Eminent domain showdown: South Dakota pipeline vote sparks concern for North Dakota oil industry
M.K. French
Farmer Staff Writer
A political battle in South Dakota has sent shockwaves north, leaving North Dakota’s oil and gas industry wondering what the future holds for crucial carbon capture projects. “This is not a kill shot,” South Dakota Sen. Mark Lapka insisted, but for North Dakota’s oil and gas industry, the recent passage of South Dakota House Bill 1052 casts a long shadow over future carbon dioxide (CO2) pipeline projects, and by extension, potential enhanced oil recovery (EOR) efforts.
The bill, signed into law by Gov. Larry Rhoden, prohibits CO2 pipelines from using eminent domain to acquire right-of-way, effectively placing a significant hurdle in front of projects like Summit Carbon Solutions’ proposed pipeline network. This network, intended to transport CO2 from Midwest ethanol plants to North Dakota for underground sequestration, is now facing an uncertain future in South Dakota.
“I encourage Summit and others to view it as an opportunity for a needed reset,” Gov. Rhoden stated in a letter to legislators, suggesting that voluntary easements could still allow the project to move forward. However, many see the bill as a direct blow to Summit, and a potential deterrent for similar projects.
The implications for North Dakota’s oil industry are substantial. North Dakota oil producers are keen on using CO2 for future EOR operations. The ability to capture and transport CO2 from ethanol plants in South Dakota is a crucial component of this strategy.
“Right now, what we’re doing is shutting the door on the opportunity,” said South Dakota Sen. Casey Crabtree, highlighting the potential consequences for North Dakota. “We are changing the rules in the middle of the game.” He further emphasized the alignment of CO2 capture and utilization with the Trump administration’s energy policies, noting, “Folks, I want our farmers and our Main Streets to be able to participate in President Trump’s energy revolution.”
The debate in the South Dakota Senate highlighted the tension between landowners’ rights and the economic benefits of such projects. Sen. David Wheeler argued that preventing CO2 pipelines from using eminent domain “will deny landowners who support the project their property rights.” He also noted the logistical challenges of large projects, saying, “If you get a block of them who are against the project for any reason, they can stop progress on anything.”
However, the bill’s supporters, like Sen. Lapka, argued that it was necessary to protect landowners from what they perceived as mistreatment by Summit officials. “This is simply a requirement that good negotiations in good faith are going to have to take place between a willing buyer and a willing seller in a normal everyday business transaction,” Lapka stated.
Senate Majority Leader Jim Mehlhaff of Pierre was particularly critical of the bill, stating, “The bill in its original form shuts down carbon pipeline development forever.” He also revealed that he had received text messages confirming the intent of the bill’s supporters to “kill the project.” Mehlhaff expressed concerns that the bill sends a negative message about South Dakota’s business climate, indicating that “the complaints of a small group of vocal landowners supersede their substantial economic interests.”
The economic stakes are high. Summit’s proposed pipeline network in South Dakota alone represents a $1.9 billion investment, with potential benefits including increased farm income and property tax revenue. Moreover, Gevo, a company planning to build an alcohol-to-jet fuel plant in South Dakota, has indicated it may relocate to North Dakota if the pipeline project is hindered.
Summit officials, in response to the bill’s signing, expressed their disappointment, stating, “It’s unfortunate that a piece of legislation has been framed around a single company rather than addressing broader infrastructure and economic policy.” They also highlighted the “competitive disadvantage” faced by South Dakota ethanol plants compared to those in neighboring states.
The implications of South Dakota’s decision are clear: North Dakota’s oil and gas industry, along with its aspirations for EOR, could be significantly impacted. As the landscape of carbon capture and utilization evolves, the ripple effects of HB 1052 will undoubtedly be felt across state lines.
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