Insights and Commentaries

Methodology for Carbon Capture and Storage Projects in Oil and Gas Reservoirs

15th October 2015

Topic(s): Carbon capture, law and regulation, Policy, use and storage (CCUS)

The American Carbon Registry (ACR) has approved a Greenhouse Gas Emissions Reduction Methodology for Carbon Capture and Storage Projects​ for the measurement, monitoring, reporting and verification of greenhouse gas emission reductions associated with capture and storage of CO₂ in geologic formations. This methodology was developed by Blue Strategies LLC with the primary authors being Mahesh Gundappa and Ray Hattenbach. The Methodology was accepted for implementation by the ACR in April 2015.

Carbon capture and storage

Carbon capture and storage (CCS) is the separation and capture of carbon dioxide (CO₂) from the atmospheric emissions of industrial processes or the direct air capture (DAC) of atmospheric CO₂ and the transport and safe, permanent storage of the CO₂ in deep underground geologic formations.

In CCS, CO₂ that would otherwise have been emitted into the atmosphere or that currently resides in the atmosphere is captured and disposed of underground. With the potential to prevent CO₂ from large-scale industrial facilities from entering the atmosphere or to remove CO₂ currently residing in the atmosphere, CCS is a powerful tool for addressing potential climate change. Geologic storage is defined as the placement of CO₂ into a subsurface formation so that it will remain safely and permanently stored. Examples of subsurface formations include deep saline aquifers and oil and gas producing reservoirs.

The methodology outlines the requirements and process for CCS Project Proponents that store CO₂ in oil and gas reservoirs to qualify their projects for carbon credits under the American Carbon Registry® (ACR) program. The methodology is based on the accounting framework developed by the Center for Climate and Energy Solutions (CCES - formerly the Pew Center on Global Climate Change).

Eligible projects

Eligible projects under the methodology are those that capture, transport and inject anthropogenic CO₂ during enhanced oil recovery (EOR) operations into an oil and gas reservoir located in the US or Canada where it is stored.

Projects are only eligible if there is clear and uncontested ownership of the pore space within the target geologic formation. Safety and the security of carbon storage are addressed within the methodology through a Risk Mitigation Covenant. Carbon credits issued under the ACR methodology shall be subject to invalidation unless the Project Proponent has filed a Risk Mitigation Covenant and secured the consent of surface owners to the filing of a Risk Mitigation Covenant or provided an alternative risk mitigation assurance acceptable to ACR. Additionally, Project Proponents and EOR operators shall obtain the required surface use agreements for the duration of the Project Term to conduct post-injection monitoring activities and, if necessary, remediation.

With respect to the capture of CO₂, eligible CO₂ source types include, but are not limited to:

• electric power plants equipped with pre-combustion, post-combustion, or oxy-fired technologies
• industrial facilities (for example, natural gas production, fertiliser manufacturing, and ethanol production)
• polygeneration facilities (facilities producing electricity and one or more of other commercial grade byproducts)
• DAC facilities

Eligible CO₂ transport options include moving CO₂ by barge, rail, or truck from the source to the storage field, or moving the CO₂ in a pipeline.

Eligible geological storage of CO₂ for an EOR project must, at minimum, utilise Class II wells in the United States (US) and similar well requirements in Canada. Eligible projects include those where CO₂ is injected:

• to enhance production from hydrocarbon producing reservoirs that have previously produced or are currently producing through the use of primary and secondary recovery processes
• to produce from reservoirs that have not produced hydrocarbons through the use of primary or secondary recovery processes but have some potential for hydrocarbon recovery through CO₂ injection in the reservoir

Project Proponents will have to demonstrate that the CO₂ being captured and stored is surplus to regulations and the volume exceeds a practice-based performance standard. Currently, the capture of anthropogenic CO₂ from eligible sources and its use in EOR operations is considered to meet the performance standard criteria. This is based on the low penetration rates of this practice in industry.

Alignment with current and future regulations

If regulations are enacted requiring CCS, projects could still qualify under the ACR methodology. For example, in August 2015 the US Environmental Protection Agency (EPA) has set standards to limit CO₂ emissions from new, modified, and reconstructed power plants. New coal-fired power plant operators could meet these standards by implementing partial CCS (EPA estimates 20% capture would be required) as part of their carbon reduction strategy. If operators reduce their emissions over-and-above the limit through CCS, they could potentially benefit from monetizing their excess emission reductions under the ACR methodology.

Emission reductions from the project are calculated as the difference between baseline emissions and project emissions. Baseline emissions reflect CO₂ emissions to the atmosphere in the absence of the project. Project emissions include emissions of CO₂, CH₄ and N₂O that occur during the capture, transport, and storage processes. Guidelines for developing baselines and emission sources as well as detailed calculation procedures are included in the methodology.

Monitoring

To assure the injected CO₂ remains in the subsurface and does not leak to the atmosphere, the methodology also provides guidelines for developing a monitoring, reporting, and verification (MRV) plan. MRV plans need to be tailored to site-specific geologic conditions and operational considerations.

A typical monitoring plan would include rigorous site characterisation and a cost-effective monitoring strategy that includes a combination of flow modeling and monitoring tools that demonstrate effective retention of CO₂ during the injection and post-injection periods. A minimum post-injection monitoring period of 5 years is required. The duration of post-injection monitoring shall be extended beyond 5 years if no leakage cannot be assured at the end of the 5-year period. In this case, the Project Term will be extended in two-year increments and monitoring shall be continued until assurance can be reasonably established that no leakage will occur.

Insurance

To mitigate the risk of unexpected release of stored CO₂ to the atmosphere, project proponents are required to purchase insurance designed to cover damages associated with reversals. In lieu of insurance, Project Proponents may opt to create a Reserve Account. Each year the Project Proponent would deposit ten percent of the project’s emission reductions in the Reserve Account. In the event of reversals, a debit shall be reconciled by the Account by retiring equivalent emission reductions from the Reserve Account. To provide flexibility, contributions to the Reserve Account need not come from the project itself whose risk is being mitigated. A Project Proponent may make its contribution of any type and vintage in the Reserve Account.

Back to Insights