Presentation to the West Coast Regional Carbon Sequestration Partnership September 30, 2003

1. Presentation to the West Coast Regional Carbon Sequestration Partnership September 30, 2003 Sacramento, CA Michael S. Bruno, Ph.D., PE Terralog Technologies USA, Inc. www.terralog.com

2. Presentation Outline • Terralog background and analysis/regulatory activities • Geologic, geomechanical, and regulatory issues for CO2 geologic sequestration • Regulatory Framework • Transport • Injection Surface Facilities • Subsurface Injection and Storage • - EOR • - Sequestration Only • Public Outreach Tied to Regulatory Efforts • Future Efforts and Contributions

3. TTI Terralog Technologies Inc. www.terralog.com Advanced Geomechanics from the wellbore to reservoir scale Compaction and Subsidence Analysis Well Damage Analysis and Design CO2 and H2S Geologic Sequestration Gas Storage Reservoir and Cavern Mechanics E&P Waste Deepwell Injection Biosolids Injection and Gassification Los Angeles (626) 305-8460 Calgary (403) 216-4730 New Orleans (985) 727-7040 Jakarta (62) 21-727-98129

4. Coupling Centralizer Base Pipe Screen Cement Gravel Pack Outer Casing Geomechanical analysis from reservoir scale to wellbore scale (permit requirements at both scales) Component Scale Reservoir Scale Model Near-well Scale

5. Geomechanical Analysis of Gas Reservoirs • Gas Storage and Recovery • Optimize storage capacity and deliverability • Evaluate and maintain storage reservoir integrity • Evaluate and maintain storage well integrity • Gas Reservoir Production • Compaction and subsidence analysis • Induced faulting and seal/caprock damage • Well casing damage analysis and mitigation designs • Geologic Sequestration of CO2 and H2S • Optimize storage capacity and injectivity • Evaluate and maintain storage reservoir integrity • Evaluate and maintain injection well integrity

6. CO2 Geologic Sequestration Regulatory Framework Applicable Legislation: Federal Regulation (SDWA, RCRA) - UIC program State Regulations (CEQA) - ARB, RWQCB Local Regulations (zoning laws) Primary Motivation: Protect Health, Safety, Environment (air, water)

7. Regulations and Permit Requirements for: • Capture • Transportation • Surface Injection Facilities • 4. Subsurface Injection (wells and operations) Underground Injection Permit Process Designed to Confirm Reservoir Integrity and Well Integrity to Maintain Containment of Injectate in Target Interval

8. Potential CO2 Migration Mechanisms in Subsurface 1. Fracturing 2. Faulting 3. Permeation and Spillover 4. Well integrity (cement damage) Injection well Offset well

9. wells A channel plan view sandstone A’ draped beds erosional truncation limestone horizontal well traces shale anhydrite cap rock sands, gravels dolomite reef structure shales, silts zone of elevated porosity a. Carbonate reef with closure for gas storage b. Channel sand of limited length Reservoir type, depth, stress conditions will influence likelihood of various loss mechanisms, supported by geomechanical analysis

10. well trajectory shale structural folding well trajectory fault seal sand gas shale shale water anhydrite shale shale sandstone high porosity d. Isolated zones of high porosity for storage c. Stratigraphic trap for gas storage development Reservoir type, depth, stress conditions will influence likelihood of various loss mechanisms, supported by geomechanical analysis

11. Injection Well Classifications and Permits : • Class I non-hazardous industrial waste • CO2 injection for disposal • oil and gas processing plant fluids • Class II injection for E&P activities • CO2 injection for EOR • produced water and gas re-injection • Class V injection for experimental technologies • biomass injection with CO2 sequestration

12. Terminal Island Renewable Energy Project Bureau of Sanitation Department of Public Works January 27, 2003

13. Biosolids Treatment Technology Demonstration: 1. Inject biosolids into deep geologic formations 2. Allow material to undergo natural process of high-temperature anaerobic biodegradation, instantly (within 24 hrs) sterilizing the material and over time (60-90 days) converting it to methane and carbon dioxide 3. Design process to capture and sequester generated C02 in formation water 4. Store or recover high purity methane for beneficial use

14. Environmental Advantages for Deep Subsurface Treatment 3. Renewable Clean energy Gas to Energy Facility 2. Reduce greenhouse gas emissions CO2 landfarms 4. Reduce transport env. impact and costs Fresh water sand Mud/shale Fresh water sand Sealing shale Brine filled sand Sealing shale Brine filled sand Long-term carbon sequestration 1. Enhanced treatment and groundwater protection

15. Injection Permit Process and Key Requirements: • 1. Geologic Review • 2. Injection Simulation • Well Review • Operating Plan • Monitoring Plan

16. Geologic Review Components Include: • Structure and isopach maps • Cross section maps • Reservoir and fluid characterization • 4. Seismic data if faulted

17. Well Review Components Include: • Well location and depths (up to 2 mi AOR) • Well schematics • Cement coverage and integrity ( TOC, CBL) 1 mile Many California oilfields have high well density

18. Public Outreach Tied to Regulatory Efforts • Key concerns: • Is it safe ? (accidents, health risks, earthquakes … ) • What disruption in normal life patterns (access, traffic) • Appropriate communication with stakeholders • Looking for grudging acquiescence or informed support ? • React or anticipate and engage ?

19. Terralog Project Efforts and Contributions Include: Task 1. Review, document, and summarize current state and federal regulations related to carbon capture and sequestration technologies Task 2. Evaluate and summarize permitting requirements for carbon capture and sequestration technologies Task 3. Review and summarize proposed new regulations under consideration by state and federal agencies that may impact carbon capture and sequestration activities. Task 4. Identify potential gaps, regulatory uncertainties, or possible conflicting regulations and jurisdictions associated with carbon capture and sequestration policies PHASE II : Permitting efforts for pilot, geomechanical support