Iowa Moves to Regulate Natural Hydrogen as Koloma Drills Four Wells into Midcontinent Rift Potential
State lawmakers in Iowa are advancing new legislation to establish a regulatory framework for natural hydrogen exploration as Koloma continues deep drilling programs targeting the Midcontinent Rift. The effort reflects growing recognition that Iowa’s subsurface geology—particularly its extensive basalt formations—may host commercially relevant hydrogen systems capable of supporting domestic fertilizer production and clean energy applications.
According to the Iowa Geological Survey, large portions of the state overlie iron-rich basalt formed during the Midcontinent Rift more than one billion years ago. These formations are considered highly prospective for hydrogen generation through serpentinization, the reaction between groundwater and olivine-bearing rocks. Historical well data from the Vincent Dome area recorded high hydrogen concentrations, and recent USGS prospectivity mapping has further elevated interest in the region. However, only a limited number of boreholes have penetrated the basalt, leaving significant gaps in subsurface data.
Koloma, which began exploring in Iowa in 2022, has drilled three deep wells and is currently drilling a fourth, with most activity concentrated around the Vincent Dome. The company is focused on determining whether the hydrogen generated in source rocks is trapped in sufficient quantities to support commercial production. “What we can say is there is a very high potential for subsurface hydrogen in Iowa,” said CEO Pete Johnson, emphasizing that the key technical question is the presence of structural traps capable of holding producible accumulations.
The company is prioritizing natural accumulations rather than stimulation methods, with a business model centered on identifying resources and partnering with operators for production and sales, particularly into the regional anhydrous ammonia market. From a market perspective, Iowa’s proximity to fertilizer demand provides a potential near-term offtake pathway if viable hydrogen resources are confirmed.
In parallel, Iowa lawmakers are considering Senate File 546, which would establish permitting, pooling, royalty, and confidentiality rules for hydrogen extraction. The proposed legislation would introduce a standardized royalty framework, including a 12.5% royalty for nonconsenting landowners, and allow companies to protect proprietary exploration data for up to five years. While the bill has industry support, it has also raised concerns among agricultural groups and environmental stakeholders regarding landowner rights, data transparency, and regulatory oversight.
Full press release is attached:
It’s no secret that Iowa is home to large geological formations that are rich in hydrogen-producing rocks, but the question in recent years has turned to whether or not that hydrogen can be extracted in meaningful quantities.
If the answer is yes, it’s likely Iowa would have a new natural resource commodity that could be used for a domestically produced fertilizer and clean fuel source.
As exploration continues in the state, Iowa lawmakers are looking to update state laws to help regulate the prospective industry.
Pete Johnson, the CEO of Koloma, a hydrogen exploration company currently operating in Iowa, said the company is still looking to answer some “pretty core technical questions” about hydrogen in the state.
“What we can say is there is a very high potential for subsurface hydrogen in Iowa,” Johnson said.
What is geological hydrogen?
The U.S. Geological Survey defines hydrogen gas as a “critical feedstock” used for petroleum upgrading, steel manufacturing and fertilizer production. It also notes that demand for hydrogen is expected to increase globally with decarbonization goals as hydrogen can also be used as an energy source. USGS said most hydrogen gas for industrial use is made via a high-heat reaction of water and coal, or methane.
Certain rock formations also produce hydrogen gas, but until recently, scientists did not believe economic accumulations of the gas were present at depths that could be extracted.
Ryan Clark, the associate state geologist at the Iowa Geological Survey, said parts of Iowa’s geology are “highly prospective” for hydrogen, critical minerals and carbon sequestration.
Geological hydrogen is formed when iron-rich rocks that contain the mineral olivine interact with groundwater in a process called serpentinization, according to Clark. He presented to the House Environmental Protection Committee Feb. 11.
These geological formations are abundant in parts of Iowa that sit on top of the Midcontinent Rift — an event from more than one billion years ago when North America attempted to split apart and large amounts of lava seeped from the earth. That spilled lava solidified into basalt rock that, in Iowa, and most of the country, is buried under thousands of feet of sediment.
Clark said Iowa has the “largest intact” segment of the rift-caused basalt structure, which stretches from the Great Lakes, through Minnesota, Iowa, Nebraska and into northern Kansas.
Despite the large swath of the Midcontinent Rift through Iowa, Clark said the state geological survey, housed at the University of Iowa, has only 24 borehole samples that were drilled deep enough, and in the right location, to intersect the basalt of the Midcontinent Rift.
These samples, and the 1,300 other core samples of geology from across the state are all housed at the university and can be analyzed by scientists and companies interested in finding out what might be in Iowa’s subsurface.
Clark said he knows of about half a dozen companies interested in the prospect of hydrogen drilling in Iowa, most of which have requested the basalt cores.
According to Clark, 11 of the 24 samples are in a geological region in northeastern Webster County known as the “Vincent dome.” Clark said in the 1970s and 1980s, the USGS surveyed wells across the country and found wells in the Vincent dome region that showed very high concentrations of hydrogen.
More recently, USGS published a map of geological hydrogen prospectivity in the U.S., which showed the “likely” areas to explore for geological hydrogen, according to a news release from USGS. The rift can be seen in dark blue across the center of the map.
“Iowa, in particular the Midcontinent Rift, looks very prospective in the eyes of the USGS,” Clark said. “So I think this has also helped contribute to some of the attention for hydrogen exploration in Iowa.”
Johnson, with Koloma, said the 2021-founded company was drawn to Iowa “from the get go” as an area to explore geological hydrogen, due to the Midcontinent Rift and the demand for fertilizer which would be a near-term market for hydrogen.
“From a market standpoint, there’s probably no better place on earth to discover more hydrogen than the Corn Belt in the United States where you’ve got massive fertilizer demand,” Johnson said.
Potential hydrogen extracted in Iowa could have other uses, like generating electricity or fueling vehicles, if the infrastructure and demand were put in place. But Johnson said the immediate demand, especially in Iowa, is for domestically produced anhydrous ammonia.
Johnson said the company began exploration in Iowa in 2022, has since drilled three wells and is in the process of drilling a fourth.
Clark said the majority of these wells are situated around the Vincent dome area. When asked by lawmakers how deep the wells were, he said he couldn’t say because much of the exploratory information is proprietary.
Clark said in the 1980s, Amoco drilled the deepest well ever drilled in Iowa at 17,850 feet.
“The wells that (hydrogen exploration companies) are drilling now are basically the second deepest in the state,” Clark said. “So, we’re talking about very deep wells and an awful lot of information.”
The discovery process, Johnson explained, includes verifying that these sites have high percentages of hydrogen as shown in the earlier rock samples. The next step is to see if the rock formations have “traps” that are holding commercial accumulations of hydrogen.
“The big question around the rock underneath the surface in Iowa is not whether it’s a good hydrogen source rock – at this point, nobody’s arguing that,” Johnson said. “The big question is whether Iowa has the right geology to have traps that will hold that gas in sort of large, producible accumulations.”
In his presentation to lawmakers, Clark with the state geological survey noted geological hydrogen could also be “stimulated” by drilling into the right rocks in the right places and injecting water. This process would stimulate the serpentinization process and allow companies to extract hydrogen without searching for naturally occurring traps of the gas.
Johnson said stimulation processes are still in “early development” and Koloma is looking for “natural accumulation.”
Koloma is a discovery company, so Johnson explained once the company finds hydrogen stores, it would partner with another company to drill production wells in those areas and then sell the hydrogen to an anhydrous ammonia producer.
While the concept of finding naturally occurring stores of hydrogen underground is relatively new, Johnson said the process of drilling and producing hydrogen wells is well established science and uses the same rigs used to drill for natural gas.
From Johnson’s perspective, the commodity has been unexplored because the value or desire for a carbon-free natural gas is relatively new and there’s “almost no overlap” between the regions that have the most viable source rock for generating hydrogen and the areas where oil and gas are produced.
“These areas are just largely unexplored, it’s not in places where people have poked a lot of holes, or drilled a lot of wells,” Johnson said. “You’re going into places where there’s almost no data, almost no wells, and you’ve got to sort of build from scratch.”
Such is the case in Iowa, a state that Clark said never had “any petroleum discovered in economic quantities.
Setting guidelines
Clark said this means that Iowa’s laws around oil and natural gas drilling “might be stress tested for the first time” if hydrogen drilling pans out as exploratory companies hope.
Lawmakers worked on companion bills in both the House and Senate in 2025 to update the state laws around oil and gas production. A new version of the bill, Senate File 546 advanced from a subcommittee Feb. 5, 2026.
The bill is supported by Koloma, which brought the previous version forward in 2025.
Johnson said while it seems “great to be unregulated” the lessons of oil and gas industry booms have shown that extracting minerals without set regulations can cause conflict.
“A small amount of regulation here defrays a lot of conflict and a lot of pain down the road,” Johnson said. “… Let’s get a sensible set of laws on the books based on what works in other sensible, surrounding states and work to put those in.”
Brittany Lumley, lobbying on behalf of Koloma, said in the subcommittee hearing that the bill would let companies know what they would need to pay and file with the Iowa Department of Natural Resources to operate in Iowa. She said the bill would also create a more “robust” pooling process.
The pooling process is when a company works to make deals with all of the landowners who are sitting on top of a resource, like oil, natural gas or hydrogen.
A well doesn’t respect property lines when it is pulling a resource, so the bill provides that when a company strikes a deal on one property to drill for a resource, it has to talk to other landowners in the determined pool area and offer a royalty on the resource.
Under the bill, nonconsenting landowners, or those who do not agree to a royalty contract with a company, will be automatically given a 12.5% royalty. Current law does not require a royalty be paid to nonconsenting landowners.
Lumley said the progress of the bill halted in 2025 due to conflicts with some of the agricultural groups in the state. Iowa Farm Bureau Federation and Iowa Soybean Association lobbyists said in the subcommittee they have worked with Koloma outside of the Capitol building to come to a better agreement, though neither group is currently registered in support of the bill.
SF 546 provides that a company can make information submitted to the DNR confidential for up to five years, which Lumley said protects a company’s proprietary information gained from exploratory drilling.
Sen. Janet Petersen, D-Des Moines, said she had concerns over the confidentiality portions of the bill and was “not comfortable” yet with the bill.
The Iowa Chapter of the Sierra Club does not have an official stance on hydrogen drilling in Iowa, but registered against SF 546.
Pam Mackey-Taylor, the chapter’s director, pointed specifically to a section of the bill that allows the director of the DNR to issue variances to “any of the department’s rules, regulations, or orders,” without a hearing.
“That’s a huge problem,” Mackey-Taylor said in a call with Iowa Capital Dispatch. “We want to make sure that the public interest is protected and we don’t want the production of hydrogen to be at the expense of the environment.”
Sen. Annette Sweeney, R-Iowa Falls, said she would like to further examine some elements of the bill, but was enthusiastic about the potential hydrogen industry in Iowa.
“Iowa can be the next Oklahoma and Texas,” Sweeney said. “We are at the cusp for being the energy generators here in the United States, because we’ve got our ethanol, we’ve got hydrogen. I think that we need to make sure we move forward, but make sure that we have our questions answered.”
The bill is eligible for discussion in the Senate Commerce Committee.
