Carbon dioxide capture elusive

Governments slow to embrace overtures for incentives to store worst of greenhouse gases, despite warnings burying CO2 essential

Gary Park

For Petroleum News

It seems like a no-brainer.

You capture carbon dioxide — rated the greatest culprit among greenhouse gas emissions — from production, upgrading or refining operations and ship it by pipeline to be either stored underground or used to rebuild reservoir pressures.

The technology is already being applied in enhanced oil recovery projects by EnCana, Apache and Penn West Energy Trust in Alberta and Saskatchewan.

The U.S. Department of Energy, in urging the industry to get projects under way, has even estimated that enhanced recovery could add a staggering 89 billion barrels of oil reserves.

But it’s proving a tough sell among governments and backers of the Kyoto Protocol.

The United Nations climate change conference in Nairobi, Kenya, in mid-November passed on a chance to adopt CO2 capture and storage as a Clean Development Mechanism technology.

Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, said the issue needs further examination and “more methodological work.”

Several European Union countries and China have been eager to get some official recognition for CO2 capture and storage.

De Boer suggested CO2 capture and storage is “absolutely critical” to China as it is the only significant way of reducing greenhouse gas emissions because coal is China’s long-term economically viable energy source.

Accounting study finds burying CO2 essential

Accounting firm PriceWaterhouseCoopers warned in September that burying CO2 will be essential to keep greenhouse gas emissions at safe levels given the rapidly growing demand for oil and gas in developing countries.

Study author John Hawksworth said there is an urgent need to move CO2 capture and storage from the demonstration stage to a “large scale” technology by 2025.

Even in Canada, where CO2 capture and storage is building a solid track record, industry is making little headway in getting government support for projects.

Clive Mather, chief executive officer of Shell Canada — a leading industry voice on the environmental front as well as a leading developer of the oil sands — has been unable to persuade governments to offer the incentives needed to generate profits from what is currently an uneconomic technology.

Shell is eager to inject CO2 emissions from its Edmonton-area Scotford bitumen upgrading and refining complex into underground storage to achieve a two-pronged benefit — allowing Canada to grow its oil sands production without adding to greenhouse gas emissions.

Mather views the project as a chance for Canada to become a world leader in CO2 capture and storage, laying the groundwork for what could become a significant business opportunity.

Shell is also involved with an industry and government coalition that is trying to determine whether profits can be made from collecting CO2 for either storage or enhanced oil recovery.

Again, that group has been met with caution at the government level for reasons that are not clear, although some observers think there is unease over the risks of possible CO2 leakage from storage facilities.

Dielwart: emission targets needed

He told an investor confidence that he has no interest in capturing CO2 “unless I can turn a profit.”

Dielwart said the economics of CO2 capture for enhanced recovery “don’t work today and they won’t work tomorrow … unless there is some clarity on regulation.

“If there are never any emission controls imposed on the emitters, then CO2 doesn’t have a hope of moving forward in any big way.”

He said promises were made four years ago and have been repeated since to kick-start a CO2 market in Alberta, but those commitments are now smothered by a blanket of “uncertainty.”

David Keith, Canadian research chair at the Institute for Sustainable Energy, Environment and the Economy at the University of Calgary, told an air issues forum Nov. 23 that the solution lies in government action to set clear standards and not get bogged down in a “complicated set of targeted incentives.”

He said the need is for “something that is clean and let the government get out of the way.”

Keith cited as an example the allocation of permits in the U.S. for sulfur emissions.

If, at the end of the year, the permits do not match actual emissions, the plant is closed. As a result the policy allows “bottom-up innovation,” he said.