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Wendy CheungU.S. EPA Region 8

Underground Injection Control ProgramSeptember 1, 2009

Geologic Sequestration Legal and Regulatory Developments and Challenges

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Outline

Overview of the Underground Injection Control (UIC) Program Rule Development ProcessThe Proposed RuleNODA updateSchedule for Final Rule DevelopmentRegional Challenges

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UIC Program Background

The 1974 SDWA (Reauthorized in 1996)Federal regulations for protection of Underground Sources of Drinking Water (USDWs)

USDW is any aquifer or portion of an aquifer that: Any aquifer or portion of an aquifer which supplies any public water system or contains a sufficient quantity of groundwater to supply a public water system and is less than 10,000 mg/L total dissolved solids.

More than 750 billion gallons of fluid are injected each year. There are between 650,000 and 850,000 injection wells in the U.S.

UIC Well Classes

Class I Class II Class III Class V

UIC Primacy

33 States have primary enforcement authority (primacy) for the UIC program; EPA and States share program implementation with 7 States and 2 Tribes; EPA directly implements the entire UIC Program in 10 states

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EPA’s Proposed GS Rule

Innovative solutions will be needed to address long-term challenge of climate change.CCS is one of the technical approaches to reduce greenhouse gas emission

Carbon Capture and Storage (CCS): includes capture, transport, and long term storage of carbon dioxideGeologic Sequestration (GS): the injection of carbon dioxide for long term storage into the subsurface Class VI well: Proposed rule will create a new category under the UIC framework to protect USDW from GS activities.

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EPA’s Proposed GS Rule

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EPA’s Proposed GS Rule

Existing UIC program provides a regulatory framework (baseline) for the Geologic Sequestration of CO2GS rule addresses potential endangerment to underground sources of drinking water from CO2injection activities

provides consistency across USprovides transparency that will build public confidence

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EPA’s Proposed GS Rule: Rule Development Process

Proposed Rule for commercial-scale geologic sequestration of carbon dioxide

Announced by Administrator on October 11, 2007Signed by Administrator on July 15, 2008120 day comment period with 2 public hearings + extended 30 days.

Authority: Safe Drinking Water Act (SDWA); proposal revises Underground Injection Control (UIC) Program standards for Geologic Sequestration

Basis of rulemaking: Authority under SDWA to prevent endangerment of underground sources of drinking water

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Collaboration During Rule Development Process

EPA’s Offices of Water and Air and Radiation worked to:Ensure that cross-program issues were addressedClarify and address issues across EPA statutes (SDWA, CAA, etc.) and regulationsCoordinate technical and cost analyses for the proposal

Regulatory development workgroup of ~48 members included DOE and 4 States (Texas, Arkansas, Alabama and Ohio)EPA has worked closely with the Department of Energy EPA increasing coordination with:

The Department of TransportationBureau of Land ManagementThe United States Geological SurveyInternal Revenue Service

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Federal – Department of Energy; Department of Interior; Department of TransportationFederal Advisory Committees – National Drinking Water Advisory Council and Clean Air Act Advisory CommitteeStates – Ground Water Protection Council (GWPC) and Interstate Oil & Gas Compact Commission (IOGCC)Non-Governmental Organizations and Water Utilities – National Resources Defense Council, Sierra Club, World Resources Institute, Environmental Defense, AWWA, AMWA, and othersIndustry Groups – British Petroleum, Shell, Chevron, American Petroleum Institute, Schlumberger, Edison Electric Institute, etc.

Outreach to Stakeholders

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Technical Workshop Series (2005-2008)Modeling: Houston, TX 2005Risk Assessment: Portland, OR 2005Site Characterization: Berkeley, CA 2006Well Construction and Integrity Testing: Albuquerque, NM 2007Area of Review: Washington, DC 2007Measurement, Monitoring, and Verification: New Orleans, LA 2008

Two Stakeholder Meetings (2007 & 2008 in DC Area)EPA’s rulemaking processTechnical and Implementation challenges

EPA’s Proposed GS Rule:Workshops and Meetings

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Develop proposed rules that would protect underground sources of drinking water under SDWATailor existing UIC program requirements to unique needs of GS of CO2 for long-term storage Encourage development of a promising tool while ensuring protection of USDWsEnsure adaptive approach to incorporate new data

EPA’s Proposed GS Rule: Goals of the Rulemaking Process

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Use existing experience with industrial and enhanced oil/gas recovery injectionCapitalize on years of EPA and State UIC program experience Clear and transparent processInvolve, inform, and educate the public

Goals of the Rulemaking Process

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Special Considerations for GSLarge VolumesBuoyancyViscosity (Mobility)Corrosivity

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EPA’s Proposed GS Rule: Approach to Rulemaking

UIC Program ElementsSite Characterization Area Of ReviewWell ConstructionWell OperationSite MonitoringWell Closure and Post-Injection Site CareFinancial ResponsibilityPublic Participation

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Existing UIC program:Injection zone that can accept fluids Confining zone (system) above the injection zone, that contains all fluids

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EPA’s Proposed GS Rule: Site Characterization

Confining Zone

Injection Zone

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Proposed ApproachDirector has discretion to require identification of additional confining zonesAdditional zones may be used for:

Pressure dissipationMonitoring

Owners and Operators submit information on the following:

Structure and stratigraphy SeismicityBaseline geochemistry

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EPA’s Proposed GS Rule: Site Characterization

Confining Zone

Injection Zone

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AoR: The region surrounding the project that may be impacted by injection activity

Basic requirementsDelineate the AoRIdentify and evaluate all artificial penetrations and other features that may allow upward migration of fluidsPlug and or remediate as appropriate

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule: Area of Review (AoR)

CO2 plume

GS Well

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Proposed ApproachUse computational modeling AoR reevaluation at a minimum of every 10 years

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule: Area of Review (AoR)

GS Well

CO2 plume

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Existing UIC program:Cased and cemented to prevent movement of fluids into an USDW Surface casing and long string casing Tubing and packer

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Workgroup Recommendations:Area of Review

Area of Review and Corrective ActionEPA’s Proposed GS Rule: Well Construction

Annulus Packer

Tubing

Long-string casing

Cement

Wellhead

Surface casing

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Proposed ApproachInject below the lowermost USDWLong-string casing cemented in place for entire lengthSurface casing through the base of the lowermost USDW and cemented to surfaceWell materials must be compatible with injectate and formation fluids

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Workgroup Recommendations:Area of Review

Area of Review and Corrective ActionEPA’s Proposed GS Rule:Well Construction

Annulus Packer

Tubing

Long-string casing

Cement

Wellhead

Surface casing

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Procedures to ensure integrity of the well before, during, and after injection

Proposed ApproachContinuous internal well mechanical integrity tests (MIT) and annual external MITsInjection pressure should not exceed 90 percent of fracture pressure in the injection zone

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EPA’s Proposed GS Rule: Well Testing and Operation

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Determination of the extent of the CO2 plume and associated area of elevated pressureExisting UIC program:

Director has discretion to require site specific monitoring

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EPA’s Proposed GS Rule: Site Monitoring

Seismic Monitoring Results, Sleipner

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Proposed ApproachTracking of the plume and pressure front is required, but techniques, frequency, and spatial resolution are not specifiedTracers are not requiredSurface-air and soil-gas monitoring is at the Director’s discretion

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EPA’s Proposed GS Rule: Site Monitoring

Seismic Monitoring Results, Sleipner

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Appropriate well-plugging, monitoring and other actions following cessation of injection Existing UIC program:

Wells must be closed in a manner that protects USDWs from endangerment Owner/operator must demonstrate and maintain financial assurance to close and abandon the injection operationLiability stays with owner/operator

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule:Well-Plugging and Post-Injection Site Care

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Proposed ApproachWell-plugging materials must be compatible with CO2streamPost-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 The owner or operator must demonstrate financial assurance for post-injection site care and site closure

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule:Well-Plugging and Post-Injection Site Care

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Existing UIC program:Show financial responsibility for well plugging, corrective action, and for site closure

Proposed RequirementsDemonstrate and maintain financial responsibility for plugging and corrective action, injection well plugging, post-injection site care, site closure, and emergency and remedial response

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule:Financial Responsibility

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Existing UIC program:30-day comment period for permits following public noticePreparation of a responsiveness summary for the public record

Preamble sought comment onAppropriate outreach techniques and technologiesEngaging the public early in permitting process before sitingI

Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule:Public Participation

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Proposed ApproachEnhanced Oil Recovery Wells (Class II) using CO2 would not be required to obtain a Class VI permit until absolutely no oil is being produced from the reservoirExisting Class I, II or V wells that transition to a Class VI permit must comply with all new regulations“Cemented-in-place” components of the well itself would be grandfathered into the new permit

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Workgroup Recommendations:Area of Review

EPA’s Proposed GS Rule:Impacts on Existing UIC Wells (Class I, II, V)

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EPA’s Proposed GS Rule:Comment Period: July 25 – December 24, 2008

CommentsFormed the basis of the next publicationCreate “logical outgrowths” from proposal

Public Comment & Hearing PeriodDiscuss merits of regulatory alternatives and the proposed approach (preamble and regulatory text)151 groups made 365 submittals with thousands of commentsOver 50 people attended the public hearing in Chicago and Denver

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EPA’s Proposed GS Rule:Notice of Data Availability (NODA)

NODA published in the FR August 31, 2009presents new data and information obtained after publication of the July 25, 2008 proposed rule

Research data from NETL(RCSP) & LBNL Injection depth for GS wells

45 day public comment period Public Hearing in Chicago on Sept 17, 2009

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EPA’s Proposed GS Rule:Notice of Data Availability (NODA)

RCSP Research SECARB: Escatawpa Project, MS - 3,027 tons into deep saline aquifer. Goal to monitor if CO2 migrating upward from the injection zone. To date, no indication of the CO2 in the shallow subsurfaceSWP: Aneth Field, UT - Combined EOR-GS, began August 2007 (~150,000 tons of CO2). Confirms need for robust monitoring plan, and tests the importance of monitoring and modeling agreement in GS projects. Demonstrates the utility of various monitoring technologies.SWP: Pump Canyon Site, NM into coal seams. “Seal Analysis” of Kirtland Formation. Testing several MMV technologies and provide data to determine the feasibility of unmineable coal seams.

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EPA’s Proposed GS Rule:Notice of Data Availability (NODA)

LBNL Research- Evaluating potential for GS mobilization of trace elements. Modeling showed trace elements may be mobilized, but only arsenic exceeding the MCL or AL.

- Reactive transport model: Hypothetical release through a preferential pathway, such as a fault zone with arsenic and lead. Only arsenic exceeded MCL or AL. Model : 20 independent GS projects, 354 miles by 342 miles, 5 Mt CO2/year over 50 years. After injection ended, pressure buildup in the injection zone began to dissipate while the far-field pressure response continued to increase and expand. The predicted pressure changes could push saline water upward into overlying aquifers if localized pathways such as conductive faults existed.

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EPA’s Proposed GS Rule:Notice of Data Availability (NODA)

Injection Below the Lowermost USDWPlacing distance between the injection formation and USDWs decreases risks to USDWsReduce the likelihood of wells being drilled through a CO2 plume in the future.

– Climate change mitigation – potential storage capacity eliminated.

– Have experience in successfully injecting above lowermost USDW.

– No restrictions provided that USDWs are protected.

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EPA’s Proposed GS Rule:Notice of Data Availability (NODA)

Waiver ProcessSubmit additional, specific information to the UIC Program Director and the Public Water Supply Supervision (PWSS) Program Director for review prior to applying for a Class VI permit. Subject to public comment and hearing.Waiver process allows flexibility at the State and Regional level to allow for geologic flexibility. It may also allow communities, local, and State authorities to plan resource use appropriately and, if necessary, circumvent the need to drill through a CO2 filled zone/formation/plume to exploit resources (both water and hydrocarbon) in or below the injection zone. EPA expects that not all States would choose to adopt the waiver process.

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EPA’s Proposed GS Rule:Schedule

Activity MilestoneTechnical Workshops, Data Collection & Analysis Ongoing

Stakeholder Meetings December 2007/February 2008

Interagency Review of Proposed Rule Late May - Early June 2008

Administrator’s Signature of Proposed Rule July 2008

Public Comment Period for Proposed Rule July – December 2008

Notice of Data Availability August 31, 2009

Final UIC Rule for GS of CO2 Late 2010 / Early 2011

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Injection Below the Lowermost USDWIn this region, there are deep USDWs. There is concern that significant potential storage capacity will be eliminated. Surface CasingFor deep USDWs, may be technically infeasible to cement to base of lowermost USDWPrimacyWill require coordination between State agencies depending upon which authority is delegated regulating Class VI wells.Water Resource Issues

Regional Challenges

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More information about the UIC ProgramEPA Geologic Sequestration of Carbon Dioxide Website –http://www.epa.gov/safewater/uic/wells_sequestration.html

Code of Federal Regulations: Underground Injection Control Regulations 40 CFR 144-148 –http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?sid=d6ee71a544eca89c533c825135913f13&c=ecfr&tpl=/ecfrbrowse/Title40/40cfrv22_02.tplWritten comments for the NODA may be submitted at:www.regulations.gov

Questions?

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State Legislation

MT House Bill 3 (enacted 2007)

Established tax incentives for CCS.

House Bill 25 (enacted 2007)

Montana Public Service Commission may not approve any utility coal-fired power plant acquisition after 1/1/07, unless the plant captures and sequesters a minimum of 50% of the CO2produced.

Senate Bill 498 (enacted 2009)

Directed the Board of Oil and Gas to develop rules for GS and regulations for converting EOR wells to GS wells. Rules include transfer of liability to state government after 30

years. Site to be certified as closed by the Department of Environmental Quality 15 years after injection ceases. The state would monitor for the next 15 years before transferring liability from the project operator. The bill also assigns the rights to pore space to surface property owners. It also clarifies that injected CO2 is not to be considered a pollutant.

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State Legislation

WY House Bill 90 (enacted 2008)

Directed Water Quality Division of the Department of Environmental Quality to develop rules, regulations, and standards for regulating GS projects. The legislation noted that GS regulations cannot “be construed to create any liability by the state for failure to comply” with the regulations.

House Bill 58 (enacted 2009)

Clarified (1) that ownership of, and liability for, injected CO2is presumed to remain with the CCS operator; and (2) that the pore space owner is not liable for the effects of the CO2 if the pore space owner does not conduct the injection but, rather, allows another to perform the injection. Enhanced oil recovery is not included.

House Bill 57 (enacted 2009)

Amended a statute that says a surface owner owns the pore space below the surface by adding a provision to say that mineral rights owners can prevent CO2 injections that would interfere with their rights.

Wyoming DEQ drafted UIC Class VI regulations, public hearing in March 13, 2009.