Thought Leadership

Greening the Oil Patch – Texas Primacy for Class VI Injection Permitting

May 14, 2024

Oil well at sunset

By Michelle Ricker – Senior Professional

The United States Environmental Protection Agency (USEPA) has Underground Injection Control (UIC) programs dating back to the Safe Drinking Water Act (SDWA). These programs regulate how fluids may be injected into underground aquifers for storage or disposal, while protecting underground sources of drinking water. In the oil and gas industry, Class II injection projects are the most common form of UIC.

These injection projects are used for both disposal of oilfield produced wastewater and for enhanced oil recovery (EOR) methods, which use either water or gases to mobilize hydrocarbons for extraction. The administration of these UIC programs falls to either USEPA regional offices or to states which have obtained primacy over the UIC program. Keep reading to learn more about the states, specifically Texas, that are looking to administer their own UIC programs and what this development means to the oil and gas industry.

Technology Moves the Needle

In 2011, USEPA developed and released UIC regulations for a new Class VI program, thus creating a new category of injection: Carbon Capture and Storage (CCS). This category is considered a potential solution to address climate change because it allows for carbon dioxide (CO2) emissions, such as exhaust from stationary engines, to be captured before it has a chance to discharge to the atmosphere. This captured CO2 is pressurized and injected into deep geologic formations for permanent storage.

Carbon capture is a relatively new technology; such innovations are advancing faster than USEPA can move to review and approve applications submitted for new Class VI projects under USEPA’s jurisdiction. The oil and gas industry is moving to decarbonize its processes, but can only move as fast as the permitting process allows. To address this bottleneck, individual states are developing their own regulations which meet or exceed USEPA’s UIC regulations in the SDWA. The states’ goal? To demonstrate that they can take over administration of the Class VI UIC permitting process.

Why do states want to do this? With the vast diversity of conditions throughout the United States, a “one size fits all” solution for UIC’s is impractical. This diversity occurs in land usage, industries, hydrogeologic conditions, and environmental conditions considered in developing a program to effectively protect health, safety, and the environment. Allowing a state primacy over its UIC programs would enable agencies staffed with scientists who have knowledge and experience of local conditions to evaluate and make decisions that better serve the mandate to protect environmental and human health.

At present, USEPA is responsible for the review and approval of Class VI project proposals for all but three states: Wyoming, North Dakota, and Louisiana. The states had their primacy applications reviewed and approved by USEPA so that their respective environmental protection agencies may act on USEPA’s behalf in administering each state’s UIC programs. Texas, which was the highest petroleum producing state in 2023, is looking to become the next state to take the reins of its Class VI permitting process. Let’s take a closer look at their effort.

The Starting Point for Texas

Texas began its journey toward Class VI primacy in 2009, when the Texas Legislature adopted a framework for CCS regulations consistent with the federally proposed regulations. These regulations are more stringent than Class II UIC regulations, due to the nature of CCS and the long-term monitoring requirements set by USEPA’s Class VI regulations. Compared to Class II UIC projects, Class VI UIC projects handle larger volumes of injected fluid at higher pressures. Therefore, the potential risk of rupture or migration outside of the intended injection zone is greater.

This framework was amended in 2021 when the legislature consolidated all Class VI permitting to the Railroad Commission of Texas (RRC). The legislature recognized that to effectively negotiate the primacy process with USEPA, one state agency as a point of contact was most efficient. In parallel with this effort, RRC adopted regulations to allow for CO2 to be used as a gas for EOR operations under its Class II UIC program.

While EOR projects using CO2 provide a form of carbon capture and reduce an operator’s carbon footprint by increasing efficiency in hydrocarbon extraction, the storage of CO2 in the geologic formation is temporary. The injected gases are produced back from the injection zone with the hydrocarbons and associated produced water. As oil and gas operators continue moving toward energy transition and decarbonization to meet their respective sustainability goals, RRC began to see an increasing number of applicants seeking permission to implement Class VI UIC projects for permanent storage of CO2.

The state of Texas submitted its application for primacy in December 2022. USEPA reviewed the application for completeness and responded with comments. RRC addressed these comments by adopting its amended Class VI UIC regulations in September 2023. These amendments clarified issues regarding well testing and mechanical integrity requirements, ownership of land versus ownership of injection zone(s), and financial assurance requirements for a proposed project’s operator (e.g., demonstration of financial responsibility and requiring estimated costs for operation of a Class VI UIC project).

Where We Are Now

As of today, USEPA Region 6 maintains primacy over Class VI UIC injection projects in Texas, with additional permitting requirements from RRC. In addition to a Class VI UIC injection project proposal submittal for USEPA, an operator must complete the following steps to permit a Class VI UIC project in Texas:

  • Obtain a Geologic Storage Facility Permit, which defines the location and operating parameters of the facility, defines the intended injection zone(s), and provides the site monitoring plans;
  • Obtain a Permit to Drill for the proposed injection well(s);
  • Submit a Notice of Completion and a Completion Report for the injection well(s);
  • Conduct an inspection with an RRC inspector to confirm compliance with the permit conditions; and
  • Obtain a Permit to Operate the injection well(s).

So where does that leave us? As USEPA reviews Texas’ amended regulations and application for primacy, opportunities still exist for an oil and gas operator to use CO2 driven Class II EOR projects as part of its decarbonization portfolio, as well as continuing to work with USEPA Region 6 to permit Class VI UIC projects for permanent CCS. Grant funding and tax exemptions exist for both types of carbon capture projects, providing further incentive for the oil and gas industry to consider CCS injection part of its decarbonization efforts. Once USEPA approves Texas’ application and enters into a Primacy Agreement with the state, the permitting process will be a one-stop shop with the state and a much more efficient process, in theory.

At the upcoming Texas Commission on Environmental Quality (TCEQ) Trade Fair, representatives from USEPA Region 6 will be presenting updates on the Class VI primacy process. GEI will be attending to keep current with these developments and share our team’s insights and capabilities. Come by Booth #824 to see us!