We numerically investigate the mechanisms that resulted in induced seismicity occurrence associated with CO2 injection at the Illinois Basin–Decatur Project (IBDP). We build a geologically consistent model that honors key stratigraphic horizons and 3D fault surfaces interpreted using surface seismic data and microseismicity locations. We populate our model with reservoir and geomechanical properties estimated using well‐log and core data. We then performed coupled multiphase flow and geomechanics modeling to investigate the impact of CO2 injection on fault stability using the Coulomb failure criteria. We calibrate our flow model using measured reservoir pressure during the CO2 injection phase. Our model results show that pore‐pressure diffusion along faults connecting the injection interval to the basement is essential to explain the destabilization of the regions where microseismicity occurred, and that poroelastic stresses alone would result in stabilization of those regions. Slip tendency analysis indicates that, due to their orientations with respect to the maximum horizontal stress direction, the faults where the microseismicity occurred were very close to failure prior to injection. These model results highlight the importance of accurate subsurface fault characterization for CO2 sequestration operations.

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