On September 9, 2021, Alberta Energy released a Request for Expressions of Interest for Carbon Sequestration Hub Proposals (REOI) under its new proposed Carbon Sequestration Tenure Management process. The proposed Carbon Sequestration Tenure Management process follows the determination in the spring by the Province of Alberta (the Province) to suspend the issuance of pore space tenure agreements while revisiting how tenure in the carbon capture, utilization and storage (CCUS) space will be managed on a go forward basis. The REOI process will enable the Province to develop strategically located carbon "hubs" that will provide sequestration services to a number of industrial facilities while ensuring pore and risk management.
In May 2021, Alberta Energy announced, through an information letter, that it intended to move towards a competitive bid process for carbon sequestration tenure, to develop strategically located carbon sequestration hubs, allowing for additional volumes and multiple sources of CO2 to be stored and avoiding stand-alone injection operations. Alberta Energy suggests that this approach will:
- protect the integrity of Alberta’s pore space by limiting perforations and development in storage zones;
- enable efficient management of pore space tenure; and
- mitigate risk in the development and operation of carbon sequestration operations alongside other resource development activities.
The REOI Process
As part of the REOI process, expressions of interest are requested for companies interested in building, owning and operating a carbon sequestration hub in Alberta. Information submitted through this process will be used to inform Alberta Energy in developing the Requests for Full Project Proposals (RFPP). Participation at this REOI stage is not required for eligibility for the RFPP stage.
At this stage, the Province is looking for advice on managing the system effectively going forward to respond to the high-level market demand in the area, rather than looking at a pre-set number of hubs or pre-determining the size or location of the hubs.
In submitting an RFPP, proponents will be required to provide a full project proposal which will be evaluated by the Province. Ultimately, the Province intends to grant carbon sequestration agreements to successful proponents at the end of the RFPP stage. It is anticipated the agreements will:
- grant the successful proponent the right to drill wells, conduct evaluation and testing, and inject CO2 within previously defined zones for sequestration;
- place requirements on the successful proponent to:
- provide competitive market service rates;
- address how carbon offsets and future credits will be approached;
- provide opportunities for Albertans, including Indigenous communities, to realize economic benefits; and
- such other requirements as the regulator sets following the REOI process and engagement with stakeholders.
Eligible Projects and Proponents
Sequestration hubs must be for permanent CO2 sequestration deeper than 1,000 meters and not associated with hydrocarbon recovery (i.e. deep saline aquifers). All required regulatory approvals remain the responsibility of the proponent and will not be granted through this process. CO2 must be captured from facilities in Alberta and the province expects positive benefits (economic, social and environmental) to the communities surrounding any proposed project.
Alberta Energy was clear that they will continue to investigate opportunities for mature oil and gas reservoirs but at this time they are not looking for proposals for such reservoirs. Any enhanced oil recovery (EOR) operations will remain subject to the existing regime applicable to EOR schemes as regulated by the Regulator.
Expressions of interest are to be submitted by interested proponents by Tuesday October 12, 2021. Alberta Energy is expected to post the RFPP in December 2021 with the selection of successful proponents to be announced by March 2022. For proponents interested in participating in the REOI process, more details regarding submission criteria and the REOI process can be found here.