Karen Frantz
GHG Monitor
1/24/2014
A point of contention has emerged among some officials in the Enhanced Oil Recovery industry over a draft guidance document released alongside the Environmental Protection Agency’s finalized rule that excludes sequestered CO2 from its definition of hazardous waste under the Resource Conservation and Recovery Act. Specifically, some argue that EPA’s notion of transiting wells used for Enhanced Oil Recovery into wells used for geologic sequestration is at best confusing and at worst potentially fatal for business. When the EPA finalized the rule earlier this month, it also released for public comment the draft guidance that is designed to provide direction to injection well owners or operators and Underground Injection Control Program Directors regarding when Class II wells—in which CO2 is injected for the purpose of EOR—must be re-permitted as Class VI wells—in which CO2 is injected for the purpose of geologic sequestration. And the idea of transitioning from Class II to a Class VI poses a host of problems for EOR operators, according to Steve Melzer, owner of Melzer Consulting, who has done much of the pioneering research on EOR in west Texas.
“Right now everybody’s really nervous about it because of the ambiguity and the potential of the discretionary decisions that nobody knows what they’ll be,” he said in a phone interview with GHG Monitor. He said when a Class II well would transition to a Class VI well is up to EPA officials, which he said creates uncertainty. “If you don’t know what the Director is going to do, we don’t have any criteria for when he’s going to say, okay, you quit Class II, you’ve got to go to Class VI.” He added: “What they’re forcing us to do is go into a transition into Class VI theoretically when we’re finished with an EOR project, but they’ve clouded that because their definition of when we’re finished with EOR is earlier than what we would define it as, the industry would define it as.”
Melzer said that there are complications associated with transitioning a Class II well to a Class VI well that include moving from mineral law to waste law, different ownership of the pore space, and the requirement of operators of a Class VI well to have storage rights, whereas that is not required for Class II well operators. And according to another industry official, transitioning to Class VI would subject a well owner to open-ended liability and a default 50-year post-injection site care period, which is particularly onerous. “After you cease operations and sell the field you’re still on the hook for 50 years beyond that,” the industry official said. “Most companies aren’t in business that long.”
Reality of Transition Debated
EPA established a Class VI well to create new technical criteria for CO2 injection for geologic sequestration when there is risk posed to underground sources of drinking water, with the aim to protect that water during all phases of operations. “The Agency believes that if the business model for a well or a group of wells changes from an [EOR]-focused activity to one that maximizes carbon dioxide injection volumes and permanent storage, then the risk of endangerment to [underground drinking water sources] is likely to increase and such wells may need to be re-permitted as Class VI wells,” the transition guidance says. It also says that the Class VI UIC Program Director is the one who will determine, based on information provided by the owner or operator, when there is an increased risk to underground sources of drinking water.
But not everyone agrees it is realistic that a Class II operation would convert into a Class VI operation. “I’m not overly worried about that scenario,” said the industry official, who could not think of a single current operation the transition guidance would apply to. “I do not know any CO2-EOR operator who intends or is willing to conduct its operations under Class VI,” the official added. “So if conversion occurs, EPA is just going to be shutting stuff down literally. And I just don’t see that happening. I think EPA needs CO2-EOR under Class II to succeed, and it’s only going to succeed under Class II.”
The official also said the conditions and hypothetical risks the transition guidance lays out that could spur conversion from Class II to Class VI aren’t relevant for existing CO2-EOR operations. “Yes, it’s a risk,” the official said. “The transition issue overlaid with RCRA is a potential issue, but I’m not losing a lot of sleep over it.” So why the need for the transition guidance? “I think there’s a lot of people wondering why that document was issued,” the official said. “Just issuing that document creates confusion.” EPA did not respond to questions about the guidance document.
Incidental Storage
Melzer said that one issue the EPA needs to address in order to help alleviate his concerns is that of incidental storage—or CO2 that is stored underground through the process of EOR operations. “We need to understand this transition so that it doesn’t impact ongoing projects, number one, and then number two, that it doesn’t preclude ongoing projects from getting incidental storage,” he said. He said he recognizes that what EPA is trying to do with the rulemaking is give people who capture carbon a place to put the CO2. “And if it’s a waste injection project from the start, okay, I can see the reason for Class VI, because that is a waste disposal project,” he said. “However, if it’s an EOR project, and that’s really where all the CO2 is going to go, at least in the next 20 years, I think…then we should be going out of our way to get incidental storage acknowledged.”
But the industry official said that EPA has said that geologic storage can occur under Class II in the preamble to the EPA’s draft rule setting emission standards for new power plants, known as New Source Performance Standards. “EPA makes clear that you can do a storage or sequestration under Class II,” the official said. “So there is no doubt that someone could comply with the NSPS through Class II injections.” But both the industry official and Melzer agreed that the hazardous waste exemption for CO2 injected into Class VI wells is a good thing. “That is actually a step forward that helps,” Melzer said, and added, “I’m not saying that the rule is a throw away. I’m just saying there’s a lot more work that is yet ahead of us so that there’s a business associated with CO2 capture and storage. … What I would like, number one on my list, is that [EPA] acknowledge that ongoing storage is occurring, and where states have primacy of Class II, that the states be allowed to set what criteria they apply to demonstrate that ongoing storage. I don’t think that’s a big step either for EPA or the states that are involved in it.”
