1. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Presentation to the West Coast Regional Carbon Sequestration Partnership September 30, 2003 Sacramento, CA Michael S. Bruno, Ph.D., PE Terralog Technologies USA, Inc. www.terralog.com

2. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Presentation Outline 1.Terralog background and analysis/regulatory activities 2.Geologic, geomechanical, and regulatory issues for CO2 geologic sequestration 3.Regulatory Framework Transport Injection Surface Facilities Subsurface Injection and Storage - EOR - Sequestration Only 4.Public Outreach Tied to Regulatory Efforts 5.Future Efforts and Contributions

3. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Los Angeles (626) 305-8460 Jakarta (62) 21-727-98129 Calgary (403) 216-4730 New Orleans (985) 727-7040 Terralog Technologies Inc. www.terralog.com Advanced Geomechanics from the wellbore to reservoir scale Compaction and Subsidence Analysis Well Damage Analysis and Design CO 2 and H 2 S Geologic Sequestration Gas Storage Reservoir and Cavern Mechanics E&P Waste Deepwell Injection Biosolids Injection and Gassification TTI

4. Regulatory and Permitting Issues For Geologic Sequestration of CO2 Screen Base Pipe Coupling Centralizer Gravel Pack Outer Casing Cement Reservoir Scale Model Near-well Scale Component Scale Geomechanical analysis from reservoir scale to wellbore scale (permit requirements at both scales)

5. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Geomechanical Analysis of Gas Reservoirs Gas Storage and Recovery Optimize storage capacity and deliverability Evaluate and maintain storage reservoir integrity Evaluate and maintain storage well integrity Gas Reservoir Production Compaction and subsidence analysis Induced faulting and seal/caprock damage Well casing damage analysis and mitigation designs Geologic Sequestration of CO2 and H2S Optimize storage capacity and injectivity Evaluate and maintain storage reservoir integrity Evaluate and maintain injection well integrity

6. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 CO2 Geologic Sequestration Regulatory Framework Applicable Legislation: Federal Regulation (SDWA, RCRA) - UIC program State Regulations (CEQA) - ARB, RWQCB Local Regulations (zoning laws) Primary Motivation: Protect Health, Safety, Environment (air, water)

7. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Regulations and Permit Requirements for: 1.Capture 2.Transportation 3.Surface Injection Facilities 4. Subsurface Injection (wells and operations) Underground Injection Permit Process Designed to Confirm Reservoir Integrity and Well Integrity to Maintain Containment of Injectate in Target Interval

8. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Potential CO2 Migration Mechanisms in Subsurface 1. Fracturing 2. Faulting 3. Permeation and Spillover 4. Well integrity (cement damage) Injection well Offset well

9. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 reef structure draped beds cap rock anhydrite shale dolomite limestone sandstone a. Carbonate reef with closure for gas storage wells zone of elevated porosity b. Channel sand of limited length erosional truncation channel plan view A A’ shales, silts sands, gravels horizontal well traces Reservoir type, depth, stress conditions will influence likelihood of various loss mechanisms, supported by geomechanical analysis

10. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 c. Stratigraphic trap for gas storage development d. Isolated zones of high porosity for storage sand shale gas water well trajectory sandstone shale fault seal structural folding high porosity anhydrite well trajectory Reservoir type, depth, stress conditions will influence likelihood of various loss mechanisms, supported by geomechanical analysis

11. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Injection Well Classifications and Permits : Class I non-hazardous industrial waste CO2 injection for disposal oil and gas processing plant fluids Class II injection for E&P activities CO2 injection for EOR produced water and gas re-injection Class V injection for experimental technologies biomass injection with CO2 sequestration

12. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Terminal Island Renewable Energy Project Bureau of Sanitation Department of Public Works January 27, 2003

13. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Biosolids Treatment Technology Demonstration: 1. Inject biosolids into deep geologic formations 2. Allow material to undergo natural process of high-temperature anaerobic biodegradation, instantly (within 24 hrs) sterilizing the material and over time (60-90 days) converting it to methane and carbon dioxide 3. Design process to capture and sequester generated C0 2 in formation water 4. Store or recover high purity methane for beneficial use

14. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Environmental Advantages for Deep Subsurface Treatment landfarms Fresh water sand Brine filled sand Sealing shale Mud/shale CO 2 Gas to Energy Facility 1. Enhanced treatment and groundwater protection 2. Reduce greenhouse gas emissions Long-term carbon sequestration 4. Reduce transport env. impact and costs 3. Renewable Clean energy

15. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Injection Permit Process and Key Requirements: 1. Geologic Review 2. Injection Simulation 3.Well Review 4.Operating Plan 5.Monitoring Plan

16. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Geologic Review Components Include: 1.Structure and isopach maps 2.Cross section maps 3.Reservoir and fluid characterization 4. Seismic data if faulted

17. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Well Review Components Include: 1.Well location and depths (up to 2 mi AOR) 2.Well schematics 3.Cement coverage and integrity ( TOC, CBL) Many California oilfields have high well density 1 mile

18. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Public Outreach Tied to Regulatory Efforts Key concerns: 1.Is it safe ? (accidents, health risks, earthquakes … ) 2.What disruption in normal life patterns (access, traffic) 3.Appropriate communication with stakeholders Looking for grudging acquiescence or informed support ? React or anticipate and engage ?

19. TTI Regulatory and Permitting Issues For Geologic Sequestration of CO2 Terralog Project Efforts and Contributions Include: Task 1. Review, document, and summarize current state and federal regulations related to carbon capture and sequestration technologies Task 2. Evaluate and summarize permitting requirements for carbon capture and sequestration technologies Task 3. Review and summarize proposed new regulations under consideration by state and federal agencies that may impact carbon capture and sequestration activities. Task 4. Identify potential gaps, regulatory uncertainties, or possible conflicting regulations and jurisdictions associated with carbon capture and sequestration policies PHASE II : Permitting efforts for pilot, geomechanical support