Paving the way for the deployment of geological CO2 sequestration in Texas – Environment



Carbon Capture, Use and Storage (“CCUS”) is widely viewed as an essential tool for reducing anthropogenic carbon dioxide (“CO2”) emissions to air. The United States, and Texas in particular, are uniquely positioned to become a global leader in CCUS due to the availability of geological storage capacity and the relevant expertise and capabilities that can be learned from experience. of the oil and gas industry with the injection of CO2. for enhanced oil and gas recovery (“EOR”) purposes. Recent actions by the Texas State Legislature and the Texas General Land Office (the “GLO”) signal strong support in Texas for the development of CCUS projects, particularly for injection and geological sequestration and storage. CO2, and help clear and set the course for onshore and offshore CCUS deployment in Texas.

Bill 1284 paves the way for state authorization of geological CO2 sequestration wells

The United States Environmental Protection Agency (“EPA”) regulates the underground injection of fluids for storage or disposal under its Underground Injection Control (“UIC”) program, 40 CFR pts. 144-147, established in accordance with the Safe Drinking Water Act, 42 USC § 300f et seq., designed to protect underground sources of drinking water. The UIC program includes six classes of UIC wells, which are based on the type of fluid that will be injected. Wells intended for injection, geological storage and CO2 sequestration were added to the UIC program in 2010 and are called class VI wells. A UIC class VI permit is required before drilling and operating a class VI well. The UIC program is implemented by the EPA or by states, territories, or tribes that have received EPA approval for the primary licensing and enforcement authority, called primacy. The primacy is approved by the well class. Texas has primacy for UIC Class IV wells, but does not yet have primacy for Class VI wells. Currently, the EPA has only approved the primacy of the Class VI program for Wyoming and North Dakota. Louisiana is in the process of applying and is expected to receive primacy in late 2021 / early 2022.

On May 21, 2021, the Texas Legislature passed, with overwhelming support, House Bill 1284 (“HB 1284”), which paves the way for the Railroad Commission of Texas (the “RRC”) to achieve rule of law. ‘EPA to administer the UIC Class VI Program governing the authorization, operation, closure and maintenance of the site after the closure of carbon sequestration facilities. HB 1284 passed with a 142-2 vote in the Texas House of Representatives and a 31-0 unanimous vote in favor of the bill in the Texas Senate. The overwhelming support for HB 1284 is yet another indication of Texas’ growing interest in encouraging CCUS.

HB 1284 provides the necessary clarity to the Texas framework for the injection of CO2 for geological storage and sequestration. Pursuant to Texas legislation passed in 2009, jurisdiction over the injection and geological storage of anthropogenic CO2 has been divided between the RRC and the Texas Commission on Environmental Quality (the “TCEQ”), depending on whether the activity of injection would be carried out into a reservoir which is initially or may be productive of oil, gas or geothermal resources or of a salt formation directly above or below that reservoir. The 2009 legislation also established the obligation to obtain a state permit for the injection of CO2 for geological storage. This division of adjudicative authority posed a logistical hurdle and administrative burden to a Texas request for EPA Class VI well primacy and created an uncertain jurisdictional framework for the regulated community. To address these issues, HB 1284 repeals TCEQ’s jurisdiction over Class VI injection wells and consolidates jurisdiction under DRR for all onshore and offshore injection and geological storage of anthropogenic CO2 in Texas.

The RRC adopted rules in 2010 based on EPA regulations for Class VI wells. 16 Tex. Admin. Code §§ 5.201 et seq.. These rules require a number of demonstrations from the applicant and the corresponding RRC conclusions to support the issuance of permits regarding the adequacy of the proposed storage formation, including:

  • The injection and storage activity will not endanger or damage any existing or potential oil, gas, geothermal or other mineral resource, nor will it cause waste as defined by the Texas Natural Resources Code, §85.046 (11) (referring to the waste of hydrocarbon resources, do not discard);
  • Groundwater sources of drinking water and surface water can be adequately protected; and
  • The injection activity will not endanger or damage human health and safety.

16 Tex. Admin. Code § 5.206 (a). Notably, the RRC rules also envisage the conversion of the injection wells used for the EOR, which are class II wells under the UIC program, into class VI wells if they are used for main purposes of geological sequestration rather than EOR. See 16 Code Admin Tex. § 5.201.

The changes implemented by HB 1284 will facilitate the application by the primacy RRC to administer the UIC Class VI license program in Texas. EPA approval of the primacy of the Class VI program will eliminate the need for federal and state licensing. However, revisions will be required to the RRC rules in relation to the request for primacy and the process for obtaining primacy will take time. The timing of the RRC’s request and receipt of primacy is uncertain, but the process is expected to take one to two years. In the meantime, proponents of CCUS projects in Texas should coordinate with the EPA and RRC on the application process, as these agencies are expected to work together to ensure a smooth transition of pending applications by the time RRC receives the application. primacy.

In addition to consolidating competence with the RRC, HB 1284 made two other changes to the regulatory framework for CO2 injection for geological storage. First, HB 1284 requires applicants to submit with their injection well application a letter of determination from TCEQ concluding that the drilling and operation of the well will not impact or interfere with an injection well. previous or existing class I, including any associated waste plume, or any other injection well authorized or permitted by the TCEQ. Second, the bill prohibits the RRC from issuing permits for the conversion of a previously plugged and abandoned Class I injection well to a Class VI injection well.

HB 1284 will come into effect when promulgated by the Governor, or on June 20, 2021 if not signed or opposed by the Governor.

GLO Prepares for Potential CCUS Offshore Installation

HB 1284 is not the only recent signal that the CCUS is picking up on the hair in Texas. On April 7, 2021, the GLO, on behalf of the School Land Board, issued a Request for Proposals (“RFP”) for the lease of land from the Permanent School Fund in Jefferson County, Texas, for the establishment and the exploitation of an offshore CO2 geological deposit. storage facility under submerged Crown land. The RFP called for proposals for leases for a period of up to 30 years, including a maximum due diligence period of 3 years, for the construction and operation of a CO2 storage depot and associated infrastructure. The deadline for submitting responses to the RFP was May 10, 2021. The publication of the RFP by the GLO highlights the value of using state-owned land for carbon capture projects, and the potential project would be the first offshore geological sequestration project in Texas, and possibly the United States.

The way to go

By consolidating jurisdiction over injection wells for geological CO2 sequestration with RRC, the Texas legislature began to pave the way for RRC to seek primacy and ultimately streamline the licensing process for Class VI wells. in Texas. While HB 1284 represents an important milestone on the road to CCUS deployment in Texas, some obstacles remain. In particular, uncertainty persists regarding the ownership of the underground porous space and the extent of responsibility for CCUS activities. In addition, there remains a need to provide a mechanism to secure property rights when 100% of the necessary rights cannot be guaranteed otherwise, such as the eminent domain or comparable mechanisms provided by the laws of other states.

While these recent actions help to clarify and better define the path for the commercial deployment of CCUS, the path will need to be carefully and strategically explored and further clarification of the legal framework will likely be required as the journey continues.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.



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