Biden Grants Louisiana Lead Role in Vetting Carbon Wells

(Bloomberg) -- The Biden administration approved Louisiana’s bid to take the lead role in vetting and overseeing carbon dioxide storage wells in the state, a blow to environmentalists and some local residents who battled the plan. 

The Environmental Protection Agency formally approved Louisiana’s primacy over the so-called class VI storage wells and inked an agreement with the state designed to blunt the impact on communities most vulnerable to pollution. 

The move promises to accelerate the permitting and construction of wells to store carbon dioxide captured from oil refineries, ethanol plants and other industrial facilities, after expanded subsidies in last year’s climate law supercharged interest in the activity. 

Carbon capture advocates have sounded the alarm about a growing backlog of carbon dioxide injection well applications, with 172 now pending before the EPA. They argue that when states take the lead role over the wells, rather than a small pool of overburdened EPA staff, they can expedite reviews and put a broader pool of engineers to work scrutinizing individual projects.

At stake, supporters argue, is the reach of a nascent carbon capture industry that’s essential to stem greenhouse gas emissions and constrain global temperature rise. Carbon capture technology also is the cornerstone of a proposed EPA regulation meant to throttle greenhouse gas emissions from power plants. 

EPA Administrator Michael S. Regan stressed that the decision was made under Safe Drinking Water Act obligations to grant states primacy over the wells if they meet requirements for approval. Nevertheless, he said, the EPA was taking steps to ensure the Louisiana well oversight “embeds environmental justice at its core.”

Under a new memorandum of agreement, the state will be obligated “to protect communities from any current or future environmental hazards associated” with the carbon dioxide storage wells, Regan said. “It will also adhere to clear federal requirements under the Safe Drinking Water Act that ensure that injection wells do not contaminate underground sources of drinking water.”

The move has implications for a number of companies pursuing carbon capture projects, including Exxon Mobil Corp., Shell Plc and Oxy Low Carbon Ventures.

The development was heralded by carbon capture advocates and Senator Bill Cassidy, a Louisiana Republican who has championed the state’s push. 

“This unlocks the next phase of job creation and economic development in Louisiana,” Cassidy said in an emailed statement. “It also creates a competitive advantage compared to other states while protecting the environment.”

Louisiana’s Geology

North Dakota and Wyoming already have primacy over permitting the CO2 wells in their states. But Louisiana’s underground geology — with caverns bled dry of their crude — is uniquely positioned as a prime repository for the nation’s captured carbon dioxide.

Projects in the queue could capture as much as 6 million tons per year of carbon dioxide in Louisiana alone, according to estimates from Clear Path, a not-for-profit group that advocates for nuclear power and carbon capture. 

“Louisiana is poised to be a leader on carbon capture and storage technology,” said Rich Powell, the group’s chief executive officer. “Granting Louisiana primacy for Class VI well permits will put their projects on a more certain and expedited path to development.”

Critics, including Louisiana residents who’ve spent decades in the shadow of oil refineries, petrochemical plants and drilling operations, say the state’s long history of drilling makes it uniquely vulnerable. During a June public hearing in Baton Rouge, dozens of Louisianans argued that state regulators were ill-equipped to oversee the injection wells, warning about the risk of lax oversight and ruptures from long-abandoned oil wells. 

Scott Eustis, community science director for Healthy Gulf and a self-described “grandson of an oil family,” testified that Louisiana is pockmarked by orphan wells that compromise “any ability to store carbon” and raise the risk that carbon dioxide pumped underground will migrate back out through abandoned well holes. “We have a broken land,” he told the EPA at the June hearing, likening the state’s below-ground geology to “Swiss cheese.”

Under EPA’s action, Louisiana is bound to uphold federal requirements for the special storage wells, including standards meant to ensure the activities don’t endanger sources of drinking water. 

States nevertheless are expected to move more rapidly in vetting the projects. For instance, North Dakota issued one carbon dioxide well permit within nine months last year. By contrast, it took almost six years for the EPA to permit two such injection wells at an ethanol plant in Illinois. 

(Updates with EPA comment and MOU details from first paragraph. An earlier version corrected the spelling in headline of Louisiana.)

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