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Vol. 26, No.28 Week of July 11, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Pembina, TC Energy team up for large scale carbon grid project

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Gary Park

for Petroleum News

Alberta’s drive to lead global carbon capture and storage and clean up its fossil fuel image in the process has resulted in two of Canada’s largest energy infrastructure companies collaborating on a grid with capacity to transport more than 20 million metric tons of carbon dioxide annually.

Pembina Pipeline and TC Energy say they will form the backbone of the province’s capture and storage business.

They plan to retrofit existing, underutilized pipelines and build new transportation systems to connect Alberta’s largest sources of industrial emissions to a carbon storage facility at Redwater, a small town 30 miles north of Edmonton.

To be called the Alberta Carbon Grid, ACG, it is being designed initially to capture CO2 from power generation facilities in the region.

Other industrial operations, such as petrochemical and fertilizer plans, will eventually gain access to the system which will have capacity of 60,000 mt, representing about 10% of industrial emissions in the province.

Principal segments of the ACG include overhauling an existing pipeline in northern Alberta, with initial design capacity of 40,000 mt per day; a central leg retrofit to gather and deliver up to 20,000 mt a day; a southwest leg with possible capacity of 20,000 mt a day; and multiple opportunities to extend the grid into other regions. In addition, a reservoir site has been selected near Edmonton to sequester more than 2 billion mt of CO2.

Cost not yet known

Mick Dilger, chief executive officer of Pembina, said the partners will not have an estimated overall cost until more engineering studies are completed, although using new pipelines could push the total investment to multibillions of dollars.

He told the Globe and Mail the partners are pledging to create an “open access” system “with many receipt points and many delivery points.”

“We’re going to make money on this, but we’re not hanging our hats on this thing just to make money. There’s a bigger purpose here.”

The companies say tolls on the system will be less than the current price of carbon in Alberta, making its use more attractive for prospective customers and helping the grid’s long-term competitive viability.

The partnership will be open to other owners with suitable existing infrastructure.

Capture greatest challenge

Dilger said the greatest challenge will be to capture rather than to transport and store the CO2.

“We just need to find a way to do it for less cost and we’ll need help from the federal government on that side,” he said.

Dilger said the plan is to meet the aims of the big oil sands producers who announced in June that they have formed a partnership to achieve net-zero greenhouse gas emissions from their operations over the next 30 years.

Alberta already has one CO2 pipeline - the Alberta Carbon Trunk Line - which captures industrial emissions and delivers them to aging oil and gas reservoirs to rebuild pressures to enhance oil recovery.

Robert Hope, an analyst at Scotiabank, said the carbon grid plan “is a positive for Alberta and the broader energy industry for Canada.”

By increasing carbon capture, storage and utilization, the carbon intensity of Canadian oil and gas will decrease, boosting the industry’s “ability to attract capital and grow,” he said.

Scott said the partners willingness to add other infrastructure owners should be applauded because shrinking the industry’s carbon footprint “should have wide-ranging benefits.”

Expansion of infrastructure holdings

For Pembina, this is the latest corporate move to expand its infrastructure holdings.

It has launched an C$8.3 billion bid to takeover Inter Pipeline, while fending off a hostile counter offer by Brookfield Infrastructure Partners.

In addition it has joined forces with Western Indigenous Pipeline Group to prepare an offer for the Trans Mountain Pipeline, which is engaged in a C$12.6 billion system expansion, and has announced it is buying a 50% stake in the proposed Cedar LNG project on the British Columbia coast to partner with the Haisla Nation.

- GARY PARK



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