1. The Injection Connection: A Regulatory Framework for Geologic Sequestration of Anthropogenic Carbon Dioxide  2010 Diane Perkins All Rights Reserved

2. Geologic Sequestration of Anthropogenic Carbon Dioxide  The process of injecting CO 2 captured from an emission source (such as a power plant or industrial facility) into deep subsurface rock formations for long-term storage.

3. Reay, Dave and Michael Pidwirny (Lead Authors); Jay Gulledge and Sidney Draggan (Topic Editors). 2010. "Carbon dioxide." In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). [First published in the Encyclopedia of Earth September 27, 2006; Last revised January 3, 2010; Retrieved March 22, 2010]. http://www.eoearth.org/article/Carbon_dioxide

4. CO 2 /Temperature on the Rise Kitchen, John, CO 2 Research in the Institute for Advanced Energy Solutions, 6-24-10, www.cmu.edu/steinbrenner/.../co2-iaes-research-kitchin- steinbrenner-AM3.ppt

5. Sources of Anthropogenic Carbon Dioxide U.S. Department of Energy, 2008, Carbon Sequestration Atlas of the United States and Canada, second edition; National Energy Technology Laboratory, Office of Fossil Fuels, p.17.

6. Why Geologic Sequestration Now?  CO 2 designation as pollutant  Greenhouse Gas Rule  Class Action Litigation  Pending Congressional legislation

7. CO 2 Emission Reduction Solution that Rocks:  Geologic Sequestration is one solution to removing excess CO 2 from the atmosphere.  Technically feasible  CO 2 stored/possibly recoverable for re-use  Geologic storage safely used for storage of natural gas

8. And the process begins…..  EPA initiated series of technical workshops in 2005 through 2008 Reservoir Modeling and Simulation Risk Assessment Site Characterization for Storage State Regulators Workshop Well Construction and Mechanical Integrity Geologic Setting and AOR Considerations Measurement, Monitoring and Verification

9. EPA also held:  Two stakeholder workshops (2007 and 2008)  A series of public webinars on financial responsibility  Two public hearings; one concerning a Notice of Data Availability (NODA) the other concerning proposed regulations.

10. EPA Proposed Rules July 25, 2008 o EPA proposed rules for geologic carbon sequestration under the Safe Drinking Water Act (SDWA), Underground Injection Control (UIC) Program.

11. EPA Working on Final Rule  Issued a Notice of Data Availability (NODA), August 2009- Key scientific research, pilot project findings and technical issues not addressed in 2008 proposed rule.  Final rule anticipated late 2010/early 2011.

12. Well Classed  Class I- Inject hazardous wastes or industrial non-hazardous, municipal wastewater beneath lowermost USDW  Class II-Inject fluids in connection with conventional oil or natural gas production  Class III-Mineral extraction

13. EPA proposal creates new class of injection well  Class IV-Inject hazardous or radioactive waste into or above USDW  Class V-All other wells that inject non-hazardous fluids above or below USDW, experimental technology wells  Class VI-Geologic Sequestration wells

14. UIC Program Primacy  33 States have primary enforcement authority (primacy) for the UIC program; EPA and States share program implementation in 7 States; EPA directly implements the entire UIC Program in 10 states

15. UIC in Texas  Texas Commission on Environmental Quality (TCEQ) has primacy for Class I, III, IV and V wells.  Texas Railroad Commission (RRC) has primacy for Class II wells.

16. Texas Senate Bill 1387, 81 st Legislature (Regular Session 2009) 9-1-2009  Texas RRC delegated jurisdiction over over the injection of anthropogenic carbon dioxide into productive formations and saline formations for the purpose of geological storage;  Requires RRC to develop rules;  Requires coordination with TCEQ;  Requires RRC, TCEQ and UT-BEG to report to legislature the appropriate agency to regulate long-term storage of carbon dioxide into non-oil, gas producing formations;

17. Texas Senate Bill 1387, 81 st Legislature (Regular Session 2009)  Requires GLO, RRC, TCEQ and BEG to develop recommendations for managing geologic storage on state-owned lands; storage capacity, legal and regulatory frameworks;  Directs that the storage owner owns the anthropogenic CO 2 in storage and authorizes the RRC to regulate the withdrawal of CO 2 ;  Directs that RRC rules be “consistent” with USEPA and requires RRC to seek enforcement primacy for the program.

18. Why RRC?  History  Experience

19. Why RRC?  Enhanced oil and gas recovery operations will remain regulated as Class II wells.  RRC has extensive knowledge of oil and gas reservoirs in Texas (contained oil/water/gas for millions of years).

20. RRC proposed rules March 26, 2010  16 TAC Chapter 5  Comment period ended 4/26/2010

21. TCEQ Regulatory Role  TCEQ will review application; AoR, corrective action plans, monitoring requirements, post-injection site care plans.  Provide “impact” letter to RRC.  No specified timeframe review of application documents.

22. TCEQ Proposed Rules March 3, 2010  TCEQ created new Subchapter N in Chapter 331 to implement SB 1387.  Rule adopted 8/20/2010. Anticipated publication of final rule September 10,2010.

23. Foundation for EPA Proposed Rules  To develop Class VI proposed regulations, EPA used the Class I UIC (Hazardous Waste) regulations as a starting point. But added rules that covered special considerations of:  Large volumes of gas to be injected;  Buoyancy of fluid;  Viscosity (mobility) of gas;  Corrosivity of CO 2.

24. EPA punted question of whether anthropogenic CO 2 is hazardous waste  : “EPA cannot make a categorical determination as to whether injected CO 2 is hazardous under RCRA. Owner or operators will need to characterize their CO 2 streams as part of their permit application…”

25. But CERLA……  Federally permitted releases (including SDWA-UIC) are exempted from CERCLA liability.  Permits must be “structured” so they do not “authorize” inappropriate hazardous releases. CO 2 may contain hazardous substances, i.e. mercury; CO 2 may react with groundwater or formation to form sulfuric acid or release heavy metals into solution.

26. EPA Proposed Rules  UIC Program Elements Site Characterization Area Of Review Well Construction Well Operation Site Monitoring Post-Injection Site Care Public Participation Financial Responsibility Site Closure

27. Site Characterization  Basic requirements for Industrial UIC Wells Injection zone that can accept fluids Confining zone (system) above the injection zone, that contains all fluids Owners and Operators submit information on the following:  Structure and stratigraphy  Seismicity  Baseline geochemistry  EPA Proposed Rules Director has discretion to require identification of additional confining zones Additional zones may be used for:  Pressure dissipation  Monitoring Confining Zone Injection Zone USDWs

28. Area of Review (AoR)- The region surrounding the project that may be impacted by injection activity.  Basic requirements for Industrial UIC Wells Delineate the AoR (2 mile radius); Identify and evaluate all artificial penetrations and other features that may allow upward migration of fluids; Plug and or remediate as appropriate.  EPA Proposed Rules Use computational modeling to determine AoR radius; AoR reevaluation at a minimum of every 10 years.

29. Well Construction Basic requirements for Industrial UIC Wells  Well components engineered to ensure protection of USDWs  Cased and cemented to prevent movement of fluids into an USDW;  Surface casing and long string casing ;  Tubing and packer. Annulus Packer Tubing Long- string casing Cement Wellhead Surface casing

30. Well Construction (continued) EPA Proposed Rules  Inject below the lowermost USDW  Long-string casing cemented in place for entire length  Surface casing installed and cemented through the base of the lowermost USDW  Well materials must be compatible with injectate and formation fluids

31. Well Testing and Operation  Basic requirements for Industrial UIC Wells Procedures to ensure integrity of the well before, during, and after injection  Injection may not fracture injection zone  Monitor injection pressure, flow rate and volumes, and the nature of the injected fluid  Perform mechanical integrity tests  EPA Proposed Rules Continuous internal well mechanical integrity tests (MIT) and annual external MITs Injection pressure should not exceed 90 percent of fracture pressure in the injection system

32. Site Monitoring  EPA Proposed Rules Tracking of the plume movement and pressure front is required, but techniques, frequency, and spatial resolution are not specified; Surface-air and soil-gas monitoring are at the Director’s discretion.

33. Post-Injection Site Care  EPA Proposed Rule Post-injection site care is set at 50 years; however, it may be modified with a demonstration that the plume has stabilized and the pressure has dissipated sufficiently Well-plugging materials must be compatible with CO 2 stream Liability stays with the owner/operator

34. Public Participation  EPA Proposed Rule 30-day comment period for permits following public notice Preparation of a responsiveness summary for the public record

35. Financial Responsibility  Basic Requirements for Industrial UIC Wells Show financial responsibility for well plugging, corrective action, and for nominal site closure care  EPA Proposed Rule Demonstrate and maintain financial responsibility for post-injection site care, site closure, and emergency and remedial response

36. RRC Proposed Rules (Synopsis) 16 TAC Chapter 5  RRC proposed rules are consistent with EPA’s but contain some elements that are more detailed than EPA’s proposed rules.

37. 16 TAC 5.203- Application and Well Construction Specifics  AoR based on computational modeling for three periods. Five years after initiation of injection; Initiation of injection to end of injection; Initiation of injection to 10 years after injection.

38. 16 TAC 5.203-Well Construction  Requires used of technology (i.e. radial cement bond log) to verify radial integrity and location of cement to prevent endangerment of USDW.  Sampling plan for well construction (logging, sampling, testing) required. RRC performance requirements vs. EPA specific tests (§146.87).

39. 16 TAC 5.203 (h)- Mechanical Integrity Section 5.203(h) requires:  Injection well testing after any workover that disturbs seal of tubing packer and casing  Well testing at least every five years  Applicant must submit mechanical integrity testing plan.

40. 16 TAC 5.203(i)-Injection Pressure  “Maximum injection pressure is determined based on formation tensile failure and is set to avoid initiation or propagation of fractures in the confining zone.”

41. 16 TAC 5.204- Public Notice  Requires use of website to post complete application;  Notice required for surface owners, groundwater conservation district, mineral leaseholders and surface leaseholders within ½ mile of outermost boundary of AoR.

42. Summary  EPA Final Rules anticipated late 2010/early 2011;  In Texas, RRC primary agency for permitting Class VI wells with support from TCEQ;  RRC proposed rules similar to EPA’s but more stringent for certain rules;  RRC required to seek primacy for program from EPA.

43. Questions? Cirrus Associates, LLC DallasHouston 1771 International Parkway Suite 107 Richardson, Texas 75081 (972) 680-8555 dperkins@cirrusassociates.com  2010 Diane Perkins All Rights Reserved