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Class II vs. Class VI Wells, for CCS Development

Updated: Nov 2, 2023



What is the difference between Class II and Class VI wells, for CCS purposes?


Wells are classified according to specific criteria and for specific purposes. Each well will have different permitting requirements.


Class VI wells, occasionally referred to as Class 6 wells, are used to inject carbon dioxide into deep rock formations, as part of a process called Geologic Sequestration, this is done solely to reduce CO2 emissions in the atmosphere and to mitigate climate change.


Class 2 wells, occasionally referred to as Class II wells, are wells used for enhanced oil recovery, disposal of waste fluids, and storage of liquid hydrocarbons. Only wells used for Enhanced Oil Recovery(EOR) would qualify for CCUS. LandGate can provide data on all wells across the US, and offers the ability to search and filter for the criteria most important to any given CCS project.


What are the IRA Tax Credit prices for CO2 sequestration in Class II wells?


The IRA has increased the commodity price of CO2 by raising the value of the 45Q tax credit. The price varies depending on the source of CO2 as well as the way the CO2 is handled. CO2 that is injected into a class 2 well in order to be utilized for EOR would receive a 45Q credit valued at $60/tonne or $130/tonne depending on if it was captured from industrial/power generation facilities, or through Direct Air Capture facilities.


What are the IRA Tax Credit prices for CO2 sequestration in Class VI wells?


The IRA has increased the commodity price of CO2 by raising the value of the 45Q tax credit. The price varies depending on the source of CO2 as well as the way the CO2 is handled. CO2 that is injected into a class 6 well for permanent geologic storage would receive a 45Q credit valued at $85/tonne or $180/tonne depending on if it was captured from industrial/power generation facilities, or through Direct Air Capture facilities.

 

Refer to this article to learn more about IRA tax credits prices for tons of CO2 injection based on source of the CO2 and type of sequestration.


Definition and Use of a Class II Well


Class II wells are a type of underground injection well that are used to inject fluids associated with oil and gas production, such as brine, produced water, and other fluids used in the drilling process. The Class II wells are typically used for EOR (also called tertiary recovery) to help enhance the recovery of oil and gas production, where CO2 is injected in wells to help sweep hydrocarbons in a reservoir that are then produced in another producing well. The Class II wells are also used for acid gas storage, where they allow for the production of sour gas while avoiding emitting hydrogen sulfide, storing it and the CO2 until needed. Finally, Class II wells are used for storing oil and gas underground for later use, particularly as part of the US Strategic Petroleum Reserve. These wells are also regulated by the US Environmental Protection Agency (EPA) under the Safe Drinking Water Act.


CCS Class II Well Permitting

The well must have a valid permit from the EPA or a state regulatory agency that meets the requirements of the Underground Injection Control (UIC) program.


CCS Class II Well Construction

The well must be constructed using materials and techniques that are appropriate for the intended injection depth and pressure. The well must be designed to prevent leaks or failures that could result in fluids contaminating underground sources of drinking water (USDWs).


CCS Class II Well Mechanical Integrity Testing

The well must undergo regular mechanical integrity testing to ensure that it is not leaking and that it is able to withstand the injection pressure.


CCS Class II Well Monitoring and Reporting

Operators of Class II wells must monitor the well and the surrounding area for any signs of leakage or other environmental impacts. They must also report regularly to the EPA on their injection activities and any incidents or deviations from their permit conditions.


CCS Class II Well Closure and Post-Closure Care

When the well is no longer needed for injection, it must be properly plugged and abandoned to prevent future fluid leaks. The operator must also provide post-closure care to ensure that the well remains secure and does not pose a risk to USDWs. The specific requirements for Class II wells may vary depending on the state and the specific characteristics of the well and the surrounding geology. However, the overall goal of the UIC program is to ensure that Class 2 wells are operated safely and that they do not pose a threat to human health or the environment.


Definition and Use of a Class VI Well

Class VI wells are used to inject carbon dioxide into deep rock formations, as part of a process called Geologic Sequestration, this is done solely to reduce CO2 emissions in the atmosphere and to mitigate climate change. These wells are also regulated by the US Environmental Protection Agency (EPA) under the Safe Drinking Water Act.


The site where the well will be constructed must undergo a thorough characterization to determine if it is suitable for CO2 injection and storage. The site must be geologically stable and free of faults, fractures, or other features that could cause CO2 to escape from the formation. The formation that will store the CO2 from a Class VI should be a "tomb".


What are the requirements for a Class VI Well?


Class VI Well Site Characterization

The key requirements for Class VI wells used for CO2 injection and storage include demonstration of the following:

  1. An injection zone(s) of sufficient areal extent, thickness, porosity, permeability, and total dissolved solids (TDS) concentration of less than 10,000 mg/l to receive the total anticipated volume of the carbon dioxide stream. 

  2. A confining zone(s) free of transmissive faults and fractures and of sufficient areal extent and integrity to contain the injected carbon dioxide stream and displaced formation fluids and allow injection at proposed maximum pressures and volumes without initiating or propagating fractures in the confining zone(s). 

  3. Identification of all underground sources of drinking water (USDW) in which the concentration of TDS is less than 10,000 mg/l to ensure that CO2 from the injection zone will not migrate into any USDW. 

  4. Maintenance of pore pressures in the injection zone at less than 90% of the fracture gradient. 

CCS Class VI Well Construction: 

The well must be constructed using materials and techniques that are appropriate for the intended injection depth and pressure. The well must be designed to prevent leaks or failures that could result in CO2 escaping into underground sources of drinking water (USDWs).


CCS Class VI Well Mechanical Integrity Testing:

The well must undergo regular mechanical integrity testing to ensure that it is not leaking and that it is able to withstand the injection pressure.


CCS Class 6 Well Monitoring and Reporting:

Class VI wells must monitor the well and the surrounding area for any signs of CO2 leakage. They must also report regularly to the EPA on their injection activities and any incidents or deviations from their permit conditions


CCS Class VI Well Closure and Post-Closure Care:

When the well is no longer needed for injection, it must be properly plugged and abandoned to prevent future CO2 leaks. The operator must also provide post-closure care to ensure that the well remains secure and does not pose a risk to USDWs. These requirements are intended to ensure that CO2 is stored safely and securely in Class 6 wells, with minimal risk of leakage or other environmental impacts.


Who do I submit permitting requests to?


For a permit for a Class VI well for carbon capture and storage (CCS), you would submit your permitting request to the U.S. Environmental Protection Agency (EPA). The EPA is responsible for administering the Underground Injection Control (UIC) program, which regulates injection wells, including Class VI wells. Though certain states are beginning to seek “primacy” for regulating Class VI wells, meaning those seeking a permit will need to go through the state agency responsible for overseeing injection wells instead of the EPA.


If you are seeking a permit for a Class II well for the injection of fluids associated with oil and gas production, you may submit your permitting request to the EPA, but you may also need to obtain a permit from the relevant state regulatory agency. The requirements for Class II well permits may vary by state, and some states have their own UIC programs that are approved by the EPA.


What are the benefits of a Class VI well?


Class VI wells receive larger amounts of money from the 45Q tax credit, as they are a form of long-term geologic storage. Anywhere from $85/tonne to $180/tonne, depending on the source of the carbon dioxide. Additionally, Class VI wells do not have to take into account factors other than the availability of CO2, as they are single purpose wells.


What are the benefits of a Class II well?


Class 2 wells that are used to store CO2 receive compensation not only in the form of the 45Q tax credit, but provide benefits in the form of increased oil recovery. This increase of oil production can extend the life of mature oil fields, and can reduce the need for new field exploration and development.


How can I use this information in CCS/CCUS development efforts?


Understanding the specifics of Class II and Class VI wells as they pertain to CCS and CCUS is the first step in development. Next, you need to find, filter, and analyze the data on wells in the area. LandGate’s X tool allows you to easily access well data across the US and then analyze and filter that data depending on your project’s specifications. Ready to learn more?


Class II vs. Class VI Wells... Which is Better?


A Class VI well is eligible for a has a higher tax credit than a Class II well, which makes it more economically attractive, but that comes with more requirements of a “tomb” to sequester and store the CO2.


From a risking standpoint, Class II wells also have more risk from a political standpoint and is often critiqued by environmentalists as “green washing”. Typical Class II wells used in EOR are used to sweep more oil & gas, that in turn generate more emissions causing climate change – . So there is a risk that the policies change around the interpretation of the IRA act for the tax credit of Class II wells for CCS.


Class VI wells are used, by definition, to store permanently store CO2 into the ground, so there is less concern that the economics would change. If anything, as the political pressure to address climate increases, it is likely that the tax credits for Class VI wells will increase.



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