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EERC-CCS Projects
- 2. Energy & Environmental Research Center (EERC) FIRST WAVE OF INCENTIVE-DRIVEN CCS PROJECTS PERMITTED IN NORTH DAKOTA, U.S. Carbon Capture Summit October 19th - 20th , 2022 Josh Regorrah Permitting and Policy Specialist © 2022 University of North Dakota Energy & Environmental Research Center.
- 3. REGULATORY FRAMEWORK DEVELOPMENTACROSS STATES
- 6. CHALLENGES TO CCUS DEPLOYMENT REGULATIONS AND PERMITTING LONG-TERM LIABILITY ECONOMICS TECHNOLOGY PROOF OF CONCEPT INFRASTRUCTURE DEVELOPMENT
- 7. ADAPTIVE MANAGEMENT APPROACH TO PROJECT IMPLEMENTATION • Staged approach to manage uncertainty and inform investment strategy • Implementation can be accelerated – Higher investment needed at lower levels of confidence – Concurrent vs. sequential development – Balance financial and technical risk ♦ Site qualification ♦ Permitting ♦ Incentive programs and revenue ♦ Investment ♦ 45Q start of construction
- 8. Generalized Timeline to Implement Geologic CO2 Storage Operations Drill and construct injection and monitoring wells; install infrastructure; update permits Investment & Construction Regulatory Review of Permit Project Design & Permit Application Feasibility Baseline Monitoring AOR (legacy wells) Financial Assurance Unitization & Project Exhibits Qualify Site/Project Design Specifications FEED 45Q Start Construction by 01/01/2033 File Permits Receive Permit Approvals Storage Facility Defined No. Injection Wells No. Monitoring Wells Go/ No-Go Acquire pore space and negotiate access agreements Screening Go/ No-Go FID Go/ No-Go (3-6 months) (9-18 months) (6-18 months) (7-12 months +) Legacy Data Acquire Site-Specific Data Compliance with IRS 45Q Tax Credit Program: EPA-Approved GHGR Subpart RR MRV Plan Projects that Qualify for CARB LCFS Markets:: CARB LCFS Permanence Protocol Welll Logs Core Analysis Sampling/Testing Seismic
- 9. CO2 Point Sources • Ethanol production • Coal-fired power generation • Gasification • Fertilizer production • Natural gas processing • Natural gas power generation • Industrial processes Capture/Storage Models • Source/sink-matched • Source aggregation and storage hub • Capture hub with distributed storage • Hybrid storage with enhanced oil recovery, minerals recovery, and/or other utilization
- 10. CCS PROJECTS IN NORTH DAKOTA Broom Creek Formation: >10 billion tons CO2 storage potential RTE CCS: ~18 million tons CO2 (if injecting up to 100 years) Broom Creek Formation: >10 billion tonnes CO2 Storage Potential • Red Trail Energy CCS: ~3 million tonnes of CO2 total ~100,000 tonnes per year • Project Tundra: ~77 million tonnes of CO2 total ~4 million tonnes per year • Dakota Gasification Company: ~26 million tonnes of CO2 total ~3 million tonnes per year Project Tundra Dakota Gasification Company
- 11. GEOLOGIC STORAGE PERMITS IN NORTH DAKOTA Image credit – EERC Red Trail Richardton Ethanol Broom Creek Storage Facility No. 1 – Approved October 19, 2021 CarbonSAFE North Dakota Storage Facility – Approved January 21, 2022
- 12. RED TRAIL ENERGY, LLC Richardton, ND 12 23 millionbushels of Corn 46 Employees 233,000 tons of Coproducts 64 milliongallonsof Ethanol Approximately $350 million of EconomicImpact Over $149 million in Gross Sales Coproducts Support 220,000 head of Cattle 928 Investors Corn Oil Sold for Biodiesel Corn-Based Biorefinery
- 13. CCS Components & Major Activities 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Characterization & Monitoring* Capture System Permits & Wells CCS Components & Major Activities 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Characterization & Monitoring* Capture System Permits & Wells Capture Bids Seismic Data Acquisition Near-Surface Monitoring (start) Drill RTE-10 Injection Well** Well Design/Permit Application (start) *Includes modeling/simulation updates with major data acquisition events **Stratigraphic test (coring, testing, logging) Capture Start Injection Start Operational Monitoring Capture Construction (start) Core, Testing, & Downhole/ Baseline Monitoring 13 Contract Capture System Drill RTE-10.2 Monitoring Well** Baseline Monitoring RTE CCS ACTIVITES TIMELINE 1st ND Class VI APPROVED Class VI Application
- 14. RTE CCS SITE
- 16. CCS Components & Major Activities 2022 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Characterization & Monitoring* Capture System Permits & Wells CCS Components & Major Activities 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Characterization & Monitoring* Capture System Permits & Wells Environmental Information Volume (EIV) Drafted Seismic Data Acquisition Near-Surface Monitoring (start) Drill J-LOC1 Well Design/Permit Application (J-ROC and J-LOC1) *Includes modeling/simulation updates with major data acquisition events **Stratigraphic test (coring, testing, logging) EIV Submitted to the DOE Core, Testing, & Downhole/ Baseline Monitoring 16 Baseline Monitoring PROJECT TUNDRAACTIVITIES TIMELINE Drill J-ROC1 Class VI Permits Submitted Class VI Permits Approved Permit to Drill (Injection wells)
- 17. Milton R. Young Station CarbonSAFE Phase III Strat Test (J-ROC1) 1 mile CarbonSAFE Phase II Strat Test (BNI-1) J-LOC1 Well (Potential Monitor) Facility Coal fired power plant which can supply 250 MW (Unit 1) and 455 MW (Unit 2) Tonnage ~4 million tonnes per annum Injector Design Three CO2 injectors into two storage reservoirs: the Broom Creek and the Dead Regulatory Status (NDIC) Class VI Permit approved PROJECT TUNDRA SITE
- 18. DAKOTAGASIFICATION COMPANY GREAT PLAINS CO2 SEQUESTRATION PROJECT • CO2 Capture Began in 2000 • 40 MMt Captured • 26 MMt over an ~12-year injection period • First project to implement a pattern injection approach to optimize storage and project footprint • Pending state approval
- 19. STORAGE FACILITY PERMIT North Dakota CO2 Storage Facility Permit (Class VI) Checklist Pore Space Access Geologic Exhibits Geologic Model and Simulations Area of Review (AOR) Supporting Plans Testing and Monitoring Plan Postinjection Site and Facility Closure Plan Emergency and Remedial Response Plan Worker Safety Plan Well Casing and Cementing Program Plugging Plan Financial Assurance Demonstration Plan Injection Well and Storage Reservoir Information 19
- 20. GEOLOGIC EXHIBITS North Dakota CO2 Storage Facility Permit (Class VI) Checklist Storage Reservoir Minerology Mechanisms of Geologic Confinement Geochemical Information of the Injection Zone Confining Zones Upper Confining Zone Additional Overlying Confining Zones Lower Confining Zone Geomechanical Information of Confining Zone Faults, Fractures, and Seismic Activity Potential Mineral Zones 20
- 21. STORAGE FACILITY PERMIT TIMELINE App Submitted Draft Permit Reg. Review (60 days) Landowner Mineral Notice (45 Days) Public Comment Period (30 days) Public Hearing Public Comment Response Final Permit Three Parts 1. Geologic Storage 2. Amalgamation 3. Financial Assurance Response to significant comments Written comments on draft permit
- 22. INTEGRATING PERMITTINGAND INCENTIVE PROGRAMS 22 LCFS Pathway Certified CI Values CO2 Credits North Dakota CO2 SFP (Class VI) California CCS Protocol: CCS Permanence Certification MRV Plan CCS Project Certification Sequestration Site Certification EPA Greenhouse Gas Reporting Program (GHGRP) Subpart Resource Recovery (RR) IRS Section 45Q CCS Tax Credits [+ 3rd party reviews] [+ 3rd party verification] Enhancement of Carbon Dioxide Sequestration Credit (a.k.a. Section 45Q): Approved EPA Monitoring, Reporting, and Verification (MRV) Plan Low Carbon Fuel Standard (LCFS) with CCS: Certified Carbon Intensity (CI) Value + CCS Protocol Certification
- 23. CCS INCENTIVES • No sales tax on capture- related infrastructure • No sales tax on CO2 sold for EOR • Coal conversion tax: tax reduction with CO2 capture (up to 50%) • No sales tax on construction of pipeline • Property tax-exempt for 10 years (equipment) • No sales tax on CO2 EOR infrastructure • 0% extraction tax for 20 years for tertiary incremental recovery • Production tax still applies • Projects beginning construction before January 1, 2033, can claim credits for 12 years after operations begin. • Tax credits claimed by the taxpayer capturing the emissions or transferred to operators of CO2 EOR projects. • Tax credit for CO2 stored in a qualified EOR project (10-year ramp-up to a maximum of $60/tonne in 2033). • Tax credit for CO2 stored in a saline formation (10-year ramp-up to a maximum of $85/tonne in 2033). 45Q Tax Credits • Credits trading price range $218 - $64 per ton (October 2022) West Coast LCFS Markets North Dakota CCUS Incentives Image Credit – EERC EPA GHGRP Subpart RR MRV Plan (IRS 45Q) Monitoring Area Delineation Leakage Pathways Evaluation Mass Balance and Sequestration Volumes
- 24. The adaptive management approach developed at the EERC has helped guide projects towards successful CCS projects. CCS projects are incentivized to operate based on a variety of voluntary markets each with their own regulatory requirements. The risk of a project is contingent on financial scope and expected timelines. BALANCING INCENTIVES AND TECHNICAL RISKS
- 25. Lessons Learned: Outreach Open houses Results of geologic characterization and monitoring provided to landowners Webpage with FAQ Visibility in the community Frequent engagement and briefings to regulators and county/city commissioners Alternative approaches to in-person outreach activities – Informational videos, virtual question- and-answer forums, and a series of media/materials releases, etc. 25 Images Credit: Energy & Environmental Research Center
- 26. Energy & Environmental Research Center University of North Dakota 15 North 23rd Street, Stop 9018 Grand Forks, ND 58202-9018 www.undeerc.org 701.777.5000 (phone) 701.777.5181 (fax) Josh Regorrah Permitting and Regulatory Specialist jregorrah@undeerc.org 701.777.5346 (phone) THANK YOU Critical Challenges. Practical Solutions.