This comment letter response contains two parts:

(1) The original submittal from the commenter. (2) A data base printout of EPA’s response to each point raised by the commenter.

Notes about the response letters:

• The response letters were generated by a data base used to track the content of all public

comment submittals and ensure that the Agency responds to each. Each comment letter

was assigned a Letter ID that corresponds to the last four digits of the docket number of the

original comment (as posted on www.regulations.gov).

• Each response letter includes: comment text; an EPA

‐ assigned comment code; and an

individual response. These are described and explained below.

• The data base contains Comment text from the letters submitted by commenters.

Many hard copy letters were scanned into electronic format for inclusion in the data

base. As a result, there may be some typographical errors attributable to optical

character recognition issues. However, all original submittals were reviewed in the

process of drafting responses to ensure that the comment content was understood and

appropriately addressed.

• The content of each comment letter was divided into topic areas and assigned a unique

Comment ID. Additionally, one or more Comment Codes (i.e., unique topic area ID) was assigned to each discrete point raised by a commenter. This information was added to

the data base. To inform final rulemaking decisions, all comments and information

received on a given topic were reviewed by technical experts in each rule area (e.g., on

construction requirements).

• Following decisions on the final rule requirements, Individual responses were drafted

by topic area to ensure completeness and consistency of the responses with the final

rule and other responses to similar comments. Each discrete point made by a

commenter was given a unique response.

• Upon completion of comment responses, all information was entered into the data base.

Each letter response is a compilation of each comment and its individual response, compiled in the order of the original comment letter. As a result of this process, there is

repetition in the response text. The Agency believes this approach ensures completeness

and attention to each comment letter that was submitted.

• All comments in a topic area were reviewed, evaluated, and responded to concurrently.

Responses on each topic area are compiled and are also available in the rulemaking docket.Hydrogen Energy International Comments to EPA Proposed Rule By Mr. Matt Toner EOR and CO2 Storage EPA Public Hearing, Chicago, Illinois – September 30, 20008

Docket ID No. EPA-HQ-OW-2008-0390

INTRODOCUTION

• Thank you for the opportunity to speak here today. My name is Matt Toner and I work for Hydrogen Energy International, where I am the Carbon Storage Manager for North & S outh America. I have over 28 years of Oil & Gas Industry exper ience, including management of CO2 EOR operations in West Texas.

• Hydrogen Energy is a joint ventur e between BP Alternative Energy and Rio Tinto and our corporate dire ctive is to develop low-carbon power utilizing pre-combustion s eparation of Hydrogen and Carbon Dioxide. Currently we have two projects undergoing regulatory review in Bakersfield, Californ ia, and the United Arab Emirates, as well as several other projects in various stages of evaluation. Todate we are the only company in the world to have secured a fullypermitted, industrial-scale facility of this type.

• As such, we are deeply appreciati ve of EPA's efforts to create a regulatory process to fa cilitate the capture and st orage of CO2, while protecting Underground Sources of Drinking Water and the health and safety of the public.

EOR RECOGNITION

• EPA has recognized the valuable role that oil and gas reservoirs can play in the geologic storage of CO2, and Hydrogen Energy would encourage that EPA go significantly furt her in facilitating use of these reservoirs. When CO2 is injected for Enhanced Oil or Gas Recovery, it could at the same time be sequestered for long term storage at the option of the operat or. EPA should recognize this concurrent dual purpose, CO2 In jection for Enhanced Oil or Gas Recovery and Designed Storage, and allow this dual purpose under existing Class II UIC rules. Furthermore, EPA regulations shouldHydrogen Energy International Comments to EPA Proposed Rule By Mr. Matt Toner

Docket ID No. EPA-HQ-OW-2008-0390 Page 2

facilitate grandfathering from dual purpose production and storage to storage-only sites when EOR/EGR operations are completed.

• In the course of a typical EOR operation, even where there is no intent to sequester, 30-50% on the injected CO2 remains in the reservoir after production operations cease. The balance is either miscibly dissolved within the produced oil or recycled for use in other

reservoirs — it is not emitted to the atmosphere. Today ~90% of the CO2 used in enhanced recovery operations is produced from naturally occurring accumulations. Rather than using this naturally occurring CO2, society can mitigate greenhouse gas emissions by using anthropogenic sources. In addition, injection can continue upon the completion of production oper ations, to fully utilize all existing pore space - What we call EOR + Storage.

• Oil and Gas reservoirs have proven capable of containing waterbuoyant fluids and gases for millions of years. These reservoirs are well studied and they offer the bes t opportunity to kick-start largescale geologic storage of CO2 - building on 100 years of oil field operating experience and adding insights which can be applied to saline storage.

• EPA recognition of anthropogenic EOR + storage as a valid method of geologic sequestration, subjec t of course to appropriate measurement, monitoring and site closure, will provide much needed

economic incentive to near-t erm Carbon Capt ure and Storage efforts, while longer-term Cap & Trade or Taxation schemes develop, in support of saline storage options.

STREAMLINING OF REQUIREMENTS

• Existing Class II regulations governing injection of CO2 in oil & gas reservoirs have proven successf ul at protecting USDWs and the health and safety of the public at large. These regulations should allow for the dual purpose of seques tration, if ant hropogenic CO2 is

used.

• Hydrogen Energy also recommends that EPA expand grandfathering to facilitate transition from pr oduction and storage to storage-onlyHydrogen Energy International Comments to EPA Proposed Rule By Mr. Matt Toner

Docket ID No. EPA-HQ-OW-2008-0390 Page 3

sites, which will incentivize the use of these reservoirs for long-term CO2 storage.

• Proposed grandfathering of Class II wells should go beyond just construction requirements to incl ude, at a minimum, operating and mechanical integrity requirement s for existing, operationally compliant, Class II EOR-CO2 injection wells. The Class VI requirements would require tech nically unnecessary changes to equipment and monito ring procedures.

• Some authors have identified leakage risk with using oil & gas reservoirs for CO2 sequestration due to the presence of inactive wells. Proper plugging and abandonment of inactive wells is a proven method which can ensure this risk is effectively managed. In addition, the oil and gas industry has developed techniques to quickly isolate, effectively repair and remediate these issues, in their unlikely occurrence.

CONCLUSION

• In closing, Hydrogen Energy wo uld like to applaud EPA for their

effort to create an effectiv e regulatory framework for the sequestration of Carbon Dioxide whil e protecting USDW's. However, we believes that EPA should go si gnificantly further than the proposed regulation, by recognizi ng the potential for concurrent, CO2 Injection for Enhanced Oil or Gas Recovery and Designed Storage and allowing for this dual purpose. Furthermore, EPA should facilitate grandfathering from dual purpose production and storage to storage-only sites when EOR/EGR operations are completed.

• Incentivizing the use of anthr opogenic CO2 for enhanced oil or gas recovery would:

–Significantly reduce CO2 emissi ons - Currently over 2 billion cubic feet of naturally-occurri ng CO2 is used for EOR in the US every day and volumes are growing;

–Increase Energy security by fa cilitating additional EOR activity and thereby reducing the need for foreign oil - EOR has the potential to add 40-80 billion bar rels of oil, based on DOEHydrogen Energy International Comments to EPA Proposed Rule By Mr. Matt Toner

Docket ID No. EPA-HQ-OW-2008-0390 Page 4

estimates, which is 2 to 4 ti mes the current US total proved

reserves;

–Effectively utilize proven, well-studied and well-tested geologic storage containers - It wil l likely cost $10's of millions and take years of study to permit one commercial scale saline storage reservoir;

–Effectively utilize over 100 y ears of oil field operating experience while building new competence for future saline storage options;

–Effectively build on the successful regulatory framework for UIC Class II wells;

–and, finally, it would help kick- start the financially challenged carbon capture industry, by improving economics and accelerating uptake of this critical technology.

Thank You.Letter ID: 0117

Commenter: Matt Toner Organization: Hydrogen Energy International

Letter ID: 0117 Comment ID: 22058 Letter Lines: 36 to 57

Comment Code: 2064 1.5.3.2 Grandfathering construction of Class II wells (seeking comment)

Comment: EPA has recognized the valuable role that oil and gas reservoirs can play in the geologic storage of CO2, and Hydrogen Energy would encourage that EPA go significantly further in fa cilitating use of these re servoirs. When CO2 is injected for Enhanced Oil or Gas Recove ry, it could at the same time be sequestered for long term storage at th e option of the operator. EPA should recognize this concurrent dual purpose, CO 2 Injection for Enhanced Oil or Gas Recovery and Designed Storage, and allo w this dual purpose under existing Class II UIC rules. Furthermore, EPA regulati ons should Hydrogen Energy International Comments to EPA Proposed Rule faci litate grandfatheri ng from dual purpose production and storage to storage-only sites when EOR/EGR operations are completed.

In the course of a typical EOR operati on, even where there is no intent to sequester, 30-50% on the injected CO2 rema ins in the reservoi r after production operations cease. The balance is either mi scibly dissolved within the produced oil or recycled for use in other re servoirs - it is not emitted to the atmosphere. Today ~90% of the CO2 used in enhanced recove ry operations is produced from naturally occurring accumu lations. Rather than using this naturally occurring CO2, society can m itigate greenhouse gas emissions by using anthropogenic sources. In addition, inject ion can continue upon the completion of production operations, to fully utili ze all existing pore sp ace - What we call EOR + Storage.

Individual Response: EPA agrees that many Class II well s are designed and constructed to withstand exposure to CO2. The final GS rule provi des for the construction of these wells to be grandfathered per §146.81(c), provid ed the owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet th e requirements at §146.86(a) and ensure protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a). EPA clarifies that only the construction requirements are grandfathered and that all other Class VI requirements (reporting, monitori ng, mechnical integrity testing, etc.) must be met following a determination under §146.81(c).

Letter ID: 0117 Comment ID: 22059 Letter Lines: 59 to 69

Comment Code: 2143 1.6.2.1 Comments in favor of inject ion into depleted reservoirs

Comment: Oil and Gas reservoirs have proven capabl e of containing water buoyant fluids and

1gases for millions of years. These reser voirs are well studied and they offer the best opportunity to kick -start largescale geologic storage of CO2 - building on 100 years of oil field operating experi ence and adding insights which can be applied to saline storage.

EPA recognition of anthropogenic EOR + st orage as a valid me thod of geologic sequestration, subject of cour se to appropriate measurem ent, monitoring and site closure, will provide much needed econom ic incentive to near-term Carbon Capture and Storage efforts, while longer-term Ca p & Trade or Taxation schemes develop, in support of saline storage options.

Individual Response: EPA acknowledges the comment and agr ees that depleted oil and gas fields are promising formations for GS, provi ded the Class VI siting, well construction and operation, monitoring and testing, an d post-injection site care and site closure requirements are met under today’s final rule. EPA adds that in jection of carbon dioxide for the purposes of enhanced oil recovery is classified as Class II injection, not Class VI, a nd will require a Class II permit. Wells for which the primary purpose is lo ng term sequestration ar e considered Class VI

wells. EPA further clarifies that the GS rule is not intended to promote a preference for GS in any particular formation type, to address use of resources, or to reduce co sts associated with GS

into various formations. The focus of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protect s USDWs from endangerment.

Letter ID: 0117 Comment ID: 22060 Letter Lines: 65 to 69

Comment Code: 1410 1.2.1 Comments in support of EPA/rulemaking

Comment: EPA recognition of anthropogenic EOR + st orage as a valid me thod of geologic sequestration, subject of cour se to appropriate measurem ent, monitoring and site closure, will provide much needed econom ic incentive to near-term Carbon Capture and Storage efforts, while longer-term Ca p & Trade or Taxation schemes develop, in support of saline storage options.

Individual Response: EPA recognizes that the oil and gas industry has decades of experience injecting CO2 for the purpose of ER, and that site s used for ER may be suitable for GS and may be among the first GS sites. EPA also recognizes that a by-product of ER activities is that a certain percentage of the CO2 is trapped in the receiving formation.

However, EPA clarifies that injection of CO2 fo r the purposes of enhanced oil and gas recovery will continue to be permitted under the Class II program until the Director determines under §144.19 that the primary purpose of CO2 injection pr oject is long term storage wherein a Class VI permit is required. Class VI requirements w ill apply to wells used for the purpose of longterm GS. The requirements for Class VI wells are tailored to address th e unique nature of fullscale CO2 GS, including the volumes of CO2 be ing anticipated for long-term storage, the buoyant nature of the injectate, its mobility within subsurf ace geologic formations, and its corrosivity in the presence of water. EPA adds that the intent of the GS rule is not to promote

2GS; rather it is designed to ensure that, where deployed, GS is conducted in a manner that protects USDWs from endangerment.

Letter ID: 0117 Comment ID: 22061 Letter Lines: 71 to 93

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)

Comment Code: 2064 1.5.3.2 Grandfathering construction of Class II wells (seeking comment)

Comment: STREAMLINING OF REQUIREMENTS

Existing Class II regulations governing injec tion of CO2 in oil & gas reservoirs have proven successful at protecting USDW s and the health and safety of the public at large. These regulations sh ould allow for the dual purpose of sequestration, if anthro pogenic CO2 is used.

Hydrogen Energy also recommends that EPA expand grandfathering to facilitate transition from production and storage to storage-only sites, which will incentivize the use of these reservoirs for long-term CO2 storage. Proposed grandfathering of Class II we lls should go beyond just construction requirements to include, at a minimum, operating and mechanical integrity requirements for existing, operationally compliant, Class II EOR-CO2 injection wells. The Class VI requirements would re quire technically u nnecessary changes to equipment and monitoring procedures.

Some authors have identified leakage risk with using oil & gas reservoirs for CO2 sequestration due to the presence of inactive wells. Proper plugging and abandonment of inactive wells is a proven me thod which can ensure this risk is effectively managed. In addition, the oil and gas industry has developed techniques to quickly isolate, effectivel y repair and remediate these issues, in their unlikely occurrence.

Individual Response: As described above, the final GS ru le provides for the construction of Class II wells to be grandfathered per §146.81( c), provided the owner or operator can

demonstrate to the Director that the wells we re engineered and constructed to meet the requirements at §146.86(a) and ensu re protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a).

EPA disagrees that other requirements (e.g., MITs, siting, monitoring, operational, and AoR requirements) should also be grandfathered. Fo llowing re-permitting of the well as Class VI, many of the unique factors of GS sites (e.g., increa sed reservoir pressures associated with large volumes of stored CO2 and the corrosivity of CO 2 in the presence of water) will result in an increased risk profile, warranti ng the specific requirements in the final GS rule. Therefore, following re-permitting as Class VI wells, these proj ects must be subject to the operational, MIT, monitoring, reporting, plugging, and post- injection site care and site closure requirements in the

3final GS rule. See the discussion of EPA's final regulatory approach in the preamble to the GS rule for additional detail on these requirements.

Letter ID: 0117 Comment ID: 22062 Letter Lines: 97 to 104

Comment Code: 2044 1.5.2.2 Oppose Class VI/ Support Class II

Comment Code: 2064 1.5.3.2 Grandfathering construction of Class II wells (seeking comment)

Comment: In closing, Hydrogen Energy would like to a pplaud EPA for their effort to create an effective regulatory framework for the sequestration of Ca rbon Dioxide while protecting USDW's. However, we believes th at EPA should go signi ficantly further than the proposed regulation, by recognizi ng the potential for concurrent, CO2 Injection for Enhanced Oil or Gas Recove ry and Designed Storage and allowing for this dual purpose. Furthermore, EPA shoul d facilitate grandfathering from dual purpose production and storage to storage-on ly sites when EOR/EGR operations are completed.

Individual Response: EPA clarifies that inje ction for enhanced recovery is permitted under Class II. EPA disagrees that dual purpose underg round injection should be authorized under the UIC program because the unique risks posed by long term storage of CO2 for GS cannot be addressed under existing UIC requirements, such as those for Class II wells. EPA believes that there are significant differences between how projects are operate d, as well as the risks posed by these different injection activities. The new tail ored approach of the GS rule was designed to address the general risks deep injection may pose to USDWs and was tailored specifically to address the risks posed by long term storage ofCO2 (i.e., very large volumes, very long timeperiods, and reservoir pressure conditions).

EPA notes that many Class II wells are designed and constructed to withstand exposure to CO2. The final Class VI regulations re quire that any owner or operato r injecting CO2 for the primary purpose of long term storage obtain a Class VI pe rmit with some special consideration for the fact that they are transitioning from a well not or iginally designed to meet Class VI requirements. The Director has the authority to determine at wh at point a Class VI permit is required for those projects that are transitioning from the primar y purpose of EOR to long term storage of CO2. The final regulation provides a set of technical factors for the Direct or to evaluate in making this determination, at §144.19. EPA believes that this approach provides su fficient protection of

USDWs when there is an increased risk to USDWs as compared to traditi onal Class II operations while allowing for site-specific flexibility. For more information, please see the discussion on transition of Class II wells in the preamble to the final GS rule.

Letter ID: 0117 Comment ID: 22063 Letter Lines: 106 to 129

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)

Comment: Incentivizing the use of anthropogenic CO 2 for enhanced oil or gas recovery

45 would:

-Significantly reduce CO2 emissions - Cu rrently over 2 billion cubic feet of naturally-occurring CO2 is used for EOR in the US every day and volumes are growing;

-Increase Energy security by facilitating additional EOR activity and thereby reducing the need for foreign oil -EOR has the potential to add 40- 80 billion barrels of oil, based on estimates, which is 2 to 4

times the current US to tal proved reserves;

-Effectively utilize proven, well-studied and well-tested geologic storage containers - It will likely cost $10's of millions and take years of study to permit one commercial scale saline storage reservoir;

-Effectively utilize over 100 years of oil field operating experience while building new competence for future saline storage options;

-Effectively build on the succe ssful regulatory framework for UIC Class II wells; and, finally, it would help kick-start th e financially challenged carbon capture industry, by improving economics and acceler ating uptake of this critical technology.

Individual Response: EPA clarifies that the purpose of the GS rule is not to incentivize or encourage the use of GS, but to ensure that, wh ere GS is deployed, it is conducted in a manner that does not endanger USDWs. Furthermore, the pur pose of the GS rule is not to incentivize the use of anthropogenic CO2 for EOR purposes.