CCS NOVA SCOTIA: EXECUTIVE SUMMARY

CCS Nova Scotia: Executive Summary

Date: 24 April, 2015 Issue: FINAL

CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Executive Summary BACKGROUND Carbon Capture and Storage Research Consortium of Nova Scotia (CCSNS) is a non-profit organization consisting of the Province of Nova Scotia (represented by Department of Energy), Nova Scotia Power Inc. and Dalhousie University. CCSNS was incorporated in 2008. . The work as initially outlined at incorporation was to be organized as a multi-phased program. Phase 1 – 2009-2015 – Research in technical and preliminary economic feasibility of applying CCS to Nova Scotia Phase 2 – 2015-2018 - Pilot Plant and Injection Phase based on findings of Phase 1 research. Phase 3 – 2018-2025 – Commercial scale operation based on Phase 2 findings. The work outlined in this summary applies only to Phase 1. The mandate of CCS Nova Scotia was to research the range of issues involved in the Capture, Transport and Storage of CO2 and how it may be applied to Nova Scotia in a safe and environmentally acceptable manner, both onshore and offshore. Given this criteria, CCS Nova Scotia developed a program to accomplish the mandate. The program was developed in 2009 and consisted of all the elements of Capture, Transport and Storage, together with the ancillary elements of Environment, Regulatory and Legal, Public Awareness and Risk Management. See Figure below for an illustration of the program.

Based on the core elements in this illustration, procurement packages were developed to conduct research for the entire program. All of the packages were/are intended to address knowledge and technology gaps for the application of CCS in Nova Scotia. To date CCS Nova Scotia has completed the following reports which will be available to the general public in accordance with our Public /Stakeholder Awareness Plan:

CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Table 1 -Program Report List Project No. Capture C1 C2 Storage S1A

Name

Status

Capture Options Assessment Capture Design Specification

Completed 2Q2011 Completed 2Q2012

Screening of Potential CO2 sites-Onshore Nova Scotia S2A Preferred Site Selection – Onshore S3A Site Characterization-Onshore Ancillary Activities RL1A Report on Legal/Regulatory Regime – Onshore Nova Scotia RM1A Risk Management Roadmap – Onshore Nova Scotia P1 Public Stakeholder Awareness Plan – E1A Background Environmental Report Offshore CCSNS-1B CCS Offshore Nova Scotia (includes technical and economic assessment of a CCS project offshore NS including Risk Management, Legal Regulatory and re-use of existing infrastructure considerations) Integration IR Integration Report (Summary of all above reports)

Completed 2Q2011 Completed 4Q2011 Completed 1Q2015 Completed 2Q2011 Completed 3Q2011 Ongoing throughout project Complete 2Q2012 1Q2013

32Q2013

As a result of the studies listed above in Table 1, it was recommended to enhance the Storage aspect of the program by providing characterization of prospective geological formations including reservoir and seal (Project S3A). Without knowledge from this part of the program, CCS Nova Scotia will not have been able to provide a comprehensive recommendation for the onshore storage potential that is required to proceed to the next phase of the program. The S1A/S2A studies identified the Sydney Sub-basin (see figure below) as one of the more promising areas for onshore CO2 storage in Nova Scotia because of the Horton Group which may serve as the CO2 storage unit, and the Windsor Group which may form the upper seal of the storage unit. This project as reported herein is the third of three projects specifically undertaken to better understand the potential of the Sydney Sub-basin. The two predecessor studies included the development of a 3D geological model with an integrated reservoir simulation model based on currently available subsurface data (Sydney Sub-basin Feasibility Study for Carbon Dioxide (CO2) Storage”, #S2A- (March 23, 2012) and a 2D seismic survey.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Figure 1 - Study area and bedrock geologic map of Cape Breton Island. Surficial bedrock geology of the study area comprises Carboniferous strata of the Sydney Sub-basin. Five potential CO2 storage sites (A1 through A5) were identified by RPS Energy. Wells, drillholes, and Murphy Oil 2D seismic lines areshown. CCSNS#1 was drilled in November 2014.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

GEOLOGY OVERVIEW The Sydney Sub-basin is a large basin situated in eastern Cape Breton Island, Nova Scotia (See figure above). The specific area of interest within the sub-basin is the Cranberry Half-Graben (Area A4) where the Horton Group was estimated to be of sufficient depth for storage of CO2 (below 800 meters). The Horton Group has potential porous and permeable zones for CO2 injection within intervals consisting of conglomerate, sandstone, and siltstone. See Figure 2 below for anticipated model of Sydney Sub-basin.

Figure 2: Idealized model of a half-graben applicable to Sydney Basin structural evolution as proposed by Pascucci et al, 2000 [9], modified.

SEISMIC PROGRAM In October of 2013 two 2-dimensional (2D) seismic lines were shot east of Sydney, Nova Scotia. The line locations were selected to help image structural features in the on-land portion of the Cranberry Half-Graben and to help characterize the depth and thickness of the Windsor and Horton Groups. See report: “Sydney Sub-basin Feasibility Study for Carbon Dioxide (CO2) Storage”, #S2A-05010-2011 (March 23, 2012), Sections 8.0 and 9.0 for the full reasoning behind this seismic shoot. The seismic acquisition program was conducted by Schlumberger Carbon Services (processed by WesternGeco, Schlumberger Geosolutions) resulting in two processed lines with a combined length of approximately 26.7 km.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Seismic Program Results The importance and requirement of porosity, permeability and injection interval thicknesses are the “first-order” controls for injectivity. While the seismic study provides very limited additional understanding of porosity and permeability, the results did provide a clearer picture of the estimated thickness and various other features of the geologic formations studied. See Figure 3 for Seismic Line 1 and Seismic Line 2 locations. This figure also outlines options for well locations.

Figure 3 – Seismic Acquisition lines with Well location Options

The next phase of the project was to collect measurements and samples of the reservoir and caprocks through installation of a stratigraphic test well. This was intended to provide more definitive results in terms of porosity and permeability, determine the overall thickness of the Horton (and Lower Horton/McAdams Lake formation) potential reservoir in addition to determining the locations and thickness of porous “streaks”, which could then be input to the next iteration of the reservoir model. The stratigraphic test well was further intended to confirm the efficacy of the Windsor Group as a caprock. The new data, along with data from the Birch Grove well, was expected to provide a much better understanding of formation heterogeneity, particularly in reference to porosity and permeability. The subsurface data set could then be used to calibrate the 2D seismic data and possibly support additional advanced seismic data processing. Information on the reservoir properties could be

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

used to further understand the potential for storage capacity and could be used to update the dynamic model developed as part of the feasibility study. There will be three potential scenarios resulting from data collected from a test well: 1. Reservoir properties are insufficient in the Horton Group of the Sydney sub-Basin to support a CCS project. Limited or minimal injectivity within reservoir. 2. Reservoir properties may support a full or partial CCS project in the Horton Group, however more geological investigation is required and injectivity is limited given new data. 3. Reservoir properties at the test well location are sufficient to support a full CCS in the Sydney sub-Basin of Nova Scotia, but further information is required to confirm the extent of the storage unit(s). It is important to note that without a stratigraphic test well it cannot be determined if the Horton Group within the Sydney sub-Basin has the potential to support the storage of CO2.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

DRILLING PROJECT OBJECTIVES The objective of this project is to characterize and assess the potential geologic storage unit (Horton Group) and the upper seal unit (Windsor Group) by drilling a stratigraphic test well (CCSNS#1) and assessing drill cuttings, borehole geophysical logs, and cores to better understand the structural style, stratigraphy, and characteristics of the relevant formations for the on-land portion of the Sydney Sub-basin. A stratigraphic test well is commonly used to validate the conceptual model and to reduce geologic uncertainty while providing critical information on rock types and rock properties. The well should be located to meet the following criteria: • • • • • •

The well must be onshore, The well has to be away from identifiable basement highs, The well cannot be on a known fault, The well must be located in an area where there is ample estimated caprock thickness, The well needs to be located where the reservoir rock is believed to be of sufficient thickness for CO2 storage, The well must be located where the anticipated reservoir is at a depth for dense phase CO2 storage.

SITE SELECTION At the time the seismic lines were planned in 2013, the objective was to set the intersection of the two lines as close to a potential drilling location as possible. These locations included Crown land and property near the Sydney Airport; however there were several complicating factors including: • • • • • • •

The airport restrictions including flight lines, Extensive wetlands, Remote locations and prohibitive roadbuilding costs, Proximity to residential properties, Site ownership, Site accessibility, Bootleg coal mines.

Possible stratigraphic test well locations are shown in relation to the 2D lines in Figures 3. In general, the sites are ranked alphabetically in order of preference from A to D. The depths to the formations of interest were fairly well constrained through the seismic interpretation and ties back to the Birch Grove #1 well. As drilling locations move farther from the seismic lines and the Birch Grove #1 well, the depths to the formations of interest will increase in uncertainty thus increasing the chances of encountering unanticipated results related to the geology during drilling. Data from the new well, along with the seismic data, will improve the geologic interpretation along both seismic lines. While B is also a good location, offering the 7

CCS NOVA SCOTIA: EXECUTIVE SUMMARY

thickest section of Horton, it is not on public/crown land and it appears that there is no Lower Horton. . C and D were in a more structurally complex part of the graben and D may have been situated on a bedrock high. D also is fairly shallow and the top of the Horton near D extends to a depth that may be too shallow for supercritical storage. The surface locations for both C and D would be fairly difficult to access and could require significant road construction, possibly involving multiple property owners. The final well location represented the best compromise for location and proximity to the seismic lines, seismic data, geologic uncertainty, site security and safety, absence of mine workings, and ease of site access and permitting. This placed the CCSNS#1 well head 1,595 m (one mile) north of seismic Line 1 as shown in the figure 4 below.

Figure 4 – Drilling Program CCSNS # 1 final location

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

CCSNS#1 drilling operation on the south end of Yates Gravel Pit, Glace Bay, Nova Scotia. RESULTS The first objective of the well was to confirm a seal as part of a CO2 storage prospective area. This was satisfied by penetrating a tight shale as observed in drill cuttings in the Windsor Group at 1,050metres (m) measured depth (MD), see figure below. This section was cored (CCSNS#1 Core #1) from 1,129m to 1,139.9m (10.9m in length) and indicated a very tight dark grey shale with occasional units of grey-white siltstone. Borehole geophysical log interpretations further support the presence of tight shale at these depths, which is prevalent throughout the Windsor Group. The second objective of the well was to penetrate a geological unit known as the Horton Group to assess the reservoir properties. A change in drill cuttings from shale to felsic cuttings, and faster penetration rates at 1,373m suggested that the top of the Horton Group had been penetrated. A drilling break at 1,424m which could indicate the presence of a porous interval prompted the decision to core. The coring progress was difficult and, after coring from 1,424m to 1,424.3m, the coring tool was pulled out of the hole. The 0.3m of recovered core indicated a very tight rhyolite which is not suitable for the storage of CO2. There was speculation that this extrusive rock might overlay the Horton Group, so drilling continued for another 102.7m with little change in rhyolite lithology. Unfortunately, no evidence of Horton Group sedimentary rock was intercepted. The stratigraphic test well, CCSNS #1, was drilled to a total depth of 1,527m and terminated on November 22, 2014 in pre-Carboniferous

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

rhyolite, which is likely basement rock. Thus, the Windsor Group on-laps the pre-Carboniferous volcanics with the complete absence of the Horton Group at this drill location. With no new petrophysical data describing the Horton Group, it was decided not to update the dynamic modeling. Based on 2D seismic, outcrops, and boreholes, it is still believed that the Horton Group is present in the area, just not at the CCSNS#1 location. See Figure 5 below for a schematic of the CCSNS#1 hole “as drilled”.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Figure 5 – Test Well- as drilled

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

CONCLUSION Horton Group (Reservoir) Based on the study S2A- Sydney Sub-basin Final Study conducted in 2012, it was determined that the proposed Horton Reservoir areas (A1-A5, first figure above) was required to support a commercial sized CO2 project in the Sydney Sub-basin of Nova Scotia. After drilling CCSNS#1, no further knowledge has been obtained representing the key reservoir parameters of porosity, permeability, and lithology. However, the 2D seismic and well programs have demonstrated findings impacting potential storage capacity. Based on the 2D seismic survey and an updated structural model, estimates of both reservoir thickness and reservoir volume for this onshore portion of the Sydney Sub-basin is approximately 35% of that modeled in the 2011 feasibility study. The onshore Horton Group volume estimate from the 2011 feasibility study is2.637 x1011 m3; the updated volume is 9.610 x1010 m3.Naturally, these estimates are area dependent, and there are other elements that will affect storage capacity. Both Seismic Line 1 and the CCSNS#1 well show that there are basement highs that can locally preclude the Horton Group altogether. Although the geometry and extent of these highs are not understood at this time, their presence subtracts from the potential reservoir volume. While basement highs would further complicate a multi-well injection strategy, so would faults. The seismic lines have imaged a few faults through both the reservoir and seal. In some instances it is not clear whether the faults extend to ground level, but in others like the Mira Road Fault they probably do. Faults can act as potential leakage pathways, so knowledge of their whereabouts is crucial for decisions regarding well placement and injection strategy. Such a strategy could be managed and would require certain limits in formation fluid pressures in these areas resulting in further constraints on potential storage volume. The 2D seismic survey imaged the Horton Group at depths at or below 1,100m, which is deep enough for CO2 storage. There are exceptions however and one such case is near the Mira Road Fault where the top of the Horton Group is thrust upwards to a depth of approximately 800m; in this locality the CO2 might not stay in a dense phase. Naturally, the injection plan would likely preclude this faulted area. The Horton Group outcrops much further to the SW, and at shallower depths it is not included as part of the static geocellular model. Results of the drilling program conducted on behalf of CCSNS highlight the geological complexity of the Sydney Sub-basin. The potential for finding a homogeneous Horton Reservoir within the Sydney Sub-basin has decreased as a result of the findings. It is not the conclusion of this report that the Horton does not exist, but rather that its extents and potential for CO2 storage have been reduced and the risks associated with further work investigating this reservoir have increased. If CCS continues to be of interest in Nova Scotia, further reservoir assessment work would be needed. See Table 2 below outlining the work required to further evaluate the Sydney Sub-basin.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

Windsor Group (Seal) The Windsor Group was originally described as having a marine influence that included evaporites. Shallow boreholes in the Sydney Sub-basin revealed distinct stratified layers of evaporites, siltstone, and shale. Well logs for the Birch Grove 1(BG1) did not produce any strong signature indicating evaporites. CCSNS#1 did however encounter a 12.5m interval with varying composition of anhydrite within the Macumber Formation which was otherwise a clay rich, dolomitic formation. Log permeability for this Windsor Group was consistently some fraction of 1 mD while the nine sidewall core samples ranged between 0.008mD and 1.611mD. With 60% of the Windsor Group having a permeability of 0.01mD or less, the Windsor Group is compositionally a good seal for CO2 storage. Although the Windsor Group is thinner than that modeled during the 2011 feasibility study, it was found to be 311m thick at CCSNS#1 and had some evaporites in the lower sections. Moving upwards, its composition became progressively more terrigenous with lesser carbonates near its top. Structurally, the 2D seismic lines revealed faults that penetrated both the Windsor Group and the reservoir. Understanding the location and extent of these faults would be crucial for a successful storage strategy in the onshore portion of the Sydney Sub-basin.

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CCS NOVA SCOTIA: EXECUTIVE SUMMARY

POTENTIAL FUTURE WORK If the characterization program were to be extended, the following work should be considered: Table 2 – Options for future work of Sydney sub-Basin Geological Characterization Task

Cost Estimate (+/- 50%) Amounts are in Canadian Dollars.

High Priority Re-enter the CCSNS#1 wellbore and run a vertical seismic profile (VSP) walkaway to map a portion of the basement rock encountered at the well.

$500K-1Millon

Acquire a new seismic line extending through CCSNS#1 over to seismic Line 1.This could reveal the nature of the basement topography and explain what happened to the Horton Group across this distance.

$500K- 1 Million

A new well could be drilled elsewhere on existing 2D seismic lines in fault block/storage area A4 to determine if the geology is significantly better or different than that seen in existing drill holes and CCSNS#1.

$6-7 Million

Moderate Priority CCSNS# 1 could be reentered, and with a kickoff point at depth, the bit could be steered away from the vertical with the intent to penetrate the Horton Group away from the basement high, preferable aimed southwestward towards seismic Line 1 located 1,600 m away.

$2.5-3 Million

In order to better understand the regional structural style and gain a better understanding of the stratigraphic development, it is recommended to run a more extensive 2D reconnaissance program using two or more parallel lines with orthogonal that allows an interpreter to gain better 3D knowledge. It will not be possible to plan a new well location that does not run the risk of having the same result as CCSNS#1 unless the subsurface is better understood. This 2D survey should, at a minimum, be planned to cross the CCSNS#1 location for the purposes of correlation.

$1-1.5 Million

Long Term Strategy As a long term strategy, another stratigraphic test well needs to be drilled to fulfill the original objectives of CCSNS#1. The location should be placed on a then current 2D line for correlation and spotted where the Horton has the greatest certainty of being encountered. Advance the reservoir characterization through utilizing outcrop analogs.

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$6-7 Million

$10-20K

CCS NOVA SCOTIA: EXECUTIVE SUMMARY

RECOMMENDATION Results of the drilling program conducted on behalf of CCSNS highlight the geological complexity of the Sydney Sub-basin. The potential for finding a homogeneous Horton Reservoir within the Sydney Sub-basin has decreased as a result of the findings, and as a result the risk of a successful carbon storage project has greatly increased. It is therefore recommended to not continue geological investigations in the Sydney sub-Basin based on this risk profile.

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