American Oil and Gas Reporter - July 2023 - 76

SpecialReport: The CCS Journey
take longer to mature. In late June, Wood
said Denbury had one storage site secured
in the Rockies but nine in the Gulf Coast.
Denbury considers three primary factors
for storage site placement, Wood outlines.
" The main factor is great containment.
We need to know the CO2 we put in the
ground is going to stay where we put it
forever, " he details. " Usually, that entails
multiple shale barriers that are almost
impermeable and can prevent the CO2
from migrating.
" The next component we look for is
proximity to our pipeline system, " he
continues. " Because we have 900 miles
of pipeline throughout the Gulf Coast,
we can be choosy about where we acquire
dedicated storage, which lets us find areas
that have excellent geology and nearby
emission sources. "
The third component deals with pore
space ownership. According to Wood,
Denbury looks for storage sites with a
low number of pore space owners so it
can acquire more capacity with fewer
contracts. " Getting to a contract takes
time, " he mentions. " Before we acquire
a site, we have usually engaged with
the owners for several months. First,
we explain CCUS and how operations
will work. That generally leads to term
sheets outlining the agreement's commercial
aspects. Finally, we get to a definitive,
exclusive agreement with the
pore space owner. "
Wood says carbon storage contracts
mirror leases for oil and gas. " The pore
space owner gets an upfront bonus and
pre-injection payments, which resemble
an annual rental in a lease form. These
payments give us exclusivity until we
are ready to inject, " he describes. " Once
injection begins, we pay a specific
amount for every ton of CO2 that goes
into the ground. "
Getting To Injection
Before drilling and operating a Class
VI injection well, companies need to go
through a lengthy process, Wood notes.
" The initial permit application includes
several components, such as the steps the
company will take to monitor where the
CO2 goes, step-by-step emergency response
plans and proof of financial readiness, "
he clarifies. " However, the most critical
component is the reservoir evaluation.
We need to build geomodels and develop
reservoir simulations to predict where
CO2 will move through the formation
within the permit's area of review. "
One of the biggest concerns is legacy
wells. " As we develop dedicated storage
fields, we have to make sure wells that
have penetrated the storage site are plugged
to keep CO2 from improperly coming to
surface, " Wood stresses.
The need for Class VI wells is large
enough that Denbury has two teams working
in parallel on permits, Wood says,
adding that most permits cover several
wells. " Once we build the permits and
develop the full package, the agency responsible
for the review will evaluate the
permit, " he describes.
By default, the U.S. Environmental
Protection Agency has jurisdiction over
Class VI permits. However, North Dakota
and Wyoming have secured primacy, and
several states are applying for it, including
Texas and Louisiana.
" Once it verifies that the application
is complete, EPA or the state agency will
go through the permit more thoroughly, "
Wood relates. " The goal is to identify
risks, then confirm that the site will perform
as predicted and that we are prepared
to develop it. We expect this step to take
about a year. "
After it is satisfied, the agency will
award a permit to construct. " This is not
a permit to inject, " Wood emphasizes.
" It's simply a permit to drill the first Class
VI well. Class VI wells resemble the
Class II wells used for CO2 EOR, but
there are a few differences. For example,
we cement casing all the way to surface. "
Normally, companies would need to
take cores from the Class VI well and
evaluate them, a process that Wood says
can take six months. " To save time and
validate our models, we drill stratigraphic
test wells and get cores in parallel to applying
for a permit, " he contrasts. " We
hope that will let us accelerate this step. "
As of late June, Denbury had drilled
one stratigraphic well. " We expect to
drill a few more this year, " Wood comments.
" The stratigraphic wells provide
cores for our storage zone, which we already
may have from historic oil and gas
wells. It's far less common to have cores
from the containment zone, and those
are vital; we want to understand the capillary
pressure, porosity and permeability
of the shale barrier to confirm that it is
highly competent to contain the CO2. "
After the agency has seen the core
Denbury CO2 pipelines
Stationary CO2 emissions
Saline aquifer CO2 storage capacity
low to high
Thanks to favorable geology and ample emission sources, the Gulf Coast and Rocky
Mountains will play key roles in the United States' carbon capture and storage market.
Denbury says the pipeline networks it operates in both regions will help it provide
efficient transportation and reliable sequestration to industrial facilities.
76 THE AMERICAN OIL & GAS REPORTER
evaluation, Denbury will do a series of
injection tests, Wood continues. " We expect
drilling the well and performing the
injection tests to take a couple months, "
he comments. " Once the injection tests
are done, EPA will decide whether to
award an injection permit. At that point,
we will install additional pumps, flowlines
American Oil and Gas Reporter - July 2023

Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2023
