This interview originally aired on In the Moment on SDPB Radio.
The South Dakota Public Utilities Commission denied Summit Carbon Solutions' permit for a carbon capture pipeline. But the project, and the debate surrounding it, is far from over.
Lee Blank, CEO of Summit, and James Powell, COO of Summit, give us an update on the $5.5 billion project.
They discuss how the company's pathway to production changed and what they want South Dakota landowners in the path of the pipeline to know.
Lori Walsh:
You're listening to In the Moment on South Dakota Public Broadcasting. I'm Lori Walsh. Summit Carbon Solutions has been seeking to build a pipeline throughout the Midwest, including the state of South Dakota. Now, that would take CO2 emitted by ethanol plants transport it, and store it underground. Some landowners pushed back against the pipeline over property rights and potential safety concerns. So last month, the South Dakota Public Utilities Commission denied Summit's permit application to build roughly 500 miles of pipeline through the state. What is the next step for Summit? Joining me now in the Kirby Family Studio in Sioux Falls, we have Lee Blank, he is CEO of Summit Carbon Solutions, and Jimmy Powell, who is the COO. Lee, welcome. Thanks for being here.
Lee Blank:
Lori, thanks for having us.
Lori Walsh:
Jimmy, welcome as well.
Jimmy Powell:
Thanks, Lori.
Lori Walsh:
There's a lot of news out there in the world, Lee, about what has happened from a legal standpoint and from community meetings. So I want to back up and take the big picture. From your perspective, why do you think this project still matters?
Lee Blank:
I appreciate that Lori. I come from agriculture. I grew up in agriculture, and I'm an agricultural executive. Frankly, as I think about agriculture over time, it's been very adaptive. It has moved and adapted to market conditions and market signals that tell them what's next and how to move forward. Again, that's really what we're facing here. There's been step changes in agriculture over time. Those step changes could be anything from the corn yields doubling every 15 years to doubling every eight years in the US corn crop. The ethanol industry in itself was a step change in agriculture. Exports are a step change in agriculture. Frankly, this is just the next, Lori, the next major step change for the agricultural markets, hitting those demand markets that are important to continue to strengthen the balance sheets of US agriculture.
I think it goes beyond just an infrastructure project, frankly. Because what it's allowing, it will allow the ethanol industry, specifically, to hit markets that will drive premiums to the ethanol industry, which is, for a large part, owned by the farm gate. So from that perspective, those economics flow back to the balance sheet of the US farmer. I think when we talk about those markets, there's low-carbon fuel markets that are now becoming available through California or also in Canada and other export markets that are low-carbon fuel. They're very important to the future of agriculture. But as we think about and we start to be responsible in agriculture about the carbon intensity of our industry, that responsibility comes with investment. It also comes with better economics.
When I think about sustainable aviation fuel, which we hear a lot about these days, every major airline is working through some sort of a process around sustainable aviation fuel, when we think about that, that's another opportunity for agriculture to be part of the energy mix moving forward, driving higher margins to the ethanol industry. Also then allowing those margins to relay back to the farm gate and putting that generational farmer in a stronger position to do with his farm operation what he'd like to do with it over time, where maybe he'd hand it down to his sons or daughter or his family.
Lori Walsh:
Does this boil down to making money off of the carbon capture, or does this boil down into a smaller carbon footprint?
Lee Blank:
Well, I think actually it's a market, so one really is derived from the other. The opportunity then to lower your carbon footprint is important, and it's something that we think about. But frankly, this is really about meeting markets and hitting those markets. A component of hitting that demand is your carbon score, is the carbon score of the industry. The carbon discussion, frankly, Lori, is here. We're going to deal with it, and we're going to be carbon responsible. We're either going to be responsible through an incentive where we can actually drive performance and drive behavior, or we're going to be responsible through it through attacks. So today, it's the carrot versus the stick, and it's really policy driven from that perspective. But again, it's driving economics that the agricultural community has the opportunity to take advantage of.
Lori Walsh:
Jimmy, I want to talk a little bit about, and we'll come back to Lee for a couple more questions about some of those thoughts, but I want to make sure that we have time to talk about what is next. If I'm a South Dakota landowner, especially one who has been opposed to this process and is not happy with Summit Carbon Solutions, talk first about the condemnation lawsuits. Are they all done? Then you're going to counties next. Why didn't you go to counties in the first place? So in that umbrella of questions that I just asked you, help us understand, if I'm a landowner, what do you want to say to me about those two things?
Jimmy Powell:
Lori, we applied in February of '22 with our application to the PUC, so quite some time ago. Then in March of this year and later for the 18 counties that we traverse passed ordinances restricting where we could build the pipeline. So going back now, we heard clearly from the PUC and the Navigator hearing and then subsequently the next week in our hearing, "You need to go try to work with these counties." So of the 14 of the 18 counties, if you combine the right-of-way we've acquired, it's about 90%. So we think we've got good, strong support in those counties. Now we got to continue to work with those landowners and then work with those four counties that have passed ordinances to see if we can agree with a blank sheet of paper where we can build a pipeline that'll make not only the commissioners feel good about where it's located but also landowners.
You mentioned eminent domain. We did file eminent domain. It was largely a group of landowners, unfortunately, that were with one attorney who we didn't feel was communicating with that attorney. In South Dakota, you probably know, the condemnation process is a very long process. So one way to communicate, it may have not been the best choice, one way to communicate is to start that process, and then you've got a direct line of communication with landowners.
All those suits have been dismissed. In the future, we know obviously where the opposition is, at least on the initial route or the current route. So we're routing around those individuals that don't want the pipeline because, believe it or not, we have a strong percentage of landowners that we signed in this state, and there are other landowners that would welcome the pipeline on their property. So we're working with our local partners, the ethanol plants, and other landowners, and our land team's been out in this state for a year and a half identifying those people. That's another opportunity for the commissioners in the counties.
Lori Walsh:
Was that a surprise to you, or was that part of the plan? You said it's a way to identify where the opposition is. That wasn't a strategy to start the lawsuits and then find out where that-
Jimmy Powell:
No, no, no, no.
Lori Walsh:
I want to make sure you clarify that fact.
Jimmy Powell:
No. If I said that, then I misspoke. We knew where the opposition was. Quite frankly, Lori, most of the opposition isn't impacted by the pipeline. So most of the vocal... I'm not saying some landowners that we currently cross don't want the pipeline. That's obvious. But a lot of the more vocal opposition, especially that congregated in Pierre several weeks ago, that aren't impacted by the pipeline. When I say impacted, the pipeline doesn't cross their property or isn't near their property.
Lori Walsh:
Let's talk a little bit about what happens next. You're going to go county by county and speak specifically to those county commissions who have enacted regulation that would make really building the pipeline untenable for your project, that basically set the easements back to a length to say, "This is where we need... If you're going to come through our county, you can't come this close to other buildings, for example." What's your path forward there?
Jimmy Powell:
Well, initially we're trying to route the pipeline where we can to comply with their ordinance. That's our first objective. So we want to sit down with those individuals either in the planning/zoning group or in the commissioners themselves and say, "Here are the restrictions, if there are any." Largely, Lori, those restrictions are in Brown and Spink County, and it's getting to our ethanol plant partners. So if we don't connect to those two ethanol plants, we can find a path through those counties. But obviously, we want to connect to the plants. As Lee mentioned earlier, the agriculture industry in those two counties is a big part of those economies, and we want to maintain that. We want to help sustain that, and hopefully, let it expand and grow. But to do that, we got to connect to those ethanol plants. So us and the ethanol plants hopefully can sit down and talk with those stakeholders in those counties and determine what we think is a route that satisfies most, if not all.
Lori Walsh:
Lee, this has become somewhat adversarial. You have a lot of support but also a vocal opposition. From a big picture communication standpoint, is there a way to go forward that is more collaborative?
Lee Blank:
Well, I think so, and I think it's part of the reason that we're being very active, especially in South Dakota and the state. Being collaborative with the various... whether it'd be government agencies or whether it'd be sitting down with you today, these are things that we've decided to try and do.
I think there is a bit of a misconception, though, that I believe is real. There is a vocal minority, and that vocal minority is very loud. Again, as Jimmy mentioned, many of those folks are not affected by the pipeline route, and yet they're still a very vocal opposition to our project and for the infrastructure project that we're putting in place. Again, we don't ignore that, but again, I think that's reality.
As Jimmy mentioned, overall in the state, we've got 73% of the right-of-way bought, and that's in all the counties in the state. What we find is that, quite frankly, those that we've partnered with are the ones that really aren't talking or communicating about the project. They're very glad for the project, they're happy for the project, but they're not in a position where they feel like taking on the adversarial voices that are out there. Again, we see it at the county commissions. We see it at the state level. We just don't find the friendly voices being as influential as they could be in the overall mix.
Lori Walsh:
Jimmy, talk about water rights. Just when this pipeline comes through, if this pipeline comes through, what kind of water needs to be accessed? Where does it come from, and how do you get the rights for that?
Jimmy Powell:
When it comes to the capture facilities, that's where the water use will be...
Lori Walsh:
For the what facilities?
Jimmy Powell:
Capture, carbon capture.
Lori Walsh:
Capture, okay.
Jimmy Powell:
As you mentioned in the beginning, there are really three major components of this project. It's the carbon capture, so we'll install a facility adjacent to each of the ethanol plants to pull the CO2 off of their process. We'll put it in the pipeline. That's the second large piece of the scope. The third piece is where we'll store the CO2 subsurface in North Dakota. So the capture facilities, which isn't part of the Public Utility Commission jurisdiction, if you will, that's a state agency that regulates both water usage and air permitting. So we work through the National Department of Resources, etc., I mean the State Department of Natural Resources, etc., to secure water.
We need water in the process to cool it. As the CO2 is increased in pressure, it heats up. In most cases, the plants already have that water, either from water wells they've driven on their site location or other sources. So in most cases in South Dakota, we'll utilize the water that's there. If not, then we have to go through the state agencies to secure that right.
Lori Walsh:
It seems like there's a lot of steps that still need to happen, but the first step is what?
Jimmy Powell:
Well, with regard to that, we've already done that. We've already identified where we'll need water and what the permitting requirements are, and those are very mature. So we've got understandings with the plants, what we're going to do around water utilization. We've already applied for air permits and, in some cases, received them from the state of South Dakota.
When it comes to siting the pipeline, then we still think that the Public Utility Commission, like the Public Service Commission in North Dakota now Utility Board, have the authority to site the pipeline. But they very clearly said, "Go work with these counties." So that's what we're doing. As I mentioned earlier, it's a blank sheet of paper. We're going to these counties and saying, "Here's alternatives where we could route the pipeline. We want your feedback." That goes to landowners, too. New affected landowners, so where the pipeline isn't today, where we may put it, so we've got people in the field that say, "I think this landowner may be receptive, so reach out to them and talk to them about it."
Lori Walsh:
Lee, a couple things I heard in opposition are safety concerns, which maybe both of you want to address, but also this idea that maybe this is not the sustainable, scalable model that people want. That there should be a greater investment in renewable energy or green energy or wind and solar versus this. This is a $5.5 billion project that we're talking about. We'll talk safety in a minute. But first respond to this idea of a lot of conservationists saying, "This is not the way to the future. This is not the sea change in agriculture that we want to see."
Lee Blank:
Yeah-
Lori Walsh:
It's a different one than we want.
Lee Blank:
I wouldn't agree with that. I think that's maybe misinformation. Green energy, green hydrogen, all those various things that are being talked about, it takes green electricity. There's major wind farms that would come through a project like that that would have to be developed as well. Today, carbon capture and sequestration, Lori, is the number one way to lower and get the largest drop in your carbon intensity score that's available. Solar panels are wonderful. Windmills are fine as well. They all have an effect on your carbon intensity. But nothing can drop the intensity of carbon and your carbon score more than carbon capture and sequestration.
The great thing, Lori, about that is the fact that it's not new. This has been used for decades. The technology's not new. It's just a large project, and it's hitting a large industry. It's the first chance for an industry, agriculture, to talk about, in a responsible way, net zero carbon as a fuel source. That's what's exciting and great about the project. All those other projects and concepts and ideas, they're all real, and they can make a difference, and they might be part of that net zero solution. But they can't make the same effect or have the same effect that carbon capture sequestration can have.
Lori Walsh:
Jimmy, let's close with safety. People are concerned about toxic plumes and how much of an evacuation zone you might need were there to be a leak. Tell us what's new in safety in carbon pipelines at the federal level, those regulations. I'd like to know what needs to be done, if anything, do you think, on the state level. Then just some of those misunderstandings people have about safety from your perspective.
Jimmy Powell:
Well, Lori, we've heard a lot of discussion about dispersion modeling. Just at a high level, every project and every operator uses a release-type model to determine what impact there may be and what risks there may be. You use that then to make sure that you understand what your emergency responsibilities are and how you would resource those. You also use it to inform your integrity management program, so where you put in heavier wall pipe, where you put pipe deeper, etc. I'll just point out that pipelines are the most reliable source of transportation in the country, especially compared to rail and truck, 99.99% reliable. There's 5,400 miles of pipeline. CO2 pipeline has been in service in this country... some for many, many decades. There's even a large pipeline in North Dakota. Never an incident.
We've all heard about Satartia, Mississippi, and some of those people may actually have been impacted. What I do know for a fact is that 45 people went to the hospital. None were admitted. You know, if you go to your emergency room in a hospital and if a trained physician really thinks that your health is at risk, then they're going to admit you or at least treat you. None were treated. The only one that was treated was not related to the incident. I'm not making light of the Satartia, Mississippi, incident. It's a real occurrence. But our pipeline will be a 24-inch. That was a 24-inch with Denbury in Mississippi. No one was killed, and technically, no one was injured. So that's a starting point. When it comes to the release model, we'll share that with emergency responders. The South Dakota PUC has had that and their staff has had that for several weeks, actually a couple of months. So we use that to inform us, and we want to use that to inform the emergency management folks and the first responders.
When it comes to its overall safety, I think it's going to be the safest large pipeline ever constructed. Why? Because of the material that we're transporting. It's also the first large-scale pipeline that's been constructed under PHMSA's new rules. We all know that PHMSA has jurisdiction over safety. PHMSA said that no valve should be spaced more than 20 miles apart. This will be the first large pipeline that actually adheres to that. It's a new technology. It's the latest materials that are going to be sourced in the United States when it comes to pipe. I think lastly and most importantly, CO2 is heavier than air. So is propane and butane and other constituents in natural gas. The difference is it's not ignitable. There's a risk with everything, especially a pipeline under pressure. But with CO2, it's much less than natural gas, refined products, or crude oil.
Lori Walsh:
PHMSA, once again, Pipeline and Hazardous Materials Safety Administration. We've had landowners on this program before talking about how this pipeline would affect their land. We'll invite them back on the program. If you have something you'd like to add to this conversation, send me an email, [email protected]. We'll keep the conversation going. Thank you so much to Lee Blank and Jimmy Powell, both with Summit Carbon Solutions. We appreciate your time.
Jimmy Powell:
Thank you.
Lee Blank:
Thank you, Lori.
