The first major offshore Carbon Capture and Sequestration (CCS) project is set to take place on Texas’ Gulf Coast. Carbon Sequestration is the process of injecting Carbon Dioxide (CO2) into geologic formations and trapping it in the pore space. Talos Energy Inc., a prominent offshore energy company in the Gulf of Mexico and Carbonvert, Inc., a developer of world-class CCS projects, have combined forces to create Bayou Bend CCS LLC (the Venture). On September 3, 2021, the Venture was awarded a lease by the Texas General Land Office to develop a large-scale CO2 sequestration hub on 40,000 acres of submerged state land near the industrial corridors of Beaumont and Port Arthur, Texas. The Venture executed the GLO lease documentation on March 11, 2022. Talos will act as the operator, bringing years of drilling and exploration experience to the table.
Talos is working alongside Core Laboratories N.V. to secure the proper CCS permits (Class VI Injection Well permits) from the Environment Protection Agency. This process requires subsurface analysis such as stratigraphic evaluation wells, reservoir core sampling, geological assessment, and rock and fluid sample analysis to determine if the reservoir can optimally secure the injected CO2. Core is a global leader in providing reservoir descriptions and services and has partnered with Talos for numerous completions of upstream subsurface projects. Once the EPA permits the project, the Venture can start sequestering the CO2 captured at nearby industrial facilities.
The EPA currently has the primary enforcement responsibility, or primacy, for overseeing permitting Class VI Injection Wells (wells used for the primary purpose of injection and sequestering CO2) in almost every state and ensuring that underground drinking water remains contaminate free, as required by the Safe Drinking Water Act. However, the Texas Railroad Commission is currently drafting an application for primacy, seeking to become the permitting agency for Class VI Wells in the State of Texas. Presently, the RRC only has primacy for Class I-V wells. There are currently only two state agencies that have primacy over Class VI Wells—North Dakota and Wyoming. As the system stands, Texas applicants must submit applications to both the EPA and the RRC, a process which has allowed the RRC to work alongside the EPA and gain valuable insight on the permitting process.
The injection of CO2 into reservoirs is not a new concept—in fact, it’s been successfully used for roughly 50 years in Texas. When injecting CO2 for Enhanced Oil Recovery production, the RRC permits the associated wells are permitted as Class II Injection Wells. Class II and Class VI Wells are largely differentiated by volume and pressure. Class VI Wells require a large reservoir that will remain undisturbed by any other activity, which must also be able to withstand the extreme pressure used when injecting the CO2. Any faults or cracks which could allow CO2 to escape must be considered during the initial reservoir analysis. Class VI Wells also require constant monitoring of total CO2 sequestration, formation dynamics, and mechanical integrity. Operators are subject to liability for any CO2 which escapes during the injection process and for 50 years after plugging and abandoning the well.
Talos is actively expanding its CCS portfolio via its subsidiary, Talos Low Carbon Solutions LLC. Talos is also working on a CCS project at the Freeport LNG facility, which will utilize land owned by Freeport LNG for sequestration, with a planned injection point less than one half of a mile from the point of capture, operable for a 30-year term. In Corpus Christi, Talos has partnered with Howard Energy Partners to evaluate 13,000 acres for a CO2 sequestration hub under a lease option agreement with the Port of Corpus Christi Authority. In Louisiana, Talos is partnering with EnLink Midstream, LLC to collect CO2 from industrial-scale admitters from Baton Rouge to New Orleans and sequester it in 26,000 acres located in Iberville, St. James, Assumption, and Lafourche Parishes. These projects will benefit surrounding industrial companies and convenient locations will keep midstream (pipeline) costs low.
We can expect all eyes on Talos and its partners during the upcoming years, and Talos’ success will likely lead to increased engagement in CCS projects across the industry. Kuiper Law Firm, PLLC specializes in oil and gas law; we will continue to monitor CCS projects as they develop. If you have any questions about the information in this article, do not hesitate to contact us.