estimate of the quantity and volume of carbon dioxide that is reasonably believed to be capable of being sequestered in the sequestration unit;

                     (c) the anticipated pressure of each formation proposed for sequestration and the anticipated pressure required to inject carbon dioxide into the sequestration unit;

                     (d) if available, the proposed locations of wells, types of wells, anticipated total depth of the wells, the casing program for the wells and the proposed locations of sequestration facilities;

                     (e) the depth of all fresh water aquifers and location of any water wells within the sequestration unit and buffer zone;

                     (f) the date the proposed plan is desired to become effective;

                     (g) the anticipated date of the commencement of development of sequestration facilities;

                     (h) the anticipated date of the commencement of injection operations;

                     (i) the estimated period of time it will take to complete the construction of the sequestration facility;

                     (j) the estimated life of the injection operations; and

                     (k) the estimated pressure in the formation at the end of the injection operations;

                (6) information on each of the facts required to be found by the division pursuant to Section 6 of the Geologic Carbon Dioxide Sequestration Act;

                (7) the amount per acre or the amount per volume of carbon dioxide injected that the operator proposes to pay to compensate the owners of the surface estate and, if severed, the owners of the subsurface formation or formations within the sequestration unit in which the carbon dioxide is to be injected for sequestration. Each owner of the formation or formations shall be deemed for all purposes to have an equal amount of capacity to store sequestered carbon dioxide and shall be compensated on a surface acreage basis for such injection and storage; and

                (8) the amount per acre that the operator proposes to pay to compensate the surface owners or, if severed, the owners of the formation or formations within the buffer and monitoring zones.

     SECTION 6. [NEW MATERIAL] COMPULSORY UNITIZATION OF A SEQUESTRATION UNIT--FINDINGS--RATIFICATION--AMENDMENTS--PETITIONS FOR INCLUSION--RECORDING--LIEN FOR COSTS.--

          A. Upon receipt of an application pursuant to Section 5 of the Geologic Carbon Dioxide Sequestration Act, the division shall set the matter for hearing and, in addition to notice otherwise required by law or the division's rules, shall cause the applicant to give notice of the hearing, specifying the time and place of the hearing and describing briefly its purpose and the land and formations affected, to be mailed by certified mail at least thirty days prior to the hearing to all persons whose names and addresses are required to be listed in the application.

          B. If the proposed unitization order concerns unknown or non-locatable owners and interest holders, the applicant shall publish notice once a week for two consecutive weeks in the newspaper of the largest circulation in each county in which the proposed sequestration unit is located and shall file proof of notice with the division concurrently with the application. The first notice shall appear at least thirty days prior to, and the second notice no more than twenty-five days from, the hearing on the application for a sequestration unit order. The notice shall:

                (1) state that an application for a sequestration unit has been filed with the division;

                (2) describe the formation or formations and land proposed to be unitized and the buffer area and any monitoring area;

                (3) in the case of an unknown owner or interest holder, indicate the name of the last known owner or interest holder;

                (4) in the case of a non-locatable owner or interest holder, identify the name of the owner or interest holder and their last known address; and

                (5) state that any person claiming an interest in the formations or lands proposed to be unitized should notify the director and the operator of the proposed sequestration facility at the published address within twenty days of the publication date of the most recent notice.

          C. After considering the application and hearing the evidence offered regarding the application, the division may enter an order setting forth the following findings if established by the evidence presented:

                (1) the underground stratum or formation sought to be unitized is suitable for the geologic sequestration of carbon dioxide and its use for such purposes is in the public interest;

                (2) the use of the underground stratum or formation sought to be unitized will contain the carbon dioxide and will not contaminate fresh water or oil, gas, condensate, potash or other commercial mineral deposits capable of being produced in paying quantities, unless all the owners, mineral lessees and other parties owning interests in such oil, gas, condensate, potash or other commercial mineral deposits have consented to the sequestration unit;