STAKEHOLDERS CALL FOR TWEAKS TO EPA’S CO2 STORAGE REGS

Tamar Hallerman
GHG Monitor
2/22/13

Some carbon capture and storage stakeholders are beginning to highlight what they describe as a “disconnect” between the regulatory requirements for CO2 sequestration established by the Environmental Protection Agency in recent years and what they say is economically feasible for companies involved. The EPA’s Underground Injection Control (UIC) Program has long regulated substances injected into the subsurface under the authority of the Safe Drinking Water Act. Until recently, the operators of CO2 injection wells were required to acquire UIC Class II or Class V permits for enhanced oil recovery or shallow experimental projects, respectively. But in late 2010 EPA finalized a new class of well permits aimed at regulating CO2 injected for permanent sequestration in saline reservoirs, known as Class VI. The classification is aimed at ensuring the long-term safety of drinking water, even as project developers move forward on a process that has not yet been tested over a long period of time. The permit requires extensive site characterization, as well as a multi-decade post-injection monitoring regime.

Some Say Class VI Requirements Drive Investors Toward EOR

Since being established slightly more than two years ago, less than a handful of projects have applied for Class VI permits. Some CCS industry officials have been quick to characterize the Class VI requirements as burdensome, suggesting that some project developers are now driven to only consider projects with an EOR component so they can apply for the less stringent Class II permits. “We currently have an EOR bias in terms of carbon capture and storage projects in the United States. Why is that? Some say it’s because of the economics of EOR, but I would say that part of it is because the regulatory structure for deep saline injection has issues,” Kipp Coddington, a partner at the northern Virginia-based law firm Mowrey Meezan Coddington Cloud LLP, said in remarks at an industry conference earlier this month. “Some might say EPA’s Class VI UIC regime is difficult, especially for R&D interests to work under. … It seems to be hindering the technology, depending on your point of view.”

Other speakers at the conference, sponsored by the Global CCS Institute, acknowledged that EPA’s Class VI requirements have caused some developers to shy away from CO2 storage in saline aquifers. “The problems we’re seeing with Class VI permitting aren’t by and large due to technical limitations. They seem to be the requirements outside of well construction, things like long-term monitoring that give regulators confidence that the [CCS project developer] will stand behind what they do,” said Dwight Peters, president of Schlumberger Carbon Services. He estimated that the cost of fulfilling the Class VI requirements is roughly 30 percent more than for Class II wells.

EPA Plans CO2 Exemption from RCRA

Meanwhile, some environmental groups have argued that the Class VI regulatory requirements, particularly for long-term monitoring, are needed to ensure that sequestered CO2, once injected, does not leach into groundwater. EPA is currently in the process of finalizing a proposed rulemaking that exempts CO2 injected into Class VI wells from having to comply with its hazardous waste laws under the Resource Conservation and Recovery Act (RCRA). The agency said the tweak will remove a key regulatory barrier for Class VI permitting.

But barriers still remain—no Class VI permits have been issued to date and there is little precedent to rely on, some industry officials said. Instead, some stakeholders like the Natural Resources Defense Council have suggested that EPA create a third permit classification for CO2 injection that could work as a regulatory median between Class II’s flexibilities and Class VI’s environmental protections. “The hydrocarbon recovery aspect [of CO2 injection] should not justify any distinction in the permitting regime that should apply to a permanent geologic repository,” NRDC’s Director for Climate Programs David Hawkins said in his remarks at the conference.