On July 25, 2008, the United States Environmental Protection Agency (“EPA”) officially published a proposed rule establishing a federal program regulating Geologic Sequestration (“GS”) of carbon dioxide (“CO2”). In general terms, GS is the capture and storage of greenhouse gases (“GHG”) in natural subsurface geological formations. GS potentially allows for a significant near-to-medium term strategy to address GHG. In fact, an EPA official has suggested that GS could reduce atmospheric GHG by as much as 55 percent over the next hundred years.

The proposed rule, promulgated pursuant to the Safe Water Drinking Act, calls for permitting and regulating a new type of underground injection well accepting CO2 for disposal and focuses on protection of underground sources of drinking water (“USDWs”). The new GS injection wells are designated as Class VI wells. The proposed rule would build on existing underground injection control regulations, with modifications to address the particular aspects of CO2 injection for GS.

The proposal would regulate owners and operators of Class VI injection wells that would accept injection of CO2 into the subsurface for the purpose of long-term storage. Long-term storage is considered 50 years or more after cessation of operations. The proposal regulates geologic site characterization, fluid movement, area of review and corrective action, as well as siting, construction, operation and maintenance of the Class VI injection wells. For example, under the proposal, owners or operators of GS wells must: 

  • submit a monitoring and testing plan, an area of review and corrective action plan, and a post-injection site care and site closure plan as part of the permit application;
  • delineate the area of review using computational fluid flow models designed for the specific site conditions and injection regime; 
  • identify all artificial penetrations in the area of review (including active and abandoned wells and underground mines); 
  • perform corrective action, either prior to injection or on a phased basis over the course of the project, to address deficiencies in any wells, regardless of ownership, that are identified as potential conduits for fluid movement into USDWs. Available corrective action techniques include plugging of offset wells, monitoring in the injection zone or remedial cementing; 
  • reevaluate periodically (at least once every 10 years) the area of review during the injection operation; 
  • comply with an injection pressure limitation not to exceed 90 percent of the fracture pressure of the injection zone; 
  • install automatic shut-off valves down-hole in addition to at the surface of the well; 
  • report semi-annually on the physical and chemical characteristics of the injection fluids, injection pressure, flow rate, temperature, volume and annular pressure, annulus fluid volume added, and the results of Mechanical Integrity Tests, plume tracking and atmospheric/soil gas monitoring; 
  • implement a default post-injection site care (monitoring) period of 50 years, during which period reports providing monitoring results and updated modeling results must be provided; and 
  • demonstrate financial responsibility for corrective action, including injection well plugging, post-injection site care and site closure, and emergency and remedial response.

These requirements emphasize the proposal’s goal to allow GS of CO2 while preventing the risk of CO2 migration into drinking water sources. The dangers of CO2 migration include leaching and mobilization of contaminants, potential changes in regional groundwater flow and the movement of saltier formation fluids into drinking water aquifers.

The EPA noted in its proposal that measures taken to prevent CO2 migration to drinking water sources would also likely prevent atmospheric migration. Because the rule was not proposed under the Clean Air Act, it does not fully address all of the environmental implications of GS. For example, the proposal does not impose requirements to monitor or control fugitive or point source CO2 emissions at a disposal well facility. Additionally, the proposal does not address the issuance of carbon credits, capture or transport of CO2, or accounting/certification for GHG reductions.

If the proposed rule is finalized, GS could become a viable means for industries seeking to manage and/or store CO2 on a long-term basis throughout the United States. It could also give rise to new business opportunities including operation of Class VI disposal wells, CO2 collection and pipeline transport, enhanced oil recovery, and certification of formation suitability and CO2 retention, to name just a few. Because numerous injection wells exist in Texas and because CO2 is already being used for enhanced oil recovery in parts of West Texas, the state may become a business base for the use of the wells. A public hearing is expected to be held on the proposed rule in September 2008