Carbon Technology and Carbon Storage Projects and Companies
Carbon technology is developing rapidly, creating new opportunities for companies working to capture, transport, store, utilize, or otherwise manage carbon. For companies developing these technologies and projects, however, the technical concept is only one part of the equation. A successful project also needs the right property interests, contracts, permits, regulatory approvals, and operational arrangements to support it.
Carbon technology and carbon storage companies often have to solve a legal problem before they can solve the engineering problem: What rights does the project actually need, and who owns them? A carbon storage project may require rights associated with the surface estate, a geologic storage reservoir or pore space, mineral interests, existing oil and gas leases, producing assets, wells, access routes, and regulatory approvals. Those interests may not all be owned by the same party. Determining how they relate requires a careful review of the property’s chain of title and the laws applicable to the project.
At Reed Energy Law, PC, we help carbon technology companies, carbon storage developers, energy companies, operators, landowners, and mineral owners work through this rights-assembly process. We help identify what the project needs, determine who owns the relevant interests, create and negotiate the agreements necessary to obtain those rights, and conduct due diligence to confirm that the project is properly structured.
Starting With the Project’s Actual Rights
Before a carbon project can be constructed or operated, the developer needs to identify the specific property and subsurface rights required by the project. That begins with understanding the technology and proposed operations. We ask practical questions about what the project will do: Where will infrastructure be located? What formations will be used? Will carbon dioxide be injected? At what depths? Will existing wells or producing assets be affected? Will the project require monitoring or continuing access? Could mineral interests be implicated? Those answers help determine what rights need to be acquired or documented.
Chain-of-Title Analysis
The next step is determining who owns those rights. A current deed rarely tells the entire story. Historical conveyances may have reserved or severed mineral interests, conveyed subsurface rights separately, created leases, or otherwise divided ownership of the property. For carbon storage projects, the legal treatment of the relevant geologic storage reservoir also needs to be evaluated under California’s current statutory framework.
California Public Resources Code ยง 71462 provides that title to a geologic storage reservoir is vested in the owner of the overlying surface estate unless the reservoir has been severed and separately conveyed. It also establishes specific rules concerning conveyances of storage reservoir rights and states that a mineral or other underlying interest does not itself convey ownership of the geologic storage reservoir unless the instrument explicitly does so. This makes the property’s chain of title a critical part of carbon storage due diligence.
Evaluating Pore Space and Storage Reservoir Rights
We analyze the chain of title to determine whether the relevant storage reservoir rights remain with the surface estate, were severed and separately conveyed, or are otherwise affected by historical instruments. We then consider the project’s proposed activities to determine whether the identified ownership is sufficient or whether additional rights need to be acquired. This analysis is property-specific. The answer should not be assumed based solely on whether a parcel has a separate mineral estate or an existing oil and gas lease.
Mineral Rights and Existing Energy Interests
A carbon storage project can also intersect with mineral interests and existing oil and gas operations. An existing mineral owner or operator may hold rights that could be affected by the proposed storage activities, even if that party does not own the relevant storage reservoir. We evaluate those relationships to determine whether mineral interests are implicated and what type of agreement is appropriate. Depending on the circumstances, the project may require a consent, waiver, amendment, lease, easement, license, acquisition, or another transaction. The goal is not to obtain a blanket waiver of every subsurface interest. It is to identify the actual conflict or potential interference and negotiate the rights needed to address it.
Creating Project Forms and Agreements
Carbon technology companies frequently need agreements that do not fit neatly into conventional oil and gas or real estate forms. We help create project forms based on the company’s actual business model and development activities. Those forms may address property evaluation, access, development rights, storage rights, monitoring, infrastructure, operations, mineral interests, existing producing assets, and other project-specific requirements. Creating the right forms early can help a company evaluate multiple potential sites consistently while still allowing the final agreements to reflect the unique title and operational characteristics of each property.
Due Diligence Before Project Investment
Due diligence for a carbon storage project should confirm more than basic ownership. It should determine whether the project has assembled the complete package of property, subsurface, mineral, contractual, and regulatory rights necessary for development and operation. We help clients review title, identify severances and reservations, evaluate existing leases and operating rights, determine the status of storage reservoir or pore space interests, and identify additional agreements that may be required. This work can be particularly important before an acquisition, financing, major development commitment, or transfer of project interests.
Transferring Producing Assets
Some carbon projects are developed in areas with existing oil and gas production. Existing wells, leases, equipment, and operating interests may need to be acquired, transferred, reorganized, or otherwise addressed to support the carbon project. We help clients evaluate these assets and determine how the existing property and contractual rights fit within the proposed carbon project. That analysis can include the relationship among producing assets, mineral interests, surface rights, storage rights, leases, permits, and operating agreements. The transaction should be structured around the project’s ultimate objective rather than treating the producing assets as an isolated acquisition.
Permitting and Entitlement Due Diligence
A carbon project also needs to be properly entitled and operated under the regulatory framework applicable to its particular activities. We assist with due diligence concerning permits, entitlements, environmental requirements, and agency approvals and help identify whether the legal rights acquired for the project correspond with the activities proposed in the permitting process. This coordination matters because property rights and regulatory approvals are separate components of project development. Having one does not necessarily establish the other.
Aligning Property Rights With Project Development
A well-structured carbon project should have a consistent relationship between its technology, site, title, subsurface rights, mineral interests, agreements, and regulatory approvals. We help clients identify where those pieces do not yet align and determine what needs to be changed. That may mean obtaining an additional property interest, negotiating with a mineral owner, revising an agreement, acquiring an existing asset, or addressing a permitting issue before the project moves forward.
California Carbon Project Counsel
At Reed Energy Law, PC, we help carbon technology and carbon storage companies assemble and protect the legal rights necessary to develop and operate projects in California. Our work includes chain-of-title analysis, evaluation of geologic storage reservoir and pore space rights, mineral-rights analysis, project forms, negotiated agreements, acquisition and transfer of producing assets, and due diligence concerning property and regulatory rights.
Attorney Alyssa Reed brings more than 20 years of energy industry experience, including direct in-house experience developing carbon solutions projects, acquiring the rights necessary to operate them, and working through permitting and operational issues. If you are developing a carbon technology or carbon storage project in California, get in touch with Reed Energy Law, PC. Contact us to discuss the project’s title, subsurface rights, mineral interests, existing assets, and regulatory requirements so we can help determine what rights and agreements are needed to move the project forward.
