Unlocking Carbon Storage Wells in 2024

Carbon storage is carrying momentum into 2024 following big year-end developments, with Louisiana obtaining regulatory primacy for carbon storage and Wyoming permitting its first set of Class VI wells. After years of delays and bottlenecks at the federal level, states are taking the lead to move these projects forward.

Both of these developments help address the main challenge developers are currently facing: unclear project development timelines due to permitting delays. To date, the Environmental Protection Agency (EPA) has permitted just two active wells in Illinois and six pending wells in Indiana and California.

The EPA is charged with implementing the Underground Injection Control (UIC) program as required by the Safe Drinking Water Act (SDWA) to prevent contamination of underground sources of drinking water. In 2011, the EPA created a new well classification, known as Class VI wells, specifically for the geological sequestration of carbon dioxide. This well class was specifically created to store CO₂ in “non-usable” aquifers under a layer called caprock, which is a natural seal that prevents CO₂ from escaping back out into the atmosphere. Research has shown that CO₂ can be securely sequestered underground, particularly within deep and porous rock formations, lasting for thousands of years, and there are natural pockets of CO₂ that have existed for millions.

States have recognized the need to accelerate these types of investments and have elected to pursue primacy – the ability to process applications through the state’s environmental regulator rather than the federal Environmental Protection Agency (EPA) — for carbon storage wells.

States have long been critical partners in the UIC program. In each case, the state regulator must demonstrate standards that are no less stringent than the federal requirements. While the EPA has delegated primacy for at least one well class to a majority of states, so far, just three states hold Class VI primacy: North Dakota, Wyoming and Louisiana. The number of states with Class VI primacy is expected to steadily increase as applications from Arizona, West Virginia and Texas are all currently under review. Additionally, the EPA recently made award selections across 25 states and tribes to support state primacy applications as directed by the infrastructure bill.

North Dakota and Wyoming have demonstrated a strong track record of approving permits for carbon sequestration in a timely manner. Whereas the federal EPA process can take years, North Dakota and Wyoming have been able to issue permits in a matter of months, with Wyoming issuing its first three Class VI permits in December 2023 after 10 months of review.

As of January 2024,179 wells across 63 projects are currently under review at the EPA. Creating efficient timelines through state primacy will be critical to approving the deluge of new well permit applications currently sitting under review at the EPA. The long and uncertain timelines at the federal level represent a significant barrier to developing the scale of storage capacity required for future carbon management infrastructure.

Additional recommendations to accelerate carbon storage projects include:

• Clarifying CO₂ Storage on Federal Lands: In 2022, the Bureau of Land Management (BLM) took the first step to authorize Rights of Ways to allow potential carbon sequestration developers to access pore space. However, the current guidance is limited, and Congress would need to provide support in the form of legislation to ensure that agency actions are legal and direct agencies involved in CO₂ storage to clarify how CO₂ companies can access pore space.
• Clarifying storage in basalt formations: Though saline formations are a popular route for carbon sequestration, basalt is another known formation well-suited for carbon dioxide sequestration, sometimes referred to as “in-situ mineralization”. In-situ mineralization has been demonstrated as a viable option to store gigatons of CO₂ securely underground. The Wallula Basalt Project, in Washington state was the world’s first deep basalt supercritical CO₂ injection well. The project found mineralization was occurring on the order of years, much quicker than currently permitted Class VI wells. The current Class VI program allows for various types of long-term geologic sequestration, but to date, the EPA has not permitted a Class VI well that involves in-situ mineralization. In order to confidently pursue carbon storage projects in basalt formations, CO₂ operators require clarity that their technology would fall under the Class VI program and ensure they are eligible to claim the 45Q tax credit.
• CO₂ Pipeline R&D: Federal research agencies like the U.S. Department of Energy have an important role to play in the development and deployment of new technologies that can streamline the pipeline permitting process. These include advanced leak detection methods and tools, novel materials for pipeline coatings and liners, advanced approaches for retrofitting existing critical infrastructure, and next-generation sensor technologies and processes. Despite recent significant investments in federal R&D, more can be done to clarify and coordinate federal investments in this space.
• Unlocking CO₂ Transportation: There are currently over 5,000 miles of CO₂ pipelines in the United States. A 2020 Great Plains Institute report suggests that an additional 29,000 miles of CO₂ transport routes are necessary to deliver around 300 million tons of CO₂ in the near- and medium-term. However, in order to deploy carbon capture and sequestration (CCS) and carbon management projects at speed and scale, there needs to be clarification on the federal government’s role in facilitating CO₂ pipeline infrastructure. Currently, there is no federal siting authority for this type of infrastructure, which in many cases will require crossing state lines. There is broad concern that as more projects develop, groups opposed to carbon management technologies will seek to delay critical infrastructure. The initiative should consider strategies to ensure CO₂ pipeline infrastructure is not blocked by politically motivated states or local siting bans.

Combined with a growing interest in Class VI primacy applications from states, these policy recommendations will position carbon capture and storage for more breakthroughs in the year ahead. It will be critical for the EPA to demonstrate success by expeditiously reviewing state primacy applications to unlock projects and get more steel (and CO₂ emissions) into the ground.