Proposal Would Make New UK Oil Fields Fund Carbon Storage as Property Law and Insurance Gaps Persist

A proposal circulating in the energy press would require producers of any newly approved oil or gas field to pay for permanent underground storage of a rising share of the carbon in their products.

Leon Stille, writing for OilPrice.com, argues the rule should be a measurable obligation attached to the right to produce. His words: "No vague promise of 'CCS readiness.' No voluntary target for 2040."

The test case is the UK's reconsideration of the Rosebank oil field and the Jackdaw gas field. Earlier development approvals for both were overturned after a court found the environmental assessments had not properly accounted for emissions released when the fuels are burned.

The scale of the numbers

Stille cites estimates that put lifetime emissions from Rosebank's products at roughly 250 million tonnes of CO2. Jackdaw's come to around 24 million tonnes.

His point is that cleaning up platform operations and methane leaks leaves most of the problem untouched, because most of a field's emissions occur when customers use the fuel. He wants the obligation tied to carbon in the fuel sold, not just carbon emitted during extraction.

An open letter signed by more than 150 academics and professionals makes a related demand: any renewed approval should carry a legally binding CO2 storage requirement. Their logic, as Stille describes it, is that if downstream emissions count when assessing a field, they should count in the conditions imposed on it.

The UK estimates its continental shelf may hold around 78 billion tonnes of theoretical CO2 storage capacity. Stille's claim is that geology is not the bottleneck. Demand is. Everyone says storage will be needed, he writes, but too few parties are legally required to buy it.

Where the industry stands

The industry's standing position, as Stille summarizes it, is that oil and gas production will still be needed for decades, supports jobs and reduces dependence on imports. Nothing in the proposal says who would absorb the cost of a mandate. That is a question for whoever sets the terms, whether the producers, their customers or the taxpayer through credits and guarantees.

The UK has not announced a storage obligation for either field. The proposal is an argument, not a policy.

Who owns the pore space

Even a perfect mandate needs a place to put the carbon, and U.S. property law is not ready for that. A review published by the Climate Solutions Law blog looked at nine states with significant storage potential, legacy oil production and rules presuming the surface owner owns the pore space: California, Illinois, Louisiana, Wyoming, New Mexico, North Dakota, Oklahoma, Colorado and West Virginia.

The finding: Texas is not an outlier. In many of those states the mineral estate remains dominant, and no comprehensive statute or common-law rule reliably stops a mineral owner from drilling into an active CO2 storage zone.

The blog's earlier hypothetical shows the danger. A developer buys surface rights over a depleted oil field and injects CO2. The injection accidentally revives the field through enhanced oil recovery. A mineral owner can then drill a horizontal well from a separate surface location into the storage formation.

The stakes include federal money. The blog says such a scenario could trigger recapture of tax credits under Section 45Q of the Internal Revenue Code. Those credits are paid for by taxpayers.

The states describe the relationship differently. Colorado calls the estates "mutually dominant and mutually servient." Illinois uses a "correlative right" and holds lessees to a prudent operator standard. Louisiana treats mineral rights as a servitude, with each side owing the other "reasonable regard." The blog says the practical result is the same: the mineral rights holder can still produce.

The liability that outlasts the injection

A third gap is insurance. A joint report by the Geneva Association, the Oil and Gas Climate Initiative and the Clean Energy Ministerial CCUS Initiative says existing products do not always cover risks from shared infrastructure, multiple operators, and duties that continue after storage operations end.

Operators may have to monitor sites, maintain facilities and meet financial obligations for years or decades after injection stops. Those duties can outlast standard policy periods, and the report says some are too difficult or costly for private insurers to cover.

The report also flags losses from delays elsewhere in a shared CCS network, which may fall outside conventional policies unless tied to a clearly defined insured event. Its recommendations include bringing insurers in earlier, setting clearer rules on liability and post-closure responsibility, and sharing operational data.

It also says government-backed arrangements and public-private partnerships may be needed where private insurers cannot take the risk alone. The recommendations are non-binding, and no insurer is required to cover any project.

That last point cuts against the pitch for mandated storage. A producer forced to buy storage must be able to count on the injection site staying available, the title staying clean and the long-tail liability being covered by someone.

What comes next

The immediate decision belongs to UK ministers on Rosebank and Jackdaw, and no storage condition has been announced for either. Whether the open letter's demand ends up in the approval terms will be the first real test of whether a storage mandate moves from op-ed to law.