PANEL 5

DEFINING AND QUANTIFYING CCS RISK AND LIABILITY Sandra Locke – Government of Alberta Chiara Trabucchi – Industrial Economics Chris Clarke – University College London

Defining and Quantifying CCS Risk and Liability – an Alberta Perspective

October 11, 2012 Sandra Locke, Alberta Energy

CCS Legislation in Alberta • The Carbon Capture and Storage

Statutes Amendment Act, 2010 was passed in Dec 2010. – Pore Space Ownership – Long-term liability – Post -closure Stewardship Fund – Tenure Agreements

CCS Regulatory Framework Assessment (RFA) • Review of our existing framework and other jurisdictions • Also looking at some gaps:

– Closure criteria. – Methodology and rate for the PCSF. – Role of risk assessment in CCS. – Clarity of roles and responsibilities for Alberta regulators. – How stakeholder engagement will take place. – Role of Environmental Impact Assessments in a CCS project.

• Recommendations go to the Alberta Government in late-2012.

GCCSI Participation in the RFA • The GCCSI was involved at the Steering Committee

and Working group level. • Steering Committee – Ian Havercroft • MMV Working Group – Ian Hayhow and Steve

Whittaker • Regulatory Working Group – Ian Hayhow

Risk Assessments Are Important • Can be used to reduce and manage risks • Will guide development of monitoring plans • Current status:

– Not explicitly required – But, embedded in current ERCB approval processes

RFA Emerging Recommendations – Risk Assessment

• Risk assessments should be required as an integral part of MMV and Closure Plans

• Guidelines for risk assessments: – Iterative, systematic, technically defensible,

transparent and available to the public. – Modelling and simulations to evaluate and predict

behaviour and inform the risk assessment. – Identify non-technical risks related to public

acceptance of MMV Plans

Post-Closure Stewardship Fund

• Established in the Mines and Minerals Act • Allowable uses of the PCSF:

• Monitoring of injected CO2

• Fulfilling obligations assumed when closure certificate issued

• Suspension, abandonment, remediation and reclamation of orphaned facilities (not capture or pipelines)

RFA Emerging Recommendation – Post-closure Stewardship Fund

• PCSF rate should be: • risk-based and probability weighted • project-specific

• Third party analysis of projects to help set the rate • Rates should be reviewed when MMV and Closure

Plans are reviewed (every three years) • Funds should be pooled amongst all payees

How much money will we need in the future?

• Industrial Economics Inc. – Valuation of the long-term risks associated with CCS.

• Alberta Innovates Technology Futures

– Estimated future costs of potential future MMV and Remediation activities.

Knowledge Sharing • New for most jurisdictions and little publicly available

information • We need to share our experiences with each other • Need to leverage external expertise that

Governments may not have internally – e.g. risk valuation and management

• Communicating risk is key

Thank You

Sandra Locke (780) 644-7126

Sandra.Locke@gov.ab.ca www.SolutionsStartHere.ca

Extra Slides

Carbon Sequestration Tenure Regulation

• Sets out details of two CCS tenure types • Evaluation Permit

• 5 year, non-renewable • MMV plan required

• Carbon Sequestration Lease • 15 year, renewable • MMV and Closure plans required – renewed every 3 years

• 1000m minimum depth

Carbon Capture and Storage Statutes Amendment Act, 2010 – Mines and Minerals Act

• Minister can issue a Closure Certificate • If certificate is issued, liability transfers to

Government of Alberta • Owner of injected CO2 • Owner, operator, licensee of injection facilities • Indemnifies the lessee against damages in tort action

RFA Emerging Recommendation – Closure and Transfer of Liability

• Minimum closure period – The Crown may grant a closure certificate after lessee

has demonstrated sustained compliance with performance criteria, no sooner than 10 years after initiation of final closure plan.

• Include climate liability in the list of liabilities that transfers to the Crown after Closure Certificate is issued.