CO2 storage due diligence: what to check before you invest in a storage site

A developer has a storage licence or an application in progress, an emitter looking for somewhere to put its CO2, and a business case that depends on injecting a set volume every year for decades. Before you invest, lend or sign a storage agreement, CO2 storage technical due diligence answers three questions: is there room in the rock for the volume promised, will the CO2 stay there, and who answers for it once injection stops?

Storage has more in common with geothermal than with a producing oil field: much of the value rests on rock that has not yet been tested by injection. Our note on geothermal technical due diligence applies the same logic to hot water.

What makes CO2 storage due diligence different?

• The obligation outlives the project. Injection may last decades, but the duty to show that the CO2 stays put runs on after it ends, and in some regimes responsibility passes to the state only once strict conditions are met. The review has to price that tail, not just the injection years.
• The regulator may be new to it too. CO2 storage regimes are the newest in the energy sector, and an application may be among the first the authority has reviewed. In the European Union the CCS Directive requires a storage permit; in the United States, injection wells need a Class VI permit under the Safe Drinking Water Act. A timeline that assumes a routine approval deserves a question.
• Volume is a contract term. An emitter pays to store a set tonnage. If the site takes less, or takes it more slowly, someone breaches a contract. Capacity and injectivity are commercial numbers, not only technical ones.

What should a CO2 storage due diligence check?

1. Capacity. How much CO2 the storage rock can hold, as a range, and how much of that range the business case assumes. Check how much of the estimate rests on wells and core from the site itself, and how much on regional data or analogues.
2. The seal. What sits above the storage rock to keep the CO2 in, how thick and continuous it is, and which faults cross it. This is usually the key question, and our geoscientists treat it that way in storage site characterisation.
3. Old wells. Every well that has ever crossed the seal is a possible path out. Ask for the list, how each one was plugged and to what standard, and what it would cost to re-enter one that falls short. On former oil and gas acreage this can be the largest single risk.
4. Injectivity and pressure. Whether the wells can take the planned rate, how far the pressure will spread, and who else is in that area: other licences, producing fields, groundwater users. Pressure travels further than the CO2 itself.
5. The wells you will drill. CO2 mixed with water is corrosive, and cold CO2 cools the well as it goes in. Check the well design and materials against the CO2 stream as specified, impurities included. That is well engineering work.
6. Monitoring. What will be measured to show the CO2 is where the model says, how often, for how long after injection ends, and who pays. A monitoring plan that stops when injection stops is a finding.
7. Permits and agreements. What has been granted, what is pending and under which conditions. Then read the storage agreement with the emitter and the transport arrangements against the technical plan. Good regulatory support shows up here as a clear record of what the authority asked for and was given.

What to ask the developer for

• Seismic data and the interpretation of the storage complex, seal included.
• Well logs, core and test data from the site and nearby wells.
• The full list of old wells in the area, with plugging records.
• The geological and flow models, with their assumptions listed.
• The injection plan and the expected composition of the CO2 stream.
• The monitoring plan and its budget, during and after injection.
• Permit applications and correspondence with the authority.
• Storage, transport and offtake agreements, signed or in draft.

Our note on the technical due diligence scope of work shows how to turn a list like this into a scope bidders can price.

Red flags in a storage data room

• Capacity given as one number.
• A seal described from regional maps alone.
• Old wells listed without plugging records.
• Injection rates borrowed from a different reservoir.
• A monitoring plan that ends with injection.
• Post-closure obligations missing from the financial model.
• A permit timeline that assumes the authority has done this many times before.

Who should commission it, and when?

Whoever carries the risk: an equity investor, a buyer, or an emitter about to sign a long storage agreement. A lender will usually appoint its own independent engineer, and our note on the owner's engineer and the independent engineer explains why that is a different job. Start before the price or the agreement is fixed. The review can be phased: settle the seal question first, and pay for the rest only if the answer holds. Focused screenings run in two to four weeks.

In CO2 storage you are not buying a volume. You are buying a promise that the volume stays put, long after injection ends.

Our anonymised engagement “CO2 storage site, characterised and licensed” is this kind of work from the developer's side: our geoscientists characterised the storage complex while our regulatory specialists built the application, as one case for the authority. Since 2015 we have worked as owner's engineer across oil and gas, deep geothermal and CO2 geological storage. If you are weighing a storage investment or agreement, tell us about the site and when the decision is due. We answer every enquiry within 24 hours.

Related notes

• Geothermal technical due diligence: what to check before you invest
• Before the first regulator meeting: what energy project owners should have ready
• Technical due diligence scope of work: what to ask for when buying an oil and gas asset