Project Information
Project Title:
Central Louisiana Regional Carbon Storage Hub - Vernon Parish #1
Sector:Carbon Capture and Sequestration
Project Location Address:
- City: Leesville
State: Louisiana
Coordinates:
Project Sponsor Contact Information:
- Company Name/Agency: CapturePoint Solutions LLC
Project Sponsor: CapturePoint Solutions LLC
Street Address: 1101 Central Expressway South, Suite 150
City: Allen
State: Texas
Zip: 75013
POC Name: Sherry Tucker
POC Title: Navigation Team
POC Work Phone: 202-258-0700
POC Email Address: stucker@capturepointsolutions.com
Alternative Point Of Contact (Optional):
Project Purpose:
CPS is developing a carbon capture and sequestration infrastructure project comprised of a sequestration site to gather current CO2 emissions in Northern Louisiana and permanently store that CO2 beneath private lands primarily used for timber management. The injection capacity is expected to grow from 2.0 million metric tonnes (MMTPA) to about 5 MMTPA in 2027 and to 7.0 MMTPA in 2029. It is anticipated this site will last for 20 to 25 years and will cumulatively sequester about 140 million metric tonnes over the life of the project. Initially CPS will use the site to sequester CO2 from the Haynesville basin natural gas plants. The medium-term plan is to connect it to Gulf coast emission sources. The first set of injection is projected to happen after securing the Class VI injection permit.
Project Description:
The proposed Vernon One CCS carbon dioxide geologic storage site is in the northeast portion of Vernon Parish, Louisiana east-northeast of the town of Leesville. The project will consist of multiple injection wells and monitoring wells. Permanent geologic storage of the CO2 is intended to occur beneath private lands primarily used for timber management. The site will be surveyed for archeological or cultural sites and threatened or endangered species.
The injection capacity is expected to grow over the life of the project, anticipated to be 20 to 25 years and will cumulatively sequester about 140 million metric tonnes over the life of the project. Initially CPS will use the site to sequester CO2 from the Haynesville basin natural gas plants. The medium-term plan is to connect it to Gulf coast emission sources. The first set of injection is projected to happen in 2024 after securing the Class VI injection permit.
The modeled pressure front that delineates the Area of Review (AoR) and maximum plume extent are based on preliminary modeling and simulation. The estimated maximum subaerial extent of the largest of the three CO2 plumes is over 8,500 acres. Following the drilling, coring and logging of a stratigraphic test well, modeling and simulation will be revised to update the aerial extent of the AoR.
The proposed project site in Vernon Parish, Louisiana was selected based on a culmination of factors deeming it to be an ideal candidate for a Geological Sequestration project. Both the confining layers and targeted injection zones are subaerially extensive throughout the Gulf Coast Region. A series of thick (200’ to 800’) confining layers separate shallow (0’ to 2,200’) groundwater resources (USDWs) from the deeper (4,200’ to 9,400’) injection zones. Available data indicate that there are no transmissive faults or fractures within the AoR and that the site is in a very stable seismic region of the Gulf Coast. There are 5 existing artificial penetrations within the designated Area of Review (AoR), and these will be evaluated and, if necessary, mitigated through appropriate corrective action. Within the AoR, groundwater use is limited to shallow aquifers penetrated by 10 abandoned groundwater wells, 2 test wells and 52 active shallow groundwater wells.
The injected CO2 will be collected from anthropogenic sources primarily including ethanol, gas processing, fertilizer and ammonia plants from the Haynesville basin and Gulf Coast. All surface facilities for the site will be constructed on private property owned or leased by CPS. Acreage owned or leased by CPS will guarantee access to the site throughout the duration of all phases of the project including Post Injection Site Care and Site Closure.
Technical and Financial Ability:
CapturePoint Solutions, LLC (CPS) is a privately owned Texas based company with a focus on developing large scale carbon dioxide capture and sequestration projects with an emphasis on deep geologic storage of CO2 in saline formations. CPS is a subsidiary of CapturePoint LLC, which has over one million tons of anthropogenic CO2 capture and multiple CO2 EOR floods including two EPA approved MRV plans, one Administratively Complete Class VI permit application (EPA Region 6) and existing projects that benefit from Federal 45Q tax credits. CapturePoint LLC is also a licensed oil and gas well operator in the state of Louisiana.
CapturePoint Solutions LLC (CPS) is providing financial responsibility pursuant to 40 CFR 146.85. CPS expects to be utilizing any one of or a combination of (1) Surety Bonds, (2) Trust Account or (3) Insurance to cover the costs of potential corrective action, emergency and remedial response, injection well plugging, post-injection site care, or site closure.
Financial Liability Cost Estimates
Corrective Action
4,085,000
Surety Bond
Includes re-plugging 5 existing abandoned wells in the AOR to meet regulatory standards.
Plugging Injection Wells
602,000
Trust Account to be funded during injection
Covers plugging 3 of the 6 proposed injection wells and leaving the other 3 for monitoring.
Site Closure
1,304,000
Trust Account to be funded during injection
Includes decommissioning of units and surface facilities
Post Injection Site Care
16,750,000
Trust Account to be funded during injection
Includes direct and indirect monitoring as per the T&M plan after injection for the PISC time frame of 50 years. This number will be adjusted based on revisions to the PISC timeline after model results are updated with site-specific data
Emergency and Remedial Response
5,000,000
Well Insurance & Pollution Liability Policy
Includes provision for one relief well to correct any CO2 leakage.
Total
27,741,000
The cost estimates above have been developed by CapturePoint Solutions LLC with assistance from its affiliate CapturePoint LLC which has deep experience constructing and operating CO2 injection wells for EOR. These costs have been estimated in compliance with the requirements of LAC 43: XVII Chapter 6 §3609. CPS is providing financial responsibility pursuant to 40 CFR § 146.85.(a) and using the following financial instruments LAC 43: XVII Chapter 6 §3609. C, (h) (i) based on estimated costs that will be incurred in hiring a third-party on arms-length basis to perform the required activities.
CPS is providing financial responsibility pursuant to 40 CFR § 146.85.(a) and using the following financial instruments LAC 43: XVII Chapter 6 §3609. C.
• CPS will establish a Surety Bond to cover the costs of
1. corrective action in accordance with 40 CFR § 146.84 and LAC 43: XVII Chapter 6 §3615.
2. Plugging of injection wells in accordance with 40 CFR § 146.92 and LAC 43: XVII Chapter 6 §3631; and
3. Implementing post injection site care and 4) Site Closure as per requirements of 40 CFR § 146.93 and LAC 43: XVII Chapter 6 §3633.
• CPS will create a Trust fund starting from the First year of injection over seven years to replace the remaining amounts required in the Surety Bond and replace the Surety Bond once it is fully funded.
• CPS will award the task of ERRP as per requirements of 40 CFR § 146.94 and LAC 43: XVII Chapter 6 §3623, to its affiliate CapturePoint, LLC (CP). CP as extensive experience in CO2 EOR injections and is a licensed operator of oil and gas wells in the State of Louisiana. The liability for ERR requirements will be addressed through a third-party Well Insurance Policy and Pollution Liability insurance policy carried by CapturePoint LLC.
Surety Bond
The Surety Bond, which will act as a Performance Bond, will identify CPS as the principal on the bond, will be provided by U.S. Specialty Insurance Company. The insurance company meets all the following criteria.
1. The Surety Bond provider is authorized to transact business in Louisiana since 1988.
2. The Surety Bond provider has either passed the specified financial strength requirements based on credit ratings or has met a minimum rating (AA- from Fitch), minimum capitalization, and ability to pass the bond rating, in line with requirements of 40 CFR § 146.85.(a).6. ii, when applicable.
The Surety Bond shall be established before permit to Inject and will follow the EPA guidance templates. The Surety Bond will be adjusted down accordingly based on the funds already spent or accrued in the Trust Fund.
Trust Account
During Injection/ operations phase of the Class VI site CPS will create a Trust Account to fund the remaining costs of Post Injection Site Care and Site Closure over a period of 10 years. The Surety Bond and Trust Account amounts shall be updated based on any revisions to the estimated costs below.
The following table provides the pay-in periods for the funding of the Trust. Amounts after the initial pay-in are subject to annual review and reporting for the continuing validation of estimate costs and underlying assumptions.
Activities Pre-injection ($000s) During Injection ($000s) Total
Plugging Injection Wells 602 602
Site Closure 1,304 1,304
Post-Injection Site Care 16,750 16,750
Total 602 18,054 18,656
Pre-injection amount in the Trust Account will be funded within 7 days of permit to inject issuance. The During Injection amount will be funded in ten (10) equal installments at least 7 days prior to successive anniversaries of permit to inject issuance.
The Trust Account will be set up before permit to Inject and shall be managed by the bank of the applicant at the time of permit to inject issuance. The current bank for applicant is JP Morgan Chase (A1 rating by Moodys). The trustee shall act as the escrow agent for the Trust Account and shall release the funds for prescribed activities in compliance with the EPA requirements. The contract for the Trust Funds shall follow all applicable EPA guidance templates for the same.
The Trust Account will be available to the Applicant or to a third party nominated by EPA if the Applicant were no longer involved with site operations. The Trust Account will be maintained until such time that the EPA and LA DNR determines that the storage operator has fulfilled its financial obligations.
Insurance
The costs for Emergency and Remedial Response shall be covered the insurance Policies carried by CPS’s affiliate CapturePoint LLC who will have the responsibility for constructing and managing the injection wells for the site.
The Well Insurance Policy, which identifies CP as the insured party covers to a limit of $5,000,000 per incident for each of the well with a deductible of $250,000. CP as the contractor for CPS will use the Well Insurance to cover required funds for the ERR.
The third-party pollution liability insurance, which identifies CP as the insured party. The coverage limits of the policy are summarized below:
Coverage Type Coverage per Event Insurance Carrier
Sudden & Accidental Pollution 1,000,000 Chubb
Gradual Pollution Primary 1,000,000 Lloyds/Enviant
Gradual Pollution Excess 4,000,000 Lloyds/Enviant
Umbrella Excess 10,000,000 Chubb
The Pollution liability insurance policies are issued from Chubb and Lloyds/Enviant Insurance Companies. The Well Insurance Policy is issued by Lloyds/ Zurich. The insurance templates will be reviewed against EPA guidance templates and any variations addressed through discussion between the insurance broker and EPA. The insurance providers meet the following criteria, in accordance with requirements of 40 CFR § 146.85(a).6.ii,
1. All of the insurance providers satisfy financial strength requirements based on credit ratings in the top four categories of either Standard & Poor’s (AAA, AA, A, or BBB), Moody’s (Aaa, Aa, A, Baa) or Fitch’s (AA-).
2. The company meets a minimum rating (“minimum rating” based on an issuer, credit, securities, or financial strength rating as a demonstration of financial stability) and minimum capitalization (i.e., demonstration that minimum thresholds are met for the following financial ratios: debt-equity, assets-liabilities, cash return on liabilities, liquidity, and net profit) and is able to pass bond rating in the top four categories of Fitch’s (AA-) or Fitch (Aaa, Aa, A, Baa), when applicable
The insurance policies are in effect from 11/17/2021 to 11/17/2023 and will be renewed every year and have been in effect since 2017.
In both the Surety Bond and Insurance policies, CPS will establish a standby trust or suitable instrument to enable EPA to be party to these instruments without EPA being the beneficiary of any funds in line with requirement in 40 CFR § 146.85.(a).6.iii.
For all the financial instruments used by CPS, Surety Bond, Trust Account and Insurance Policies, we will try to use the recommended language by EPA. If that is not possible due to issuer internal restrictions, we will make sure the instrument uses the required conditions of coverage, including cancellation, renewal, continuation, specifications on when provider becomes liable if failure to renew; and requirements for provider to meet minimum financial strength requirements as outlined by EPA and LA DNR.
Summary of Financing, Reviews and Authorizations:
Permitting and oversight for this project will be through the US Environmental Protection Agency (USEPA), and the Louisiana Department of Natural Resources (LADNR). The site will be owned and operated by CapturePoint Solutions, LLC (CPS). As part of the permitting and oversight, CPS will continuously monitor operations at surface facilities and at each of the injection wells and provide collected data to the USEPA in semi-annual reports.
Project Assessment:
This project meets the definition of a covered project under 42 U.S.C. §4370m(6)(A) because it requires review by the Environmental Protection Agency and involves construction of infrastructure for carbon capture as defined in 42 U.S.C. §4370m(6)(C)(i) as a facility that sequesters carbon dioxide emissions.
Form Submitter Contact Information:
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