review road storage permit knowledge dissemination 26 october 2012, oostvoorne

Review ROAD storage permit

Knowledge dissemination26 October 2012, Oostvoorne

Presentation

1. EU CCS Demonstration network - Case study storage permit ROAD

2. CCS Directive

3. Transposition CCS Directive in the Netherlands

4. Storage permit process

5. Addressing the key issues in the storage permit

6. Key challenges

1. EU CCS Demonstration network - Case study storage permit ROADAt the Cottbus knowledge sharing event, there was a fruitful

discussion with the projects actively sharing their experiences. Below is a list of the key findings that came from the regulatory session:

• financial issues, liability and responsibility; • the transposition of the EU Storage Directive 2009/31/EC (CCS

Directive) into national laws; and• Lessons learnt from the ROAD storage permitting process.

• There was a high level of concern among the members that the current manner of implementation of the CCS Directive presents a significant financial hurdle for attaining a feasible project;

• Using a risk-based assessment for the Financial Security (FS) reduces the requirements to a much more feasible level;

• All of the projects gave an update of the state of transposition of the CCS Directive in their countries. All are on track for full transposition, although some are doing so in a draft form;

• ROAD emphasised that the national transposition of CCS Directive should be as general as possible and that site-specific or storage-type specific issues should not be included;

• Regulation concerning civil liability is not addressed in the CCS Directive and could prove problematic if it is not addressed by member governments.

1. EU CCS Demonstration network - Case study storage permit ROAD

• The most important CCS legislation regarding the storage of CO2 comes from the Directive 2009/31/EC on the geological storage of CO2.

• There are several important requirements of this legislation leave room for interpretation by Member States.

• The case study by the ROAD project assesses key issues relating to the storage permit.

It must be noted that the storage permit application is filed by TAQA. TAQA already holds the current gas production permit and submitted the application and will be the storage permit holder and the storage operator. ROAD describe their view of the process from a full chain project view. The case study is drafted by the ROAD-project and therefore it only represents the views and opinions of the ROAD joint-venture parties.

2. CCS Directive

• CCS Directive 2009/31/EC: “a regulatory framework to ensure permanent containment of CO2 and, where this is not possible, eliminate possible negative effects and any risk to the environment and human health”

• CCS Directive introduces several key elements:- Plans (monitoring, corrective measures, closure, post closure)- Financial Security- Criteria for transfer responsibility- Financial Mechanism (transfer responsibility)

2. CCS Directive

• Interpretation of these elements is up to the Member States. The Guidance Documents (300 pages) give no sufficient clarity and are especially applicable on storage in aquifers

• Furthermore, regulation of civil liability is not addressed in the Directive, this is up to the Member States

• Other relevant legislation for regulating CCS in the Netherlands:• Long-term CCS-policy (CCS-obligation, cohesion with mining

activities, selection storage sites etc.). Proposals were expected in 2011, but are postponed (after demonstration projects)

3. Transposition CCS Directive in the Netherlands• Implementation CCS Directive in Dutch Mining Act:

1. Literal translation2. Contains no further interpretation of open standards3. Interpretation of open standards in storage permit

• ROAD fully endorses this approach:• Each CCS project has it’s own specific characteristics• Tailor made approach is essential

• Regulation should not restrict the development of CCS, keep legislation as general as possible, location-specific agreements in storage permit.

3. Transposition CCS Directive in the NetherlandsTransposition in:

• Dutch Mining Act. On 25 January 2011 the Parliament (except for the ‘Partij voor de Dieren’) voted in favor of the Amendement. Senate’s approval came in June 2011.

• Mining Decree and Mining Regulation. These frameworks give general rules for the process of the storage permit application. These amendments entered into force in September 2011.

• Storage permit. The permit applicant has to explicate how to give substance to financial security, monitoring, post-closure obligations etc.

4. Storage permit process

4. Storage permit process• June 2010:

• TAQA submitted application (under “old” Mining act)

• June – September 2011: • opening storage permit P18-4 for competition

• August 2011: • the draft storage permit was ready and sent to the EC

• December 2011 – February 2012: • publication draft storage permit under RCR and opportunity for public parties to

submit their opinions

• February 2012: • the EC adopted its first Opinion on the draft permit. Only minor changes in draft

storage permit

• Final and irrevocable permit will be published soon

4. Storage permit process• Although the storage permit is finalized and ready for publication, the

permit needs a detailed update before injection starts (2015):

• All plans (monitoring, corrective measures etc.) are not operational yet and must be finalized in 2014

• Additional studies will be carried out (for example: well and fault integrity studies)

• The Financial Security must be in place in 2014

• The minister must give his/her approval on these updates when the permit will be adjusted and Sodm and TNO (state advisors) will give their expert advice

• The Opinion of the EC “..confirms the suitability of the chosen storage location for the permanent storage of CO2 as was demonstrated by a detailed characterisation and assessment of the storage site and complex”. But the EC will be enabled in 2014 again to give a non legal-binding opinion on the update of the storage permit.

5. Addressing the key issues in the storage permitFour examples:

1.Financial Security (FS)

2.Transfer of responsibility

3.Financial Mechanism

4.Definitions storage site and storage complex

5. Addressing the key issues in the storage permit1. Financial Security (FS)

• Which activities are included in the FS?

• Calculate the amount of the costs (risk based approach)

• Are all available financial instruments accepted?

5. Addressing the key issues in the storage permit

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10-29

Monitoring

Contingency monitoring

Corrective measures

Abandonment well P18-4A2

Abandonment platform P18A

CO2-proof abandonment P15-9

Financial mechanism

EU-ETS

Subtotal

Contingency 20%

Total

5. Addressing the key issues in the storage permit2. Transfer of responsibility

•Key question: when and how can you prove that all available evidence indicates that the stored CO2 will be completely and permanently contained? Thorough elaboration of procedures and criteria in the storage permit?

•There are no reasons why the minimum period of 20 years has to lapse.

•Monitoring plan is considered to be sufficient to prove the complete and permanent containment.

•The operator must submit a report to the competent authority for approval of the transfer (after injection phase).

5. Addressing the key issues in the storage permit3. Financial Mechanism

•Monitoring period and cost limited to 30 years of monitoring

•Otherwise there will not be a transfer (operator pays for everything)

•Monitoring after handover is included in monitoring plan

5. Addressing the key issues in the storage permit4. Definitions storage site and storage complex

•It is clear that if CO2 migrates out of the reservoir (out of the storage site) into the complex, additional monitoring is required. The permit is granted for storing CO2 in the site, not in the complex.

•According to the law, only corrective measures need to be taken in case of leakage, meaning CO2 leaking out of the complex. Therefore, a width definition of the storage complex is preferable, especially for projects storing CO2 in aquifers.

•According to the EU ETS Directive in the occurrence of any CO2 leakage , the permit holder would need to purchase CO2 allowances equivalent to the volume of escaped CO2. The definition of ‘leakage’ is not the same as the definition for ‘leakage’ in the CCS Directive:

• only EUA’s must be purchased in case the CO2 leaks to the atmosphere. • No EUA’s need to be purchased in case the CO2 leaks out of the storage

complex, but remains trapped under the ground.

6. Key challenges

• Storage process:• Although the storage permit is finalized and ready for publication, the permit

needs a detailed update before injection starts• No 100% certainty before 2014• Second opinion EC in 2014

• Financial Security:• Which financial instrument (bank guarantee, balance sheet, insurance, etc.)

will be accepted in 2014?• Can increase (and decrease) over time

• Transfer of responsibility:• No certainty on period after abandonment to transfer• Financial Mechanism

6. Key challenges

• Civil liability• Amendment of Dutch Civil Act not published yet (how to qualify carbon

dioxide?)• Transfer of liabilities with transfer of responsibilities• Cap in time

• Volatility EUA’s• Costs for leakage are unknown• Speculation on EU ETS should not be part of CCS demonstration projects

Thank you for your attention.

Any questions?

review road storage permit knowledge dissemination 26 october 2012, oostvoorne

Documents

ccs directive ccs directive

eu storage directive

transposition ccs directive

ec ccs directive

ccs directive interpretation

storage permit process

storage permit application

storage permit holder