Bottleneck Grows for CCS Projects Seeking EPA Approval

Houston – May 31, 2024 | Naomi Klinge (RBN Energy)Caliche Less than a handful of Class VI wells have been permitted by the Environmental Protection Agency (EPA) nearly two years after the 45Q tax credit for carbon capture and sequestration (CCS) was enhanced and expanded under the Inflation Reduction Act (IRA), but there's a growing backlog of projects working their way through the approval process, with nearly 40% of applications filed within the last 12 months.

Even though regulations around Class VI wells were added in 2010, few applications have been approved by the EPA in that time. Just four wells have reached active status, two at an Archer Daniels Midland site in central Illinois (one of which is in its post-injection phase) and two in west-central Indiana operated by Wabash Carbon Services. The wells, which received final permitting in January, are in their pre-operation phase. In addition, 11 wells have been approved in states that have primacy over the permitting process — Louisiana, North Dakota and Wyoming.

There are a lot more CCS projects in the pipeline, however. The EPA’s online permit tracker shows 47 projects, accounting for 138 total wells, under review. Seven wells are in the Completeness Review stage (far-left column in graphic below), the first step in determining whether the application is complete. The most recent proposal to move through that stage is the Caliche Beaumont Sequestration Project. Caliche reached an agreement with the city of Beaumont, TX, last year to lease subsurface areas under 4,000 contiguous acres and estimates the project would be able to sequester at least 30 million MT of carbon dioxide (CO2) emissions. It is one of 13 CCS projects (totaling 34 wells) in Texas moving through the EPA’s approval process, with more than 70% of the applications filed within the last 12 months.

There are 127 wells in the next phase, Technical Review, during which the project’s plans for construction and operation are evaluated. No wells are currently awaiting a draft permit or going through a public comment period. Final permits (far-right column) are pending for four injection wells to be operated by Carbon TerraVault at the Elk Hills Oil Field west of Bakersfield, CA.