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October 2009

Vol. 14, No. 43 Week of October 25, 2009

Canada backs carbon capture

Governments commit C$1.65B to 2 projects, claim they lead world in developing technology; others say industry should do cleanup

Gary Park

For Petroleum News

Canadian and Alberta taxpayers are starting to feel a rather large hand in their pockets as the two governments roll out plans for carbon capture and storage projects — their key technological initiative to remove greenhouse gas emissions from the atmosphere.

In early October, C$865 million in public money was pumped into Royal Dutch Shell’s planned C$1.35 billion Quest project, with Chevron Canada and Marathon Canada as partners, to inject 1.1 million metric tons a year of carbon dioxide from the company’s Edmonton-area heavy oil upgrader into underground storage, some of it for possible use in enhanced oil recovery.

Less than a week later, the governments announced they would contribute C$781 million for a $1.4 billion CCS project TransAlta plans to capture about 1 million metric tons a year from its coal-fired electricity plant in central Alberta.

These handouts are taking place amid mounting questions about whether largely untested CCS technology will achieve its hoped-for goals without causing a financial boondoggle.

Of the public share, Alberta will account for almost C$1.2 billion, drawn over 15 years from the C$2 billion it has earmarked to develop and test CCS technology.

‘Clean energy superpower’

Prime Minister Stephen Harper said the TransAlta venture, with Capital Power and Paris-based Alstom as partners, meets the federal government’s objectives of helping economic recovery and improving the environment.

“To keep Canada on the cutting edge, we are investing massively in scientific research and development. A major focus of these investments is our energy sector.”

Harper said that in order for Canada to meet its goal of becoming an “energy superpower” it must be a “clean energy superpower.”

Alberta Premier Ed Stelmach said the benefits of Project Pioneer will extend far beyond the TransAlta plant by offering “lessons on how other plants might be retrofitted here in Alberta and around the world.”

The project was not on the original short list of three projects that Alberta tagged for its CCS money.

A spokesman for Greenpeace said governments should play no role in subsidizing CCS efforts by giant companies.

“Industry created this toxic mess and they should be fully and financially responsible for cleaning it up,” said Mike Hudema.

He also described CCS as a “risky, expensive smokescreen,” urging governments to invest more in renewable energy technology, such as wind and solar power, which he said will create more jobs over time.

Alberta Energy Minister Mel Knight defended the approach, arguing government must be a partner in developing CCS technology.

Federal Natural Resources Minister Lisa Raitt, who joined Knight at the Quest announcement, said: “We have to start somewhere. We start today. There are some hurdles to CCS, but the good news is the technology has already been technologically proven.”

Reduction in emissions pledged

The Canadian government has pledged to reduce greenhouse gas emissions by 20 percent below 2006 levels by 2020.

Graham Boje, vice president of health safety and sustainable development with Shell’s Canadian division, cautioned that, despite the financial backing, Quest has yet to receive corporate sanctioning.

He said the project has a “long way to go before it becomes a fully operational CCS project. We’re still in the project development phase and the final investment decision depends on a range of factors.”

Boje said it will take about two years to complete engineering, undergo public consultation and obtain regulatory approvals.

The Alberta government is still working on the two other projects that made its initial short list: the Alberta Carbon Trunk Line, a joint proposal by Enhance Energy and North West Upgrading to incorporate gasification, carbon dioxide capture transportation, enhanced oil recovery and storage, drawing on carbon dioxide from the Agrium fertilizer plant and the planned North West heavy oil upgrader; and an integrated gasification combined-cycle power generation plant proposed by Epcor Utilities and Enbridge at the Genesee site in central Alberta.

Coalbed methane recovery honored

The Alberta government derived some hope when an enhanced coalbed methane recovery project, led by the Alberta Research Council, landed an international award in London, England, earlier in October.

The recognition from the Carbon Sequestration Leadership Forum was for work completed last year involving the injection of carbon dioxide into deep, unmineable coal bed, displacing the underground methane with CO2, reducing greenhouse gas emissions and improving the recovery of coalbed methane in the process.

Knight said the award established that the government-funded research council is a “global leader when it comes to contributing real solutions to address climate change.”

The forum also endorsed a second Alberta project, co-led by ARC Resources and the research council, aiming to store carbon emissions from Alberta’s industrial heartland region, north of Edmonton, in an underground reef formation, which is estimated to have the potential to handle 1 million metric tons a year of CO2 by 2015 for more than 20 years.






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