CRC is actively pursuing Carbon Sequestration (CS) leases in Kern County. If surface owner agrees to Carbon Sequestration (CS - pore space utilization), what are effects on mineral owners/lessors, as well as ORRI interests (fee & USA). Anyone have any experiences or opinions?
I have worked on a CCS project. Pore space belongs to the surface owner and is akin to a salt water disposal well just disposing gas rather than liquids. Shouldn’t really have any effect on mineral interest at all since they are only allowed to dispose into formations with no oil&gas.
SWD wells inject high volumes that travel long distances (miles) and can water out the oil and destroy existing or future production. This has happened in shallow formations in Texas. Definition of nonproducing is defined as no currently producing wells within a short distance, not as there is zero oil and gas in the injection formation. There are unknowns about the long-term effect of carbon sequestration, as the formation water will become increasingly acidic and the effects on old and drilling pipe, such as corrosion leading to pipe failure. The projections as to limitation of area are estimated based on underground fault lines as currently understood. If it all fails, there will be no way to remediate or fix this.
1 Like
Can an oil company drill through the CO2 storage to get to oil below it? Would the oil company be responsible if damages to the CO2 storage occur? If so, then this likely means it will cost more to drill for oil beneath CO2 storage projects, making the minerals less desirable?
Hi AJ11,
An oil company could not drill directly through a CO2 storage area as that would allow the CO2 to escape. They might be able to slant or horizontally drill from a neighboring parcel, but that would depend upon the size of the storage containment.
Hope this helps.
Jean M. Pledger Pledger Law, PC
Jean, If the CO2 storage area is of sufficient lateral size, then that could effectively strand the development of the underlying oil and gas? Would the mineral owners need to be compensated for this loss? In Texas, how could it even work with minerals having long been established as the dominant estate?
Curious as to the legal basis for this, presumably state or federal statute. I had understood that oil companies would not be able to produce from the formation into which the CO2 is being injected but would be able to produce from formations above and below the “CO2 formation.” Many, if not most, mineral owners, will never consent to a future with no wells. Does the statute provide compensation for total loss of development? There is no certainty of containment of the CO2 in these projects, even with theoretical fault lines, not only within a specified geographic area but between formations.
2 Likes
I do realize that this is a California post, so a statutory curb may be limited to California and not to other states.
1 Like
In the area we did sequestration we bought out the mineral rights but the surface and mineral owner were the same and it was an area with no active oil&gas production or exploration. Personally I would not want sequestration happening in an area where I owned minerals that could potentially be developed. If I was the sequesterer I would not want to dispose in an area with any active wellbores for fear of migration and leakage.
1 Like