In an attempt to provide clarity on the business requirements and best practices for applying for Small-Scale and Remote (SSR) Carbon Sequestration Tenure, the Government of Alberta (the Government) released Mineral Rights Information Bulletin 2023-01 (The Bulletin). The Bulletin covered the intended applications of SSR Carbon Sequestration Tenures, rent and issuance fees, pore space agreements, pore space unit agreements and other regulatory guidance. This process is designed to be followed until the Electronic Transfer System (ETS) is enhanced to support application submissions.

Respecting the intended applications, the Government stated that SSR Carbon Sequestration Tenures can be used in the following situations:

• For sequestering carbon emissions that are expelled too far from a hub, when hub infrastructure may be delayed, or when a hub is not ready to accept the volume of carbon dioxide from an emitter;
• Where carbon sequestration would be less than 200,000 tonnes of carbon dioxide annually;
• In application for waste gas disposal, such as sour gas or acid gas, which may arise or is arising from oil and gas facilities and needs to be disposed of; or
• To sequester carbon emissions arising from facilities testing carbon capture approaches.

Applications for SSR Carbon Sequestration Tenures require that the applicants identify and address overlapping interests and activities in the location that has been requested. More specifically, these requirements include the following:

• The requested lands cannot overlap with an existing carbon sequestration agreement or grant of pore space.
• Applications must be paired with a completed carbon sequestration unit agreement addressing carbon sequestration and all overlapping rights.
• Applications will also need to provide information regarding the business case, the requested lands and sequestration formation, the required technical information on sequestration location, the pore space unit agreement, and any other information required to obtain the relevant approvals from the AER or other regulatory agencies.
• Additional information may be requested from the applicant where proposals:
  • Seek to sequester over 200,000 tonnes of CO2 per year;
  • Request a project size over one quarter of a township in area; or
  • Fall within or near a current or forthcoming carbon sequestration hub.

The Bulletin also added the following notes:

• Carbon sequestration tenure is not required for projects that inject carbon dioxide as part of enhanced recovery and will continue to operate under current mineral rights tenure systems.
• Existing acid gas disposal operations are not required to apply for carbon sequestration tenure for ongoing operations.

Should this and all other elements of an application be satisfied, approval results in granting a pore space agreement and a pore space unit agreement. Pore space agreements grant the right to sequester carbon dioxide into a subsurface reservoir (pore space) within the location. On the other hand, a pore space unit agreement addresses the varying interests and activities within the location, including Crown interests.

The Bulletin also provides templates for Pore Space Lease agreements, Pore Space Unit agreements, and the SSR Carbon Sequestration application form. 

Agreements are subject to Section 23 of the Mines and Minerals Act.

Overall, the Bulletin provides clarification and signifies the willingness of the Province to create additional optionality for emitters to find more economic means to capture and sequester its emissions. While it is apparent that SSR sequestration can offer financial and logistical advantages over a larger hub, it is reasonable to wonder if this act of leaning further into SSR sequestration is simply deferring the inevitable move to a more decentralized CCS strategy in the Province that forgoes the need to construct significant transportation infrastructure to manage emission reductions. Although this strategy makes sense, it will place further onus on the Province to ensure the necessary monitoring and testing programs are in place to ensure that SSR sequestration locations are actually suitable for permanent sequestration of CO2 emissions.

For more information on this topic, please reach out to the authors, George Antonopoulos, Bernie Roth and Byron Reynolds.

A special thank you to Jesse Dias (articling student) for his assistance with this article.