United States: EPA Finalizes Geologic Sequestration and Reporting Rules

The U.S. Environmental Protection Agency (EPA) recently finalized two rules related to the capture and long-term storage of carbon dioxide, a process that aims to significantly reduce greenhouse gas (GHG) emissions in the atmosphere:  the Geologic Sequestration (GS) rule and a Clean Air Act rule requiring reporting of GHG emissions from GS facilities and all other facilities that inject carbon dioxide (CO₂) underground.  Based on the amount of underground storage capacity in the United States and Canada, the underground storage of carbon could reduce CO₂ emissions by as much as 10% by 2050.¹

The GS Rule

Carbon capture and sequestration (CCS) is considered one of a portfolio of options that could be deployed to reduce CO₂ emissions to the atmosphere and help mitigate climate change.  The GS rule regulates the "sequestration" portion of CCS, or the long-term containment of a gaseous, liquid or supercritical CO₂ stream in subsurface geologic formations.  The GS rule sets forth the minimum federal requirements under the Safe Drinking Water Act's Underground Injection Control (UIC) program for the underground injection of CO_2.  The GS rule does not apply to issues concerning CO₂ capture or transport.   

The GS rule establishes a new class of UIC well, called a "Class VI well."  An owner or operator of a Class VI well must obtain a permit from EPA prior to engaging in GS. Class VI well permits will be issued for the operating life of the facility and the post-injection site care period, and the EPA will review the permit every five years to determine whether it should be modified, revoked, reissued, or terminated.  Additionally, Class VI permitting requirements will apply to any CO₂ injection project, including certain Class II enhanced oil or gas recovery (ER) projects,² where there is an increased risk to Underground Sources of Drinking Water (USDWs).  Where no increased risk to USDWs exists, ER projects may continue to operate under Class II permitting requirements.

Class VI wells must comply with the following requirements, which in most cases will be incorporated into the permit:

• Site Characterization.  Similar to pre-existing UIC rules for other well classes, owners and operators must perform a detailed assessment of the geologic, hydrologic, geochemical, and geo-mechanical properties of the proposed GS site to ensure that wells are sited in appropriate locations and inject into suitable formations.
• Area of Review (AoR) and Corrective Action Requirements.  For Class VI wells, the AoR is defined as "the region surrounding the [GS] project where USDWs may be endangered by the injection activity."  EPA will require computational modeling of the AoR that accounts for the physical and chemical properties of the injected CO₂ and is based on available site characterization, monitoring, and operational data.  Owners and operators periodically must reevaluate the AoR and perform corrective actions, if necessary, to ensure that the CO₂ is moving as predicted within the subsurface.
• Injection Well Construction and Operation.  Class VI wells must be designed and constructed using materials that can withstand contact with CO₂ over the life of the project.  The rule is based on existing UIC construction requirements for Class I hazardous waste injection wells, with modifications to address the unique physical characteristics of CO₂ (e.g., buoyancy and potential presence of impurities).  Operational requirements also account for GS-unique circumstances.  For example, EPA will require that injection pressures not exceed 90% of the fracture pressure of the injection zone.  Additionally, the wells must be equipped with an alarm and an automatic shutoff device in the event of a loss of mechanical integrity.
• Testing and Monitoring (Mechanical Integrity Testing).  Owners or operators must develop and implement a comprehensive testing and monitoring plan for GS projects, including injectate monitoring, corrosion monitoring of the well's tubular, mechanical, and cement components, pressure falloff testing, groundwater quality monitoring, CO₂ plume and pressure front tracking and, at EPA's discretion, surface air and soil gas monitoring.  Class VI wells must also undergo continuous mechanical integrity testing to verify proper well construction, operation, and maintenance.
• Well Plugging, Post-Injection Site Care (PISC) and Site Closure.  Class VI wells must be properly plugged to ensure USDWs are protected and that wells do not serve as conduits for fluid movement following cessation of injection and site closure.  Notably, EPA will require a 50-year PISC period (subject to modification under certain circumstances), where owners or operators must monitor the AoR for migration and other developments.  When the site no longer poses a risk of endangerment to USDWs, owners or operators must plug all monitoring wells, submit a site closure report, and record a notation on the property deed that the land has been used to sequester CO₂.
• Financial Responsibility.  Owners or operators must demonstrate and maintain financial responsibility for performing all activities at a GS facility.  Financial assurance may be demonstrated using trust funds, surety bonds, letters of credit, insurance, self-insurance (financial test and corporate guarantee), or an escrow account.
• Injection-Depth Waivers.  Although generally EPA will require Class VI wells to inject CO₂ to a depth below the lowermost USDW, EPA will allow owners and operators to seek a waiver from the injection-depth requirement in certain circumstances.  EPA anticipates waivers only where there are deep USDWs and/or where lack of a waiver would result in impractical or technically infeasible well construction.  The rule does not categorically preclude or prohibit injection into any type of geologic formation.

The final GS rule becomes effective January 10, 2011.

Mandatory GHG Reporting for GS and Other UIC Wells

In addition to the final GS rule, EPA promulgated a related regulation under the Clean Air Act that will require GHG monitoring and reporting from GS facilities and from all other facilities that inject CO₂ underground.  The new rule does not require control of GHGs.  It will affect owners and operators of CO₂ injection wells, enhanced oil and gas recovery projects, and acid gas injection projects.

The final GHG reporting rule requires GS facilities to report all CO₂ emissions associated with their facilities, including CO₂ that is received, injected into the subsurface, produced, emitted by surface leakage, and emitted and/or vented by certain GS process-related equipment.  A GS facility will be required to develop and implement an EPA-approved monitoring, reporting and verification plan, and report the amount of CO₂ sequestered, using a "mass balance" approach, by subtracting total CO₂ emissions from CO₂ injected in the reporting year.  Other non-GS facilities that inject CO₂ underground, including enhanced oil and gas recovery wells and research and development projects investigating GS for CCS technologies, must report the mass of CO₂ received.

Once a facility is subject to the rule's reporting requirements, the owner or operator must continue to monitor and report until the site has been closed or until EPA determines that the injected CO₂ stream is not expected to migrate in a manner likely to result in surface leakage.  Facilities must maintain all required records for at least three years.

The GS reporting rule became effective on December 31, 2010.

Future CCS Developments

An estimated 95% of the largest stationary sources of CO₂ emissions in the United States are within 50 miles of a candidate GS site.  Considering the large storage capacity in North America, GS has the potential to contribute significantly toward meeting the goals of the nation's climate policy.  Perkins Coie continues to follow climate policy developments and is available to assist with any GS- or other climate-related inquiries you may have. 

• Read the GS Rule in the Federal Register:  Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO₂).
• Read the GS Reporting Rule in the Federal Register:  Mandatory Reporting of Greenhouse Gases:  Injection and Geologic Sequestration of Carbon Dioxide.

Footnotes

1. The Department of Energy has estimated that there are 3.5 trillion tons of carbon storage capacity in the United States and Canada.  If that capacity is fully utilized, it could reduce CO₂ emissions by up to 10%.

2. Underground injection of CO₂ for enhanced oil recovery (EOR) and enhanced gas recovery (EGR) is a long-standing practice.  Both practices are collectively referred to as "ER."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.