U.S. Gearing Up For Offshore Storage By Establishing Rules Of The Game

Emily Pickrell, UH Energy Scholar

We are still in the early days, but using offshore storage wells and basins to store the carbon captured from emissions and the atmosphere is building momentum.

The technologies for removing carbon emissions are becoming more economically feasible, and the government has stepped up with legislation to speed it up. The most recent provisions in the Inflation Reduction Act are a good example. Carbon capture projects are getting a huge push forward by the Biden administration. They are, for example, the big winners in the $369 billion climate bill recently passed by Congress.

The next question: Where will all of this captured carbon will be stored?

Onshore geological (underground) storage is the obvious first stop. It has been in use in the oil industry for years and is an integral part of business for companies like Occidental PetroleumOXY
, which uses carbon dioxide injection as a method to increase crude oil recovery. This practice is often termed as CO₂ enhanced oil recovery, or CO₂ EOR.

The geological formations and depleted reservoirs in offshore waters like the Gulf of Mexico also hold tremendous promise as future storage sites. The same porous geology of the U.S. Outer Continental Shelf that has made it a great place to drill for oil and gas also makes it highly favorable for storing carbon.

Offshore storage also provides the ability to reuse the extensive offshore infrastructure. More importantly, it also allows companies to be able to set up storage next to major emission centers, such as refineries and industry, without having to worry about transporting the carbon back to onshore facilities.

The government and the industry are beginning to take the necessary steps to take advantage of offshore storage sites.

Successfully storing carbon offshore means doing so safely. And that means a set of regulations with rules of the game for all players. It ensures that all operators consistently apply the same safety practices that can be effectively monitored.

Drafting the initial set of safety regulations is the task of the U.S. Department of Interior’s Bureau of Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE). They have a mid-November deadline to do so, according to the Biden administration’s 2021 Infrastructure Investment and Jobs Act. It gave the Secretary of the Interior the authority to grant leases for offshore carbon storage in U.S. federal waters.

The end game for the new rules is clear.

These offshore regulations need to make carbon storage safe for the public, which will provide confidence in developing the sector further. To do so, there need to be parameters to ensure that storage sites are carefully chosen and sufficient monitoring is conducted to make sure the carbon remains safely sequestered.

Existing rules for onshore carbon storage, overseen by U.S. Environmental Protection Agency, or EPA, have worked well and can provide some guidance. The focus of its rules are to ensure the protection of underground sources of drinking water. Even so, many elements of these regulations have a useful overlap.

Like those for offshore exploration and production, the new regulations are expected to be designed around best practices. The offshore regulatory agencies, BOEM and BSEE, have already proposed a list of these management practices for offshore carbon sequestration.

Both the list – and the practices – are similar to what energy companies already do for offshore oil and gas operations. When drilling for hydrocarbons, companies spend millions to ensure that they understand the geology and the characteristics of the site. They do so by collecting and analyzing extensive geologic data to determine with great precision the potential of a geological formation thousands of feet below the surface.

These same techniques are well-suited for offshore carbon storage.

“It is applied to slightly different circumstances, but you still need to understand the areal and vertical structure of these reservoirs and how the sealing mechanisms – shale layers above and below, fault seals, etc. – can effectively sequester the fluids in them for centuries,” said Ram Seetharam, a former Exxon executive now working on affordable carbon capture and storage solutions. “You need to be able to predict where the carbon dioxide is going and be confident there are not pathways that will let it be released at the surface.”

It also means that the activities the regulations are expected to make mandatory – identifying risks through a risk management plan, monitoring these risks and reporting their progress – are already practiced by the industry in their drilling and production operations.

There are, of course, additional financial issues to address, such as how to handle any liability issues that arise in case of a storage malfunction, and how to decommission the sites if and when necessary.

Those who recall the BP Deepwater Horizon accident fear a big uncertainty: the safety risks of offshore storage. There are several reasons why offshore carbon storage is significantly less risky than an offshore oil platform or subsea drilling operation. The most important reason is that even in a worst-case scenario, a carbon dioxide leak is not nearly as toxic or dangerous for the environment as a major oil spill.

“There are not any combustible materials to deal with,” Seetharam said. “The explosion risks are significantly lower than when dealing with hydrocarbons.”

But it still leaves the human health question: While CO₂ is naturally present in the air and is not harmful to health at low concentrations, a CO₂ plume could be enough to kill a person in direct contact. For this reason, the British government has raised concerns that carbon storage has the potential to create a major accident hazard, given a devastating leak.

For this very reason, many experts view offshore storage as preferable to storage near population centers. At the same time, these safety concerns are why it is such good news most of the companies looking at offshore carbon storage bring decades of experience.

Several of the largest energy companies that operate in the Gulf of Mexico have already partnered to develop the Northern Lights project, an offshore carbon storage project in the North Sea and off the coast of Norway. This project is currently scheduled to go into operation in 2026. The companies involved – BP, Eni, Equinor, Shell and Total – are players in the Gulf of Mexico as well and said to be looking for offshore storage opportunities.

Coming up with rules that are sufficient to protect us while still encouraging a much-needed service in the name of protecting the climate is a heavy lift for the regulators. But these new regulations can’t come soon enough.

Emily Pickrell is a veteran energy reporter, with more than 12 years of experience covering everything from oil fields to industrial water policy to the latest on Mexican climate change laws. Emily has reported on energy issues from around the U.S., Mexico and the United Kingdom. Prior to journalism, Emily worked as a policy analyst for the U.S. Government Accountability Office and as an auditor for the international aid organization, CARE.

UH Energy is the University of Houston’s hub for energy education, research and technology incubation, working to shape the energy future and forge new business approaches in the energy industry.