Crediting Carbon Dioxide Storage Associated with Enhanced Oil Recovery

Abstract

What must be done to get credit for the quantities of carbon dioxide unavoidably stored in association with carbon dioxide enhanced oil recovery (CO2-EOR)? This presentation will explore that question with particular emphasis on several recent developments occurring in December 2015 that will directly affect the answers to that question in the context of the United States Environmental Protection Agency's (EPA's) regulatory scheme for controlling greenhouse gas (GHG) emissions. In 2015 EPA finalized a foundational regulatory framework for controlling GHG emissions from both new and existing fossil-fuelled electric utility generating units. In doing so, EPA conditioned the use of CCS on quantifying stored carbon dioxide through reporting under subpart RR of the part 98 GHG reporting requirements, the reporting approach developed primarily for geological sequestration in saline formations. And subpart RR reporting would be required regardless of whether carbon dioxide storage is achieved through geologic sequestration or in association with carbon dioxide enhanced oil recovery (CO2-EOR). Numerous concerns were raised in comments on the proposed rules and in response to the final rules about the ability for EOR operations to comply with the reporting requirements of subpart RR, and from 2010 until 2015 no one reported under subpart RR because all of the projects injecting carbon dioxide into saline formations had qualified for research exemptions, and no EOR operations had voluntarily opted to report under subpart RR rather than under subparts W and UU.As 2015 came to a close, efforts were launched to get EPA to show that the hurdles to quantifying and reporting for carbon dioxide stored in association with CO2 EOR can be surmounted or to remove those hurdles. On December 22, 2015 EPA approved the first ever use of subpart RR reporting for a CO2-EOR operation by approving a monitoring, reporting and verification (MRV) plan submitted by Occidental Petroleum for the Denver Unit in the Permian Basin of West Texas. In so doing, EPA provided some clarity about how a number of concerns and uncertainties surrounding the use of subpart RR reporting for storage associated with CO2-EOR, and the decision indicates significant flexibility to adapt parts of subpart RR requirements to a substantially different context than saline formation geologic storage. Yet other questions that have been raised remain unanswered in any direct way. And these uncertainties may bar the way to effective implementation of EPA's requirements for existing electric utility generating units. EPA is being called upon to show how the reporting can be achieved without disrupting the EOR operations through clarifications, guidance, policy revisions, or decisions or, alternatively, to remove the hurdles through regulatory actions.This presentation will explain the significant developments in reporting and in regulatory petitions that occurred at the end of 2015 and assess how this affects the viability of CCUS that relies on storage associated with CO2-EOR. It will also survey the potential effects of other developments in the implementation of other CO2 storage quantification and reporting regimes at the subnational, national and international levels in comparison with the requirements being implemented by EPA at the federal level.