The Government of Canada adopted the Canadian Net-Zero Emissions Accountability Act in 2021 that sets an aggressive emissions reduction target of 40 to 45 percent below 2005 levels and net-zero by 2050, followed by the introduction of the 2030 Emissions Reduction Plan on March 29, 2022 for achieving those legislative requirements. In that regard, the net-zero transition exposes all sectors of the economy to disruption, and along with the upstream oil and gas sector, are facing increased scrutiny of their commercial operations, including environmental, social and governance objectives.
The International Energy Agency has identified carbon capture, utilization and storage (CCUS) as a critical component to achieving net-zero goals. In comparison to other technologies, CCUS offers a unique value proposition as it can reduce emissions directly from commercial operations and also remove emissions from the atmosphere. Critical to the success of CCUS is ensuring that carbon dioxide (CO2) is permanently stored within geological formations. Policies and procedures for the measurement, monitoring and verifications (MMV) of injected CO2 are key to establishing permanent storage. Alberta has relatively advanced requirements for MMV and actual experience on the use of MMV for commercial scale projects.
With an abundance of suitable geological formations for carbon sequestration, the Province of Alberta has developed significant expertise in CCUS activities, including with respect to MMV plans. Such expertise was demonstrated on March 8, 2021, when the Government of Canada announced the formation of the Alberta-Canada CCUS Steering Committee that would leverage Alberta's early CCUS leadership.
In 2010, the Government of Alberta amended the Mines and Minerals Act to reserve pore space in the subsurface for carbon sequestration activities, followed by enactment of the Carbon Sequestration Tenure Regulation (CSTR) to regulate such activities. Subsequently, the Government of Alberta supported the development of CCUS infrastructure including a commercial-scale CCUS project to address carbon emissions – the Shell Canada Energy Quest Project (Quest Project), which is designed to capture one million tonnes of CO2 emissions per year. According to the 2020 Annual Summary Report released by Shell in 2021 for the Quest Project (Shell Quest Report), the Quest Project surpassed over five million tonnes of sequestered CO2 since beginning injection activities in 2015.
MMV plans must be filed with and approved by the Minister of Energy. The Alberta Energy Regulator (AER) will also consider the MMV plan when reviewing applications and considering approvals for the development of a CCUS project.
A fundamental and necessary component to any proposed carbon sequestration operation is establishing and implementing a robust MMV plan throughout an operational lifecycle of a CCUS project. The purpose of an MMV plan is to confirm and verify that CO2 is being successfully captured, injected and permanently stored and stable within the injection formation. An MMV plan also provides for early warning for leaks and for migration of CO2 in the subsurface that is inconsistent with original design and containment modeling expectations.
An MMV plan requires the collection and analysis of data to optimize sequestration operations, as well as ensuring reliability in measuring the volumes of CO2 injected, monitoring the migration and sequestration of the CO2 plume, and managing the integrity of the geological formation. Under the CSTR, an MMV plan must also sufficiently demonstrate that the proposed CCUS project will not interfere with the recovery of other minerals.
The CSTR authorizes two types of dispositions for sequestration activities, both of which require approval of an MMV plan. The first is an evaluation permit, which allows a proponent to drill wells for evaluating the suitability of geological formations for carbon sequestration.
The second is a sequestration lease, which allows a proponent to drill wells to conduct evaluation and testing for the purpose of carbon injection and sequestration. The CSTR imposes additional requirements to an MMV plan for a sequestration lease from that of an evaluation permit: the MMV plan must be submitted in greater detail for approval, an annual report must be provided to the Government of Alberta regarding findings and observations from the leaseholder's MMV activities, and the MMV plan must be renewed and approved every three years.
Under section 19(3) of the CSTR, a successfully proposed MMV plan will also be a necessary requirement for the ultimate transfer of long term liability to the Province of Alberta after a closure certificate is issued.
The AER has several directives setting out the requirements for CO2 transport and injection. The review and approval process associated with the Quest Project further provides some valuable insight as to what information should be presented in an MMV plan and its assessment by the AER.
By way of background, from the date of initial application to the issuance of decision, the regulatory approval process was approximately 19 months including a public hearing. Initial applications for the Quest Project were filed in December 2010 with the Energy Resources Conservation Board (ERCB), now formerly established as the AER. There were two rounds of supplemental information requests and a four-day public hearing, which were followed by a decision issued by the ERCB on July 10, 2012 (Quest Decision).
One of the critical findings in the Quest Decision was the importance of an MMV plan for preventing serious impacts to the environment. The ERCB viewed Shell's MMV plan as extremely important to every operational phase of the Quest Project and equally important to its post-operational closure and post-closure phases.
The chief concern raised in the public hearing was the proper containment of the injected CO2. However, the ERCB determined that the risk of a containment breach was extremely low, particularly due to Shell's MMV plan for early detection and proposed measures to implement for mitigating any potential impacts of a containment breach.
The ERCB accepted Shell's proposed process and that the MMV plan would be adaptive, flexible and responsive to the operational phases of the Quest Project. In approving Shell's MMV plan, the ERCB considered the collection of extensive baseline data and proposed monitoring groundwater chemistry, wellbore integrity, general containment, the extent and movement of the CO2 plume, the pressure front and ground heave, surface leakage with periodic reporting to the Government of Alberta and the ERCB.
The ERCB also included several conditions, such as requiring annual reporting of operational performance and immediate reporting of loss of containment. Thus, approval of the Quest Project focused on compliance with the MMV plan and reporting of operational performance to ensure containment of CO2, compliance with regulations, and conformance with model predictions and preliminary studies. According to the Shell Quest Report, the MMV data indicated no migration of the sequestered carbon outside of the Basal Cambrian Sands injection reservoir and no insurmountable operational challenges to date.
On May 30, 2022, the AER released a revised draft version to Directive 065 (Draft Directive 065) that proposes details the AER will consider when assessing CCUS project applications and subsequent development approvals (feedback accepted until July 10, 2022). Draft Directive 065 provides information on requirements for different aspects of a CCUS project application, including containment of the maximum expected fluid plume, safety of the CCUS project operations, and reporting.
The Request for Full Project Proposals for CCUS Hubs (CCUS Hub RFPP) recently provided by the Government of Alberta on March 3, 2022, does offer further insight as to what the required information for a strong MMV plan. It indicates that an MMV Plan should contain information with regard to the project execution plan and the project design detail. In addition, to reduce risks and mitigations, the MMV plan should identify key project and sequestration risks as well as anticipate mitigation measures. The CCUS Hub RFPP also adds that an MMV Plan should have an initial assessment including information such as the anticipated capacity targets and the potential impacts to the activities of other subsurface pore space users as well as the impact on the biosphere, geosphere, atmosphere and hydrosphere. In addition, the MMV Plan should include information with regard to the project plan, timeline, modelling and site characterization. Finally, an assessment of the MMV techniques and technology should also be included.
After release of the CCUS Hub RFPP, on March 16, 2022 the Government of Alberta released a document that further provided guidance to what information should be presented in an MMV plan (MMV Guidelines). The MMV Guidelines specifies a number of key principles, such as regulatory compliance, ability to monitor the four spheres (geosphere, hydrosphere, biosphere and atmosphere), risk-based and adaptive, and use of best available technologies economically available. The MMV Guidelines presents the required criteria of an MMV plan for each operational lifecycle of a CCUS project: all project stages, pre-injection (for evaluation permit), pre-injection (for a sequestration lease), operation/injection, and closure period.
MMV plans will continue to be a key component of applications for future CCUS projects necessary to obtain regulatory approvals. The views of the ERCB (now the AER) in the Quest Decision are instructive for assessing issues that may be raised in respect of submitted MMV plans. The Shell Quest Report and previously released annual reports are instructive for assessing operational issues that MMV plans should consider proactively addressing. The recently released CCUS Hub RFPP, MMV Guidelines and Draft Directive 065 exemplifies the importance of submitting a strong MMV plan for approval of a CCUS project.During the operational phase of a CCUS project, MMV plans will confirm CO2 is being contained in a manner consistent with original designs, regulatory approvals and other legal requirements, including compliance with environmental and regulatory laws. Ultimately, the MMV plan will support closure of a CCUS project and long-term liability transfer.