### 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.December 22, 2008

Submitted Via E-Mail

Water Docket

Environmental Protection Agency

Mai1code: 2822T

1200 Pennsylvania Avenue, NW Washington, DC 20460

101010. 

### regulations.gov

Re: Docket ID No. EPA-HQ-OW-2008-0390: Comments to Proposed Rule on Federal Requirements Under the Underground Injection Control Program for Carbon Dioxide Geologic Sequestration Wells

Sandridge Energy Corporation ("Sandridge") is pleased to submit these comments to the

Environmental Protection Agency's ('IEP A") Proposed Rule re Federal Requirements Under the Underground Injection Control Program ("UIC') for Carbon Dioxide ("C02") Geologic Sequestration ("GS") Wells, Docket ID Number EPA-HQ-OW-2008-0390 (the "Proposed Rule").

Sandridge is a rapidly growing independent natural gas and oil company concenh'ating in exploration, development and production activities. The company also engages in enhanced oil

recovery ("EaR") using industrial C02 and has an agreement with a dominant EaR operator to
use/ sequester C02 from the Sandridge wells for 30 years. The indush'ial C02 is created through a

process in which C02 is stripped out of the gas stream initially produced by the company in the

West Texas Overthrust. Through its EaR practices and other business operations, Sandridge is

committed to conducting its business in a manner that produces important new domestic supplies

of natural gas and oil, while also working to protect the environment. Accordingly, Sandridge
supports the EPA's efforts to protect underground sources of drinking water in the context of geological sequestration. However, Sandridge's comments below describe the important

differences between EaR and GS and suggest ways that the Proposed Rule can better distinguish

EaR from GS so that even more C02 may be sequestered in connection with EaR.

The first part of these comments discusses the widely accepted importance of EaR using C02 to
the U.S. domestic supply of energy and to the 

## u.s. environment. The second part of these

comments suggests that the Proposed Rule must better distinguish GS of C02 that occurs in

connection with business-as-usual EaR that is regulated

- and should remain regulated

- under

Class II of the EPA's UIC program, from GS of C02 that will occur in conjunction with UIC projects designed solely to permanently sequester large quantities of C02. Finally, the third part
of these comments includes observations about GS of C02 under the potential new rules.

1. EPA UIC Regulations Must Recognize That EaR Using C02 Increases Domestic Energy Supplies And Utilizes And Simultaneously Sequesters C02 That Would Otherwise Be

Vented Into The Atmosphere

Discovering Beneath Exploring Beyond'"

123 Robert S. Kerr, Oklahoma City, OK 73102-6406 • Phone 405-429-5500, Fax 405-429-5975 • sandridgeenergy.comAs explained below, Sandridge believes that the EPA must issue regulations under the UIC in a

manner that enables new and existing owners and operators of Class II wells to use those wells to inject C02 for EaR without additional and undue risks and costs. This process has and will significantly increase domestic sources of energy, while utilizing and simultaneously sequestering

C02 that would otherwise be vented into the atmosphere.

A. EaR Using C02 Has Significant Economic And Environmental Benefits

EaR using C02 has and will substantially increase the U.S. domestic energy supply, which places

the counh-y in a more favorable economic and national security position. After the primary and secondary phases of oil recovery are complete, C02 may be injected into oil and gas fields and

reservoirs during a tertiary recovery phase known as EaR to recover between 10 and 50 percent of

the oil originally contained in the reservoir. According to the Department of Energy (DOE), approximately 1,673 fields/reservoirs, which account for 146 billion barrels of original oil in place

and 65 billion barrels of remaining immobile oil, are candidates for C02-miscible flooding in the

U.S. The latest report on IIStoring C02 with Enhanced Oil Recoveryll published by the DOE's

National Energy Technology Laboratory (the IIDOE-NETL Report") explains that lithe 39 to 48

billion barrels of economically recoverable domestic oil[,] economically recoverable from storing

C02 with EOR[,] would help displace imports, [create] a path toward energy independence

... [and] help build pipeline infrash'ucture subsequently usable for storing C02 in saline formations. II

EaR using C02 contributes to the 

## u.s. domestic energy supply in an environmentally responsible

way that traps C02 that would otherwise be vented into the atmosphere. C02 is not simply injected into a formation when it is used for EaR; C02 is also sequestered simultaneously during

and after oil and gas production resulting from EaR with C02. When C02 is injected for EaR, approximately one-third to one-half of it becomes trapped and stored in the field or reservoir in perpetuity and the remainder of the C02 is produced with the oil and then separated and reinjected to further enhance production. Each subsequent injection traps even more of the original C02, and ultimately nearly all of the C02 is sequestered in the field or reservoir. Because

of this sequestration, oil and gas producers must continually obtain additional amounts of the greenhouse gas, which is then ultimately sequestered-instead of vented-into the atmosphere.

The DOE-NETL Report estimates that II s ignificant volumes of C02 (ranging from 10 to 13 billion

metric tons depending on oil price) can be stored with enhanced oil recovery. II

In fact, EaR is the only commercially available near-term way to sequester C02. In his recent testimony during the 

## u.s. House Energy and Commerce Subcommittee on Environment and

Hazardous Materials hearing on IICarbon Sequestration: Risks, Opportunities and Protection of Drinking Water, II Dr. Ian Duncan from the Bureau of Economic Geology at the University of Texas

at Austin stated that II [i]n the near term, C02-enhanced oil recovery, combined with appropriate monitoring, mitigation and verification, can make a significant contribution to putting man-made

C02 into permanent storage in depleted oil reservoirs, and it may have been a little confusing in

some of the previous testimony where it was perhaps suggested that C02 involved in enhanced oil

recovery is just there to recover the oil. lI

The time-tested and successful regulation of C02 sequesh'ation in connection with EaR under

Class II requirements (as opposed to the ongoing developing tests and regulation of C02 sequestration from large-scale GS projects) is the reason that experts point to EaR using C02 as

2the only near-term commercially available way to reduce greenhouse gas emissions through

carbon sequesh'ation. Injecting relatively small amounts of C02 at relatively light pressures for

EOR purposes has been tested and regulated since the early 1970s under Class II requirements.

These requirements include rules to ensure proper monitoring, mitigation and verification and

have resulted in the successful regulation of C02 used for EOR. Testament to this successful regulation is the fact that the EPA has acknowledged that there has been no known impactpositive or negative-of C02 used for EOR on underground sources of drinking water. 1

Since EOR using C02 has been successfully regulated under the Class II program for over three decades, Sandridge believes that the EPA should continue to monitor EOR using C02 under that

program. Accordingly, there must be a recognized line between GS that occurs in conjunction

with business-as-usua1 EOR where C02 is injected at relatively low volumes and at relatively low

pressures, and GS during which C02 is injected at high volumes at high pressures for the primary

purpose of permanent sequesh'ation. Developing such a line will not only benefit regulators by clarifying the boundaries between the two types of activities, but also companies engaging in EOR using C02 that have already factored the Class II requirements into their costs and risk

assessments. If there is doubt that business-as-usua1 EOR using C02 may be subject to new regulations, companies may decide that taking steps necessary to qualify such projects for carbon

credits are no longer worth it, thereby potentially depriving the U.s. of important verifiable carbon sequestration alternatives.

B. Benefits From EaR With C02 Can Only Be Realized If Costs Are

Contained

As suggested above, Sandridge believes that the economic and environmental benefits from EOR using C02 will only continue and grow if costs and risks are contained. As it is, under the current
business and regulatory environments, cost is a major barrier to EOR with C02, Occidental

Petroleum Vice President of Worldwide Engineering and Technical Services William Roby

illustrated the enormous costs associated with EOR using C02 in recent testimony when he

described that II [Occidental] estimate[s] that using C02 enhanced recovery at [its] Permian Basin operations increases the cost of recovering a barrel of oil by more than 50 percent over typical primary and secondary recovery operations. II

First, a business must spend significant capital to build the pipeline infrastructure necessary to

carry the C02 from its source to the targeted fields and reservoirs. In order to make the necessary investments in EOR with C02, a business must be able to figure that it will recover the capital costs
from the long-term oil production potential of the target formation and the expectations of future

oil prices. Oil price volatility is " a significant deterrent to C02 pipeline and project investment by industry, particularly for smaller independent producers. II EOR with C02 becomes more attractive from a business cost perspective as oil prices go up.

Given recent and future oil price volatility and the enormous costs associated with EOR using
C02, it is crucial for businesses engaging in that activity to keep costs as stable and predictable as

1 See U.S. Environmental Protection Agency, Proposed UIC Regulations for Geologic Sequestration of Carbon Dioxide, Meeting Summary, Appendix 3, Page 2 of 2 (Dec. 3-4, 2007) (responding to a written question after

the meeting, EPA stated, "[t]O date, according to rule-making research, we know of no cases of C02 being

used for EOR where the C02 has impacted a USDW").

3possible. Since these businesses have been operating under Class II regulations, they are able to predict those regulatory costs with some precision. This prediction has encouraged businesses to
invest in C02 since they do not have to factor much regulatory volatility into their business plans

for conducting EaR with C02.

II. EP A Regulations Must Reflect A Bright Line Between C02 Sequestered In Conjunction

With Business-As-Usual EaR Regulated Under Current Class II Regulations And C02 Sequestered For The Purpose Of Permanent GS Regulated Under A New Regime

Sandridge is concerned that the Proposed Rule does not adequately recognize that industry may only be expected to continue investing in EaR projects using C02 as long as industry may rely on the activity's regulation under tested and predictable Class II requirements for injection wells. In

its current form, the Proposed Rule indicates that " [i]njection of C02 for the purposes of enhanced

oil and gas recovery

.. . 

### ,as long as any production is occurring, will continue to be permitted under the

Class II program" (emphasis added). However, the Proposed Rule does not set a minimum level

at which production must be occurring to appropriately distinguish injection of C02 for businessas-usual EaR that will be regulated under Class II regulations, from injection of C02 for GS that

will be regulated under a new class. 2

This omission increases the potential risks and costs to industry and could lead to a chilling effect

on industry efforts to seek carbon credits. As such, it is important to make clear that C02 sequesh'ation can occur in conjunction with business-as-usual EaR with the proper level of regulatory scrutiny under Class II regulations, and it can also take place in conjunction with

activities specifically designed to sequester large amounts of C02 that will be regulated under a

new regime. Sandridge believes that it is crucial that EP 

### Ns final rule makes this clarification to help ensure that industry continues its EaR activities and taking steps necessary to earn carbon
credits, especially at this time when the U.S. is searching for ways to increase the domestic supply

of energy in ways that reduce greenhouse gas emissions. Accordingly, as a member of an industry actively involved in EaR using C02, Sandridge believes that EPA should ensure that the final rule

contains a bright line, minimum level at which production must be occurring to appropriately distinguish injection of C02 for business-as-usual EaR that will be regulated under Class II regulations from injection of C02 for permanent GS that will be regulated under a new class.

III. Suggested Injection Well Definition To Create Necessary Bright Line Between Class II

And Class VI C02 Injection Activities

Sandridge suggests that EPA continue to regulate under Class II requirements injection wells that

meet the following definition:

(1) For enhanced recovery of oil or natural gas where geologic sequestration is occurring during or in connection with enhanced recovery of oil or natural gas 

### provided (i) there is reasonable expectation of more than insignificant future production volumes or rates as a result of carbon

dioxide injection and 

### (ii) operating pressures are no higher than reasonably necessary to produce

such volumes or rates.

2 See id. (responding to a question about activities that the Proposed Rule is designed to cover, EPA clarified

that "[t]his [proposed] rule applies to geologic sequestration, not EORjEGR activities").



### 4This suggested formula to define injection wells that should be regulated under Class II has been

reviewed and approved by several interested parties, including representatives of environmental organizations, as well as indush·y. Therefore, Sandridge believes that EPA should 1) be satisfied

that the definition has been well-vetted and enjoys broad support, and 2) adopt the formula as the

standard that separates C02 sequestration that occurs in conjunction with business-as-usual EOR

that will continue to be regulated under traditional Class II requirements, from C02 sequestration

that occurs as a result of C02 injection in large quantities for the sole purpose of permanent GS

that may be regulated under a new class.



### N. Conclusion

It is widely accepted that business-as-usual EOR using C02 has the potential to unlock enormous

new domestic energy supplies while reducing C02 through simultaneous sequestration. Since this important industry practice has been tested and regulated successfully for more than three
decades, with no known negative impacts to the environment or underground sources of drinking

water, Sandridge urges the EPA to ensure that indush-y will continue to invest in EOR using C02 (and thereby simultaneously storing C02 which would otherwise be vented into the atmosphere) by revising the Proposed Rule to define and distinguish C02 sequestration that occurs in conjunction with business-as-usual EOR that will continue to be regulated under h'aditional Class

II requirements, from C02 sequestration that occurs as a result of C02 injection in large quantities

for the sole purpose of permanent GS that may be regulated under a new class. For the reasons explained above, Sandridge suggests the EPA create this bright line by classifying injection wells

that meet the following formula as those that will be regulated under Class II:

(1) For enhanced recovery of oil or natural gas where geologic sequestration is occurring during or in connection with enhanced recovery of oil or natural gas 

### provided (i) there is reasonable expectation of more than insignificant future production volumes or rates as a result of carbon

dioxide injection and 

### (ii) operating pressures are no higher than reasonably necessary to produce

such volumes or rates.

Sandridge recognizes that EPA is considering new regulations for the injection of C02 at volumes

and pressures that go beyond traditional EOR activities for which the proposed Class VI requirements may be appropriate. However, in these comments, Sandridge only seeks to point

out the extraordinarily important business, environmental, and regulatory reasons why it believes

that the EPA must ensure that the final rule properly distinguishes C02 injected for business-asusual EOR from C02 injected for GS.

Thank you for your consideration of these comments.

Sincerely, 

# *

Tom Ward

Chief Executive Officer



### 5

### Letter ID: 0219
Commenter: Tom Ward Organization: Sandridge Energy Corporation

Letter ID: 0219 Comment ID: 21568 Letter Lines: 61 to 70

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: 1. EPA UIC Regulations Must Recognize Th at EOR Using CO2 Increases Domestic Energy Supplies And Utilizes And Simulta neously Sequesters CO2 That Would Otherwise Be Vented Into The Atmosphere

As explained below, Sandridge believes th at the EPA must issue regulations under
the UIC in a manner that enables new and existing owners and operators of Class II wells to use those wells to inject CO2 for EOR without additional and undue risks and costs. This process has and will significantly increase domestic sources of energy, while utilizing and simultaneously sequestering CO2 that would otherwise be vented into the atmosphere.

Individual Response: The Agency believes that the nature and risks of CO2 injection for the primary purpose of long term storage pose different risks than injection for the primary purpose of ER, and therefore has develope d new Class VI regulations to address these unique risks. EPA
clarifies that the rule does not create any additional requiremen ts for Class II EOR wells that inject CO2 for enhanced recovery of oil or gas.

In response to the comment about domestic energy production, EPA clarifies that the purpose of the GS rule is to ensure protection of US DWs from endangerment and not to promote or incentivize GS. However, the Agency believes th at establishing a regulatory framework for the future development and deployment of CC S technology may provide the regulatory and jurisdictional certainty needed to foster deve lopment and deployment of CCS while ensuring USDW protection.

Letter ID: 0219 Comment ID: 21569 Letter Lines: 72 to 145

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: A. EOR Using CO2 Has Significant Econom ic And Environmental Benefits

EOR using CO2 has and will substantially increase the U.S. domestic energy supply, which places the country in a mo re favorable economic and national security position. After the primary and secondary phases of oil recovery are complete, CO2 may be injected into oil and gas fields and re servoirs during a tertiary recovery phase known as EOR to recover between 10 and 50 percent of the

1

### oil originally contained in the reservoir. According to the Department of Energy (DOE), approximately 1,673 fields/reser voirs, which account for 146 billion barrels of original oil in place and 65 billion barrels of remaining immobile oil, are candidates for CO2-miscible fl ooding in the U.S. The latest report on "Storing CO2 with Enhanced Oil Recovery " published by the DOE's National Energy Technology Laboratory (the "DOE-NETL Report") explains that "the 39 to 48 billion barrels of economically recoverable domestic oil[,] economically recoverable from storing CO2 with EOR[,] would help disp lace imports, [create] a path toward energy independence...[and] help build pipeline infrastructure subsequently usable for storing CO2 in saline formations."

EOR using CO2 contributes to the U.S. domestic energy supply in an environmentally responsible way that trap s CO2 that would otherwise be vented into the atmosphere. CO2 is not simply inj ected into a formation when it is used for EOR; CO2 is also sequestered simultaneously during and after oil and gas production resulting from EOR with CO2. When CO2 is injected for EOR, approximately one-third to one-half of it becomes trapped and stored in the field or reservoir in perpetuity and the remainder of the CO2 is produced with the oil and then separated and reinject ed to further enhance production. Each subsequent injection traps even more of the original CO2, and ultimately nearly all of the CO2 is sequestered in the fi eld or reservoir. Because of this sequestration, oil and gas producers must continually obtain additional amounts of the greenhouse gas, which is then ultim ately sequestered-instead of ventedinto the atmosphere. The DOE-NETL Report es timates that "significant volumes of CO2 (ranging from 10 to 13 billion metric tons depending on oil price) can be
stored with enhanced oil recovery."

In fact, EOR is the only commercially av ailable near-term way to sequester CO2. In his recent testimony during the U.S. House Energy and Commerce Subcommittee
on Environment and Hazardous Materials hear ing on "Carbon Sequestration: Risks, Opportunities and Protection of Drinking Water," Dr. Ian Duncan from the Bureau of Economic Geology at the University of Te xas at Austin stated that " [i]n the near term, CO2-enhanced oil recovery, combined with appropriate monitoring, mitigation and verification, can make a sign ificant contribution to putting manmade CO2 into permanent storage in deplet ed oil reservoirs, and it may have been a little confusing in some of the prev ious testimony where it was perhaps suggested that CO2 involved in enhanced o il recovery is just there to recover
the oil."

The time-tested and successful regulation of CO2 sequestration in connection with EOR under Class II requirements (a s opposed to the ongoing developing tests and regulation of CO2 sequestration from large-scale GS projects) is the reason that experts point to EOR using CO2 as th e only near-term commercially available way to reduce greenhouse gas emissions through carbon sequestr ation. Injecting relatively small amounts of CO2 at relativ ely light pressures for EOR purposes has been tested and regulated since the early 1970s under Clas s II requirements.

2

### These requirements include rules to en sure proper monitoring, mitigation and
verification and have resulted in the succe ssful regulation of CO2 used for EOR. Testament to this successful regulation is the fact that the EPA has acknowledged that there has been no know n impact-positive or negative-of CO2 used for EOR on underground sources of drinking water.[1]

Since EOR using CO2 has been successfully regulated under the Class II program for over three decades, Sandridge believes that the EPA should continue to monitor EOR using CO2 under that progr am. Accordingly, there must be a recognized line between GS that occurs in conjunction with business-as-usua1 EOR where CO2 is injected at relatively low volumes and at relatively low pressures, and GS during which CO2 is injected at high volumes at high pressures for the primary purpose of perman ent sequestration. Developing such a line will not only benefit regulators by clarifying the boundaries between the two types of activities, but also companie s engaging in EOR using CO2 that have already factored the Cl ass II requirements into their costs and risk
assessments. If there is doubt that bu siness-as-usua1 EOR using CO2 may be subject to new regulations, companies may d ecide that taking st eps necessary to qualify such projects for carbon credit s are no longer worth it, thereby potentially depriving the U.S. of impo rtant verifiable carbon sequestration
alternatives.

Individual Response: EPA agrees that injection of CO2 for the primary purpose of enhancing oil and gas recovery should remain under the Cl ass II Program. The Agen cy believes that the nature and risks of CO2 inject ion for the primary purpose of long term storage pose different risks than injection for the primary purpose of EOR, and therefore has developed new Class VI regulations to address these unique risks. For example, the volu me of CO2 anticipated to be injected for long term storage is significantly gr eater than for ER operatio ns. Reservoir pressure conditions will also be different, with Class VI injection operations involving large volumes of CO2 and likely having higher pressure s within their storage formations than Class II ER projects.

As described above, EPA clarifies that the purpose of the GS rule is to ensure protection of USDWs from endangerment and not to addr ess domestic energy production. The Agency believes that establishing a regulatory framework for the future development and deployment of CCS technology may provide the regulatory and jurisdictional certainty needed to foster development and deployment of CC S while ensuring USDW protection.

Furthermore, EPA clarifies that the Agency is using an adaptive approach to regulate GS injection. The Agency plans, every six years, to collect and review data on GS projects, including monitoring EOR projects using CO2, to determine whether the appropriate amount and types of information and appropriate documenta tion are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0219 Comment ID: 21570 Letter Lines: 147 to 209

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/

3

### dividing line between Class II and Class VI (seeking comment)

Comment: B. Benefits From EOR With CO2 Can Only Be Realized If Costs Are Contained

As suggested above, Sandridge believes that the economic and environmental benefits from EOR using CO2 will only continue and grow if costs and risks are contained. As it is, under the current bus iness and regulatory environments, cost is a major barrier to EOR with CO2, Occidental Petroleum Vice President of Worldwide Engineering and Technical Services William Roby illustrated the enormous costs associated with EOR using CO2 in recent testimony when he described that "[Occidental] estimate[s] that using CO2 enhanced recovery at [its] Permian Basin operations increases the cost of recovering a barrel of oil by more than 50 percent over typical primar y and secondary recovery operations."

First, a business must spend significa nt capital to build the pipeline infrastructure necessary to carry the CO2 from its source to the targeted fields
and reservoirs. In order to make the n ecessary investments in EOR with CO2, a business must be able to figure that it will recover the capital costs from the long-term oil production potential of the ta rget formation and the expectations of future oil prices. Oil price volatili ty is "a significant deterrent to CO2 pipeline and project investment by industry, particularly for smaller independent producers." EOR with CO2 beco mes more attractive from a business cost perspective as oil prices go up.

Given recent and future oil price volatility and the enormous costs associated with EOR using CO2, it is crucial for bus inesses engaging in that activity to keep costs as stable and predictable as possible. Since these businesses have been operating under Class II regulations, they are ab le to predict those regulatory costs with some precision. This prediction has enc ouraged businesses to invest in CO2 since they do not have to factor much regul atory volatility into their business plans fo r conducting EOR with CO2.

II. EPA Regulations Must Re flect A Bright Line Betw een CO2 Sequestered In Conjunction With Business-As-Usual EO R Regulated Under Current Class II Regulations And CO2 Sequestered For The Pu rpose Of Permanent GS Regulated Under A New Regime

Sandridge is concerned that the Proposed Ru le does not adequately recognize that industry may only be expected to continue investing in EOR proj ects using CO2 as long as industry may rely on the acti vity's regulation under tested and predictable Class II requirements for inje ction wells. In its current form, the Proposed Rule indicates that "[i]njection of CO2 for the purposes of enhanced oil and gas recovery.. .,as long as any production is occurring, will continue to be permitted under the Class II program" (emphasis added). However, the Proposed Rule does not set a minimum level at which production must be occurring to appropriately distinguish injection of CO2 for businessas-usual EOR that

4

### will be regulated under Class II regulations , from injection of CO2 for GS that will be regulated under a new class. [2]

This omission increases the potential risks and costs to industry and could lead to a chilling effect on industry efforts to seek carbon credits. As such, it is important to make clear that CO2 sequest ration can occur in conjunction with business-as-usual EOR with the proper level of regulatory scrutiny under Class II regulations, and it can also take pl ace in conjunction with activities specifically designed to sequester large amounts of CO2 that will be regulated under a new regime. Sandridge believes that it is crucial that EPA’s final rule makes this clarification to help ensu re that industry continues its EOR activities and taking steps necessary to earn carbon credits, especially at this time when the U.S. is searching for ways to increase the do mestic supply of energy in ways that reduce greenhouse gas emissions. Accordingly, as a member of an industry actively involved in EOR us ing CO2, Sandridge believes that EPA
should ensure that the final rule contains a bright line, minimum level at which production must be occurring to appropriate ly distinguish inj ection of CO2 for business-as-usual EOR that will be regul ated under Class II regulations from injection of CO2 for permanent GS that will be regulated under a new class.

Individual Response: In response to the comment that es tablishing a new well class will create economic and operational barriers, EPA clarifies th at this comment is outside the scope of the rulemaking. The purpose of the GS rule is to ensure protection of US DWs from endangerment and not to promote or incentiv ize the deployment of GS. Howeve r, the Agency believes that establishing a regulatory framework for the fu ture development and deployment of CCS technology can provide the regulato ry and jurisdictional certainty needed to foster development and deployment of CCS while ensuring USDW protection.

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: 0219 Comment ID: 21571 Letter Lines: 211 to 265

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: III. Suggested Injection Well Definition To Create Necessary Bright Line Between Class II And Class VI CO2 Injection Activities

5

### Sandridge suggests that EPA continue to regulate under Class II requirements injection wells that meet the following definition:

(1) For enhanced recovery of oil or na tural gas where geologi c sequestration is occurring during or in connection with enha nced recovery of oil or natural gas provided (i) there is reasonable expectation of more th an insignificant future production volumes or rates as a result of carbon dioxide inje ction and (ii) operating pressures are no higher than reasonably necessary to produce such volumes or rates. This suggested formula to define injection wells that should be regulated under Class II has been review ed and approved by se veral interested parties, including representa tives of environmental or ganizations, as well as industry. Therefore, Sandridge believes that EPA should 1) be satisfied that the definition has been well-vetted and enj oys broad support, an d 2) adopt the formula as the standard that separate s CO2 sequestration that occurs in conjunction with business-as- usual EOR that will continue to be regulated under traditional Class II requirements, from CO2 sequestration that occurs as a result of CO2 injection in large quantitie s for the sole purpose of permanent GS that may be regulated under a new class.

IV. Conclusion

It is widely accepted that business-as-usu al EOR using CO2 has the potential to unlock enormous new domestic energy supplies while reducing CO2 through simultaneous sequestration. Since this im portant industry practice has been tested and regulated successfully for mo re than three decades, with no known negative impacts to the environment or underground sources of drinking water, Sandridge urges the EPA to ensure that i ndustry will continue to invest in EOR using CO2 (and thereby simultaneously st oring CO2 which would otherwise be vented into the atmosphere) by revisi ng the Proposed Rule to define and distinguish CO2 sequestration that occurs in conjunction with business-as-usual EOR that will continue to be regulated under traditional Class II requirements, from CO2 sequestration that occurs as a result of CO2 in jection in large quantities for the sole pur pose of permanent GS that may be regulated under a new class. For the reasons explained above , Sandridge suggests the EPA create this bright line by classifying injectio n wells that meet the following formula as those that will be regulated under Class II:

(1) For enhanced recovery of oil or na tural gas where geologi c sequestration is occurring during or in connection with enha nced recovery of oil or natural gas provided (i) there is reasona ble expectation of more th an insignificant future production volumes or rates as a result of carbon dioxide inje ction and (ii) operating pressures are no higher than reasonably necessary to produce such
volumes or rates.

Sandridge recognizes that EPA is consider ing new regulations for the injection

6

### 7 of CO2 at volumes and pressures that go beyond traditional EOR activities for which the proposed Class VI requirements ma y be appropriate. However, in these comments, Sandridge only seeks to point out the extraordinarily important business, environmental, and regulatory reasons why it believes that the EPA must ensure that the final rule prop erly distinguishes CO2 injected for business-asusual EOR from CO2 injected for GS. Thank you for your consideration
of these comments.

Individual Response: EPA believes that injection for the primary purpose of long term storage is sufficiently different from Class II ER opera tions and warrants tailored requirements in order to protect USDWs from endangerment. For exam ple, the volume of CO 2 anticipated to be injected in Class VI wells is significantly great er than for Class II wells. Reservoir pressure conditions will also be different, with Class VI injection operations involving large volumes of CO2 and likely having higher pressures within th eir storage formations than Class II EOR projects, which may lead to fluid movement.

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.

EPA is developing guidance on transitioning perm its from Class II to Class VI. The guidance will assist Directors in determining whether an injection project should be transitioned from Class II, where the primary purpos e is oil and gas production, to Class VI, where the primary purpose is long-term storage of large volumes of CO2. The guidance describes recommended methods the Director may use to evaluate change s in risk to USDWs from projects, and how the Director may determine whether a project should be regulated within th e Class II or Class VI UIC program. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm. For more information, please
see the discussion on transition of Class II well s in the preamble to the final GS rule.