New Mexico Tech seeks funding to study carbon storage near San Juan Generating Station

FARMINGTON — The San Juan Basin may be an ideal location to inject carbon dioxide into underground reservoirs, and the New Mexico Institute of Mining and Technology hopes to make this a reality.

New Mexico Tech is partnering with Enchant Energy, Sandia and Los Alamos national labs, University of Utah and other entities. They hope to receive federal funding through the U.S. Department of Energy's CarbonSAFE grant program.

`Robert Balch, director of the Petroleum Recovery Research Center located at New Mexico Tech, told the Aztec City Commission this week that they are seeking $20 million in federal grant funding with $5 million of matching funds that will be provided by industry partners and New Mexico Tech. If the project is successful, he said there is a potential for $50 to $100 million of future funding.

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When reached by phone, Balch said getting the grant won’t be easy. The U.S. Department of Energy has $35 million to distribute and a competitive field of applicants.

However, the project has garnered support from communities in northwest New Mexico. San Juan County, Farmington, Aztec, Four Corners Economic Development and Bloomfield have all provided letters of support for the project.

If the study finds that carbon dioxide could safely be stored in an underground saline aquifer, it could help plans to retrofit the San Juan Generating Station with carbon capture technology and keep it open after 2022. 

What does the project involve?

If New Mexico Tech and its partners receive the funding, a 9,000-feet deep test well will be drilled into the Entrada and Morrison formations near the San Juan Generating Station.

Balch said the primary site selected is located on state land north of the power plant and is leased to Hilcorp Energy.

“These are deep sandstone reservoirs that have very salty water in there,” Balch said.

He said the water in the aquifers is three times more salty than sea water. This salty water is important because it has a great carrying capacity for carbon dioxide.

A cap rock seals the reservoir, preventing the liquid from moving into other formations. However, Balch said the plume of carbon dioxide will move horizontally in the reservoir and monitoring will be required.

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Researchers will take fluid and rock samples from the test well. This will help researchers understand how the carbon dioxide will travel in the reservoir.

If successful, the injection well will be located closer to the power plant and the test well will be used as a monitoring well.

The injection well will need to be a U.S. Environmental Protection Agency class six underground injection control well. Carbon dioxide can only be stored in class two or class six wells. Class two wells are exclusively used for injecting fluids associated with oil and natural gas production while class six wells are used for permanent storage of carbon dioxide.

There are not any class six wells in the Southwest, Balch said, adding that the only two in the country are located in Illinois. He said a class six well has been permitted in Wyoming as well.

However, he said there are about a dozen class two wells in New Mexico, primarily in the Permian Basin. These wells have been used to dispose acid gas — which consists mostly of carbon dioxide and hydrogen sulfide. 

Why choose northwest New Mexico?

Balch said the San Juan Basin in as attractive location for a carbon dioxide storage well because of Enchant Energy’s interest in retrofitting the San Juan Generating Station with carbon capture technology.

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While saline aquifers are widespread across the western United States, Balch said it is important to locate the storage wells near the carbon dioxide source so that it does not have to be transported far.

How will this help Enchant Energy?

While Enchant Energy’s business model is based on selling carbon dioxide from the San Juan Generating Station for use in enhanced-oil recovery in the Permian Basin, CEO Jason Selch said having a sequestration well in the San Juan Basin would provide more options while reducing its dependency on a single piece of infrastructure.

Sequestration is when the carbon dioxide is placed in an underground reservoir for permanent storage.

Balch said it would be advantageous for Enchant Energy to have multiple options for carbon dioxide storage, including enhanced oil recovery and an injection well.

He explained that if the Cortez Pipeline was to fail, leaving Enchant Energy unable to transport carbon dioxide to the Permian, the company would have to shut down the San Juan Generating Station unless there was an injection well.

Will this replace plan to sell carbon dioxide for oil extraction?

Enchant Energy Chief Operating Officer Peter Mandelstam said the company is gratified by the support the community has provided for the project.

“Sequestration is the best solution for the environment,” he said.

At the same time, Mandelstam acknowledged that Enchant Energy is a business and has to make money. Sequestrating the carbon dioxide would make Enchant Energy eligible for higher tax credits under 45Q tax credits. Selling carbon dioxide for enhanced oil recovery would give Enchant Energy $35 a ton. Meanwhile, sequestration would provide $50 a ton in tax credits. But, while the company would receive higher tax credits, it would forego revenue from the sale of carbon dioxide.  

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Mandelstam said Enchant Energy is interested in sequestration as long as it can make a profit off of its investment into the power plant.

Having the ability to sequester carbon dioxide will also help the local community, Mandelstam said. He said it would create jobs and increase the tax base.

“All the good things that we’ve been talking about are amplified by doing the sequestration here,” he said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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