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December 2009

Vol. 14, No. 50 Week of December 13, 2009

Alberta touts carbon capture prospects

Gary Park

For Petroleum News

The Alberta government may not be putting all of its climate-change strategies in one basket, but it’s coming close as it pursues recognition as a world leader in advancing carbon capture and storage technologies.

It is now close to doling out the promised C$2 billion to four projects that it hopes will turn demonstration projects into full-scale commercial ventures, creating thousands of jobs, billions of dollars in additional royalties from enhanced oil recovery schemes and put it on the leading edge globally in proving the worth of CCS.

The government has so far allocated C$1.67 billion to three projects — Shell’s Quest, TransAlta’s Pioneer and the Alberta Carbon Trunk Line, a joint venture by North West Upgrading and Enhance Energy — and has confirmed the SwanHills Synfuels initiative will receive the last C$300 million.

In late November, Alberta agreed to pay C$495 million over 15 years to the carbon trunk line plan for a ground-breaking project that backers say could generate an extra 1 million barrels per day of new oil production and generate C$15 billion in royalties.

Largest CCS venture in world

After signing a letter of intent with the partners, Premier Ed Stelmach told reporters the C$600 million line will be the largest CCS venture in the world.

“It will be useful in other jurisdictions around the world where emissions are higher than in Alberta,” he said.

“The knowledge garnered here will be shared, which will further reduce the cost of carbon capture projects and facilitate its broader use,” Stelmach said.

He said the project will be able to store 14.6 million metric tons of CO2 per year when it starts operations in 2012, initially transporting 5,100 metric tons per day of compressed CO2 over 145 miles from an Agrium fertilizer plant near Edmonton to a depleted oil field in central Alberta.

The CO2 volumes, which will eventually reach 40,000 metric tons per day, will be used to rebuild reservoir pressures to recover oil from a field which has so far produced 70 million barrels of light crude from 166 million barrels of discovered petroleum initially in place.

The pipeline will advance a joint Fairborne Energy and Enhance CO2 project by extending the producing life of the Clive field by another 20 years, Fairborne said in a statement.

The company said an estimate of its own 60 percent working interest points to a contingent resource associated with the CCS project of 24 million barrels.

Canada also contributing

The Canadian government is contributing C$63 million, which Natural Resources Minister Lisa Raitt said demonstrates Canada’s desire to “show international leadership in CCS technology.”

Stelmach said the oil produced from the EOR technology will be subject to royalties and taxes to both his government and freehold landowners over the life of the project.

Enhance President Susan Cole claimed the investments will enable Alberta to “lead the world in CO2 management and … in turn, generate C$15 billion of royalties to the province.”

She estimated it will cost C$600 million to build the pipeline and another C$200 million for operating costs.

To date, there has been no opposition from 400 landowners along the pipeline route, Cole said.

They have agreed to contribute a combined C$865 million to a Royal Dutch Shell plan to capture 1.2 million metric tons per year of CO2 beginning in 2015 at its Scotford refinery on the outskirts of Edmonton and a C$774 million plan to capture CO2 at a TransAlta coal-fired power plant to be used for EOR in nearby conventional oil fields, starting in 2015 with the capture of 1 million metric tons per year.

SwanHills final recipient

The final recipient of government money is expected to be SwanHills Synfuels, which is working on a C$30 million demonstration project to turn ultradeep coal deposits into synthetic natural gas.

If it receives the additional C$300 million, the privately held company plans to replicate its demonstration project with 20 pairs of wells over a section of land, supplying enough syngas for an initial eight years of power generation by a 300-megawatt clean-energy plant, which is planned to be in service by 2015.

SwanHills President Douglas Shaigec said the demonstration project has clearly demonstrated that the prospects of turning deep coal (about 4,600 feet deep) into energy are immense.

“It was a demonstration of what has been done in the world previously, taking the proven process and applying it to the deep coals we have in Alberta,” he said.

“We made some excellent quality syngas. It was all very much in line with what the theory had predicted,” Shaigec said.

CO2 created from the conversion of coal into gas will be used by local firms for enhanced oil recovery.






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