Product Summary

PCOR Partnership Storage Project Risk Management: Integrating Guidance Documents, Regulatory Requirements, Financial Incentives, and Best Practices

Risk management for a geologic carbon dioxide (CO₂) storage project (hereafter "storage project") addresses a set of risk scenarios that are identified for a project. The risk scenarios comprise a chain of circumstances that has the potential to occur and produce a negative impact on a component or objective of the project. In this context, risk is expressed in terms of the severity of the consequences (negative impacts) produced by the occurrence of a risk scenario and the associated likelihood of its occurrence (chance of a scenario happening, described using general terms or mathematically by specifying a probability of occurrence over a given period). Many of the risk scenarios for storage projects relate to storage permanence and the potential consequences that could negatively impact the commercial, safe, or long-term containment of CO₂. There is no one-size-fits-all risk management approach for storage projects. Instead, risk management is about having a detailed process in place, adhering to that process throughout the project life cycle, and adapting the process depending on site-specific conditions, applicable regulatory requirements, and any additional requirements imposed by pursuing one or more financial incentive programs. This document represents a culmination of risk management experience gained by the Plains CO₂ Reduction (PCOR) Partnership since 2003, presented here as a recommended risk management process that can be used or, if warranted, readily adapted by most storage project developers to satisfy their risk management needs. The sections of the document include the following components of risk management applied to storage projects: 1) Section 2.0 provides an overview of existing guidance documents for storage projects and summarizes the common elements that should be incorporated into the risk management process. 2) Section 3.0 outlines federal regulatory requirements and highlights distinguishing characteristics of specific state-level requirements that could affect project risk management planning for states within the PCOR Partnership region. 3) Section 4.0 summarizes additional risk management requirements imposed on project developers if they choose to pursue certain financial incentive programs. This document discusses two programs: 1) qualifying the stored CO2 for a tax credit under Section 45Q of the Internal Revenue Code (Section 45Q credit), and 2) the California Air Resources vi Board Low Carbon Fuel Standard for ethanol producers who capture and store CO₂ from their ethanol plants and sell the resulting lower-carbon ethanol in a low-carbon-fuel market for a premium price. 4) Sections 5.0-8.0 integrate nearly two decades of risk management experience within the PCOR Partnership, comprising storage project development activities guidance documents, regulatory permit applications and hearings, and interactions with authorities responsible for managing financial incentive programs, into a recommended risk management process (Section 5.0), guidance for establishing the context of the risk assessment (Section 6.0), risk assessment technical approach with examples (Section 7.0), and discussion of risk treatment options (Section 8.0). 5) Section 9.0 provides a review of the PCOR Partnership risk management experience, highlighting key aspects in the evolution of risk assessment for past and present storage projects. This document encompasses the current body of knowledge and best practices for applying a standardized risk management approach for storage projects. These best practices will continue to evolve and be refined over time as commercialization of the CO₂ storage industry proceeds.