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Home » Chemung County » Massive Southern Tier gas drilling spree proposed; 6,500 land leases sought for plan to extract methane and store CO2

Massive Southern Tier gas drilling spree proposed; 6,500 land leases sought for plan to extract methane and store CO2

  • / Updated:
  • Peter Mantius 

A newly formed company with Texas roots wants to drill thousands of new natural gas wells across the Southern Tier in order to store carbon dioxide underground as well as extract methane from the Marcellus and Utica shale formations. 

Southern Tier CO2 to Clean Energy Solutions LLC is pursuing leases from landowners who own at least 30 acres in Broome, Tioga and Chemung counties. It recently mailed 6,500 information packages inviting people to sign up for what it hopes will be a massive carbon capture project.

“With your lease and the leases of thousands of more like-minded landowners, we’ll commence a series of pilot wells …,” a cover letter 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.”

More than a decade ago, Chesapeake and other drilling companies leased tens of thousands of acres across the Southern Tier at prices ranging from less than $5 per acre to more than $3,000 per acre, excluding royalties, for high-volume hydraulic fracturing of new natural gas wells. 

But New York State officials, citing environmental and public health drawbacks, later banned fracking whenever it requires more than 300,000 gallons of water per well. High-volume fracking typically requires at least 1 million gallons per well, often much more.

Southern Tier Solutions (shorthand for the company’s unwieldy name) won’t use any water or chemicals in its drilling process, according to Bryce Phillips, its president.  

Instead STS plans to inject CO2 — the main driver of climate change — into the shale formations, which readily absorb it. The process forces out methane, which can then be sold or burned.

Initially, Phillips said, 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 establish “a network of 200-300-megawatt power plants throughout the Southern Tier.”

Orca, the world’s largest direct air capture plant, opened in 2021 in Iceland.

In addition, “direct air capture” facilities (DACs) will be built nearby to remove CO2 directly from the air. (Only 27 DAC plants had been commissioned worldwide as of July, when at least 130 others were in development.) 

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 U.S. 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.

Phillips said he plans offer public presentations across the Southern Tier in the coming weeks to explain the company’s rather complex standard lease and to answer other questions.

About a dozen people attended the first such session yesterday at the Hilltop Inn in Elmira. Several who had received information packages inviting them to sign leases asked for further details. (Another session is scheduled for 11-4 on Sunday, Nov. 12, at the Hilltop Inn.)

On its website, STS invites certain landowners in Broome, Tioga and Chemung counties to click to request an draft lease.

The company’s website allows landowners to request a copy of a proposed lease, which includes a nominal upfront bonus of $10 and future payments for CO2 sequestered and methane extracted in connection to their land. (The bonus is not $10 per acre, just $10).

“We are not here to revisit the financial disaster suffered by the companies of the earlier shale boom at the hands of regulatory policymakers,” the company website says in its detailed Q&A section.

“The permitting process poses (STS’s) greatest operational challenge,” the website states.

In fact, state agencies that issue permits must now consider in their decision-making the goals and targets in the 2019 Climate Leadership and Community Protection Act. The law requires that total state greenhouse gas emissions to be reduced by 40 percent by 2030 and 85 percent by 2050.

The Climate Action Council, which is charged with developing strategies to meet those goals, issued a scoping plan last December that includes extensive discussions of carbon capture (or carbon sequestration).

“We are 100 percent in alignment with (CLCPA’s) goals,” Phillips said in an interview today.

The approach Phillips and STS are promoting links carbon sequestration with a massive new natural gas drilling spree.

The company says it envisions a series of a dozen or more hubs in the Southern Tier, each “supported by a 50,000-to-100,000 acre leasehold position.” Each hub would include a DAC unit, a electrical power plant, CO2/methane separation equipment and a “subsurface network of CO2 and (methane) supply and distribution lines” linking multi-well pads to the generating plant, the DAC and the separation and storage facilities.

“The aggressive pace of development requires that, in a finite period, a significant number of wells are drilled,” the website says. “…The plan is ambitious and achievable, but the greatest obstacle we face is running out of time.”

STS was created in April. It has no offices in the Southern Tier, and its principal address is listed as a Houston office of Incfile, an incorporation and compliance service that handles paperwork for many businesses. Phillips is listed as the company’s governing person and his address is listed as a post office box in Fort Worth, where he lives in a home that Zillow values at $3.5 million.

Phillips said at the meeting in Elmira yesterday that he has an extensive background in the oil and gas industry. Records show he is president of Phillips Land Associates, which has business relationships with fossil fuels heavyweights like XTO Energy Inc., Oxy USA Inc. and Hyde Oil & Gas Corp. The STS website does not provide details. 

Phillips said today that STS would decide by early March whether to proceed with the drilling of pilot wells in New York. He said the company would only go forward if it had signed leases for at least 100,000 acres.

He estimated the cost of the pilot wells at $60 million, which he said 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.

So far at least 1,000 landowners have expressed an interest in the lease, and several dozen have signed agreements, he said. “I haven’t heard anyone say ‘no,’” Phillips said. 

But Joan Koster of Barker told WaterFront said she received an STS invitation package in the mail about three weeks ago and would never agree to sign. 

“We own over 130 acres of prime land in a town that is gung-ho for fracking,” Koster said. “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.”