(457f) Supporting and Developing Commercial Carbon Storage Projects in the Western United States: The Carbon Utilization and Storage Partnership

The Carbon Utilization and Storage Partnership of the Western United States (CUSP) is one of four regional Initiatives created in 2019 and sponsored by the US Department of Energy (DOE). The 2019 initiatives were created to support and create commercial opportunities, working directly with companies developing Carbon Capture Utilization and Storage (CCUS) projects. Each of the new initiatives were created from the original seven Regional Carbon Storage Partnerships (RCSP’s), first created by the DOE in 2003. The CUSP is built from three of those original initiatives: The Southwest Regional Partnership on Carbon Sequestration (SWP); WestCarb; and Big Sky, all located in the western US. The CUSP region Includes 14 western states, and has 20 founding organizations in the region including Universities, Research Centers, State Geological Surveys, and US National labs (see figure) including key managing partners from the original RCSP’s. With recent changes to section 45Q tax credits in the 2021 Build Back Better Bill, and the 2022 Inflation Reduction Act, the US government has accelerated and incentivized an already intense interest in industry to pursue commercial de-carbonization projects. The CUSP team represents over 100 scientists and engineers in more than 40 organizations that are actively working to accelerate and assist in development of 23 projects in the western US.

Description of the CUSP

Through 2022 the CUSP has received $15 million in federal funds, and has generated $3 million in cost-share from its original partners and from companies working on CUSP sponsored projects in the region. Additional non-federal funds have come from direct work by CUSP partners with industry. While the federal funds are not designed, nor able, to add significant infrastructure to most projects, projects benefit from the experience gained in the region over two decades of previous carbon storage research at the three original RCSP’s and assistance is most often given in geologic and geophysical characterization of potential storage sites and in preparing for, and assisting with, permits, monitoring plans, and in development of EPA Class VI, and state Class II injection permits. In addition, the CUSP helps projects by developing economic analyses and in pairing regional opportunities that fit sources, mid-stream, and storage components for industries in the region. In 2020 the CUSP funded studies to benefit three projects in the region: conversion of a mature EOR project at Farnsworth Texas from a primarily EOR focus to a primarily storage focus by assisting with a monitoring, reporting and verification (MRV) plan that was approved by the US EPA in May of 2021. The CUSP also assisted in the conversion of a midstream facility from an acid-gas disposal focus to a regional carbon storage hub focus in the Permian basin of New Mexico, with assistance in state permitting a new disposal well, and submission of an MRV plan which was approved by the US EPA in December 2021. The third project involved writing the MRV plan and providing aid in submission of Class VI permits for a storage site near Farmington, New Mexico, this site will have as its first customer a coal plant conversion to a hydrogen burning power source. These three projects alone will store nearly 10 million tonnes of CO₂ per year with injection already occurring at Farnsworth and in the Permian basin, and by 2025 at the Farmington site. In 2021, the CUSP identified 23 additional projects in the region that could be operational within 1-3 years, and funded work to support 12 of those projects. The CUSP is doing unique work in understanding storage in basalt formations, and in the interplay of hydrogen and carbon economies. Large scale projects include engagement with mid-stream gas processors, and iron smelter that is converting to capture and storage, a power plant that is converting to hydrogen burning, and in stacked storage throughout brownfields in the region. The new projects give CUSP a portfolio of 15 federally funded projects and CUSP members are supporting eight additional projects in the region funded directly by industry.

The US Department of Energy (DOE) support and regular funding to US Regional Carbon Sequestration Partnerships such as the CUSP helps foster partnerships between stakeholders including industry, academic research, and regulatory agencies, all of which helps speed up commercialization of CCS/CCUS projects. In addition, expertise developed within the region by CUSP partners provides local expertise to address regional and state issues, public outreach, and to form project teams for industry sponsored work. The CUSP partnership has allowed all participating states to further characterize their CO₂ sources, sinks and potential transportation pathways in the western US, and to then connect those networks to adjacent states and regions. Each state in the CUSP region focuses on local geological knowledge, permitting and regulatory environments, understanding public sentiment, local industries and storage potentials, and the appetite for CCUS projects. Each state benefits from regional and topical expertise provided by partners outside of their states, that may have expertise or tools to assist them in areas they have previously not had resources to delve into. This feedback process has helped CUSP members identify potential regional CCUS hubs and to begin to develop those opportunities. In the CUSP region the CCUS project development process has been optimized through refinement of more traditional static atlas-style data and converting older static databases into self-updating data sources. The CUSP is working towards integrating machine learning tools to manage its data. It has already allowed project teams to rapidly perform base-level surveys of the region for CCUS opportunities and will also help pinpoint specific issues related to those opportunities such as infrastructure challenges, areas with varying regulatory environments, and very importantly, public opinions. CUSP has also been working to improve data regarding social considerations and impacts on communities surrounding CCUS projects, with focuses on environmental justice and socio-economic considerations.

Summary

The teamwork, expertise, and continuity developed through the CUSP has elevated the western region’s capability to develop MRV plans, fulfill the complex and comprehensive process of preparing for state applications for Class II applications, and the federal requirements for permitting and drilling of Class VI well for CO₂ storage. Importantly, the regional expertise in preparing and needed documentation for the MRV applications to the EPA, which allow access to 45Q tax credits. As a whole the regional network has created an environment which has improved the ability to create commercialized CCUS projects. This effort has enabled the development of collaborations with industry partners and created trust in the CUSP team capabilities to develop CCUS projects with high readiness levels.

The interest industry has in in CUSP and our focus projects demonstrates that with the right set of incentives CCUS projects can be developed and become commercially viable within the region and across the US. The Inflation Reduction Act (IRA) recently signed into law has given a significant boost to the carbon management industry. The IRA will substantially increase the availability of the federal income tax credits available for domestic CCUS projects (45Q credits). The new rates for qualified carbon oxide are $60/MT for utilization of the CO₂ (instead of $35/MT) and $85/MT for safe geological sequestration (instead of $50/MT). Those rates are even higher for Direct Air Capture projects: respectively $130/MT-$180/MT. In addition, the IRA has significantly lowered volume thresholds for CCUS projects to qualify for 45Q, and has provided new options for monetizing 45Q credits.

The CUSP is actively seeking opportunities to help companies access 45Q credits. CUSP members have proven experience in generating CO2 storage models, MRV applications, and in stakeholder engagement. The databases created for regional use, enables partners to share useful information necessary to create robust geologic models and CCUS business models. This paper will present an overview of CUSP goals, summaries of direct and indirect projects, plans for furthering the program, and describe processes developed for optimizing and commercializing projects in the Western USA using examples of past, current, and potential projects.