Managing basin-scale carbon sequestration: A tragedy of the commons approach

The Tragedy of the Commons is a well studied problem in the literature of ecology, economics, and environmental policy which illustrates the deleterious consequences of managing common pool resources when individual and social incentives are misaligned. In this work, we apply a simple model of carbon sequestration in a deep saline aquifer by two neighboring geologic CO₂ storage (GCS) operators to begin investigating if a Tragedy of the Commons framework applies to GCS. Specifically, we consider the pressure space as a “commons” because the injection by each firm at its own well increases the downhole injection pressure at both wells. We assume that a firm will decrease its injection rate if the downhole pressure at its well exceeds a predefined maximum (i.e., exceeds the “pressure limit”). With this assumption in place, we find that the same injection flowrates are optimal for both wells, regardless of whether they are owned by the same firm or competing firms. This suggests that GCS may not be best represented by a pure Tragedy of the Commons framework under our initial assumptions. However, there could be economic incentives or contractual obligations that may result in either or both GCS operators being unwilling to reduce their injection rates. Thus, we conclude the conference paper with a discussion of future extensions of our approach that may demonstrate closer alignment with the Tragedy of the Commons, including explicit definitions of pore-space rights, firm uncertainty regarding the parameters of the Theis equation, and the potential role of unitization.