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By Tim McDonnell
![](images/Logos/Semafor.jpg)
By Gavin
Maguire
Oil and gas
companies are writing their own rules for carbon storage
![](images/images_03_22_2023/pic2.jpg)
Shell's carbon capture and
storage facility in Saskatchewan, Alberta, Canada - REUTERS/Todd Koro1
THE SCOOP
Global oil and gas companies are writing their own rules for
controversial carbon-sequestration projects, officials say — but they’re
divided over what those rules should be, in particular on proposed
legislation that would offer protection in lawsuits over negative side
effects.
Two bills introduced last week in the Texas state legislature — one
of which was partially authored by Chevron — aim to shield companies that
inject CO2 captured from factories, power plants, or the atmosphere into
underground reservoirs from some litigation, in the event that the
reservoirs leak, trigger earthquakes, or otherwise cause damage. But Oxy,
formerly Occidental Petroleum and an aggressive proponent of carbon
capture, utilization, and storage (CCUS), opposes the moves, putting it in
an unlikely alliance with environmental groups.
TIM'S VIEW
The debate in Texas shows how legacy energy companies are
racing to write the rules for emerging climate technologies, and points to
an issue on which the Biden administration’s clean energy development
goals and its environmental justice promises may conflict.
CCUS is a growing area of focus for oil and gas companies, who see
it as a way to continue producing and burning fossil fuels with a lower
climate footprint. Most energy modelers agree that given how entrenched
oil and gas are in the economy, a large amount of carbon capture will be
necessary for the world to meet the Paris Agreement warming goals. Texas
in particular is keen to establish itself as a CCUS hub. By 2030, the
volume of carbon captured globally is on track to more than double, up to
110 million tons per year. Demand for storage space, the International
Energy Agency projects, could rise from about 40 million tons per year
today to more than 5 billion by 2050.
Liability limits for sequestration are a prerequisite for
large-scale investment in a nascent technology, some companies say.
Chevron, working with the Texas Oil & Gas Association (TXOGA), “helped
author” one of the bills, a company spokesperson said, that was then
introduced by Greg Bonnen, a Republican representing the Dallas suburbs.
Bonnen did not return a request for comment; a BP spokesperson said the
company supports the Bonnen legislation.
But Oxy, which is pushing most aggressively to the forefront of
CCUS, told me in a statement it “oppose[s] shifting long-term liability”
off of companies and onto a state-managed trust fund, because the projects
are in its view low-risk: “Properly selected and operated CCUS projects
offer safe, secure and permanent CO2 storage.”
Environmental groups have the same position, albeit for different
reasons, arguing that although carbon sequestration has indeed been
performed on a smaller scale for years without incident, it still entails
risk to groundwater and that companies shouldn’t be completely off the
hook for potential damages.
KNOW MORE
Most carbon captured today is sequestered via “enhanced oil
recovery,” a process in which it is injected into oil wells to push out
the last drops. That type of use has helped make early-stage carbon
capture facilities economic. But to reach the necessary scale, most CO2
will need to be injected deep underground into formations of porous rock.
The Inflation Reduction Act doubled the tax credit available for geologic
carbon storage, to $50 per ton.
“Texas has an opportunity to take the lead on this technology,”
state Representative Drew Darby, a Republican who authored the other bill,
told me. “To do that you have to create an environment that will allow
businesses to invest in CCUS.”
Darby’s bill would limit the circumstances under which a company
could be sued over an ongoing sequestration project, unless the company
falsified information provided to regulators. It would also codify that
sequestered CO2 does not qualify as a “public nuisance,” preventing suits
brought on those grounds.
Bonnen’s bill addresses the period after a sequestration project is
closed — an important part of the timeline for projects that are, in
theory, meant to keep CO2 permanently out of the atmosphere. It authorizes
the state to collect an unspecified advance fee from companies to create a
trust fund out of which future maintenance and legal fees can be paid.
Once a reservoir is no longer being added to and passes closure
inspections from regulators, the company is released from liability. The
state operates a similar program for oil and gas wells, which has failed
to keep up with the pace of oil well retirements and had to be buttressed
with federal funds last year.
Chevron is more supportive of the second proposal than the first,
the spokesperson said: The company “believes that CCUS operators should
remain responsible and liable during the higher-risk stages of projects
(e.g. during injection) as well as during the immediate years after site
closure to ensure it was closed properly, [but] we also support frameworks
that allow for liability to be transferred to a governmental entity when
risk is minimal and reasonable conditions have been met.”
Environmental groups have complained that the public health risks
of carbon sequestration infrastructure on nearby communities are
understudied, and that the industry needs more, not less, oversight. The
Bonnen bill is a “get out of jail free card,” said Scott Anderson,
Austin-based senior director for energy at the Environmental Defense Fund.
“It’s a problem for the industry to simultaneously say ‘Don’t worry, we
can do this, but by the way if it turns out not to be safe and effective,
we don’t want to be responsible for mistakes’.”
STEP BACK
One reason for the industry split over liability protections has to
do with the grinding pace of federal permitting bureaucracy. Geologic
carbon sequestration projects require a special permit from the
Environmental Protection Agency. These permits are notoriously tedious to
procure; only two have been issued so far nationwide, after a six-year
application process.
As a result, some states are keen to get permission to bypass that
process and issue permits themselves. Wyoming and North Dakota have
succeeded, but Texas is still bound by the federal process, which many in
the industry would like to change. But if the state’s legal criteria for
these projects are weaker than the EPA’s, that delegation is less likely
to come through, Anderson said. Accepting greater liability, in other
words, may be worth it to bypass the federal permitting process.
ROOM FOR DISAGREEMENT
Scientists have cautioned that built-up pressure in CO2 reservoirs
has the potential to cause small earthquakes and that CO2 leakage into
groundwater aquifers can lead to increased concentrations of lead and
arsenic. Still, research and industry experience so far shows that carbon
sequestration is far less environmentally hazardous than oil and gas
production. Within a few years, depending on geologic conditions, the CO2
turns to stone, minimizing risk that it later escapes back into the
atmosphere. To date there have not been any notable mishaps on carbon
sequestration sites in the U.S., said Erin Burns, executive director of
Carbon180, a carbon removal advocacy group, and the practice is a good fit
for the business model and workforce expertise of oil and gas companies.
“We can absolutely store lots and lots of CO2 very safely,” she
said. “But it’s about public trust. We need to do it in ways that
communities are comfortable with.”
THE VIEW FROM CORPUS CHRISTI
One venue looking to dive headfirst into carbon storage is
Texas’s Port of Corpus Christi, the country’s top oil export hub. In 2021,
it announced a plan to eventually sequester 10 million tons of CO2 per
year, and in February it was awarded $16.4 million from the Department of
Energy to put that plan into action, the largest such grant awarded so
far. In an interview last week, Sean Strawbridge, the port’s CEO, said he
supports the Bonnen bill.
“We want to be the carbon holding tank for the hemisphere,” he
said. “Bring us your carbon!”
NOTABLE
One thing not to worry about is running out of storage space.
The IEA estimates that the world’s total carbon sequestration capacity
could be as high as 55 trillion tons — 11,000 times more than projected
demand. It also found that 70% of global emissions come from sources
within 100 kilometers of a potential storage site.
Green Play Ammonia™, Yielder® NFuel Energy.
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