Alberta producers rewarded for use of carbon dioxide in enhanced oil recovery

Gary Park

Petroleum News Calgary correspondent

Four companies using carbon dioxide in enhanced oil recovery projects will share a C$14 million bonus from the Alberta government.

Projects planned by Anadarko Canada, Apache Canada, Devon Canada and Penn West Petroleum all qualify for the royalty credits under the province’s plan to reduce greenhouse gas emissions by encouraging the sequestration of CO2 as part of oil and gas production.

The CO2 is pumped into aging reservoirs to restore pressures and allow the final barrels to be extracted. Apache believes it has the potential to produce 616,420 barrels from its project.

Energy Minister Murray Smith said the government is eager to promote innovation and technology “that will enhance the sustainable development of the province’s abundant energy resources.”

Devon, in partnership with three other producers, plans to inject about 110 metric tons of CO2 per day for the duration of a project in Swan Hills, central Alberta.

Apache is working in the Zama Keg River oil pool project in the northwest, Anadarko has an oil pool project in the south and Penn West is operating the Pembina Cardium project in central Alberta.

The Alberta government said in a news release that CO2 projects face high initial costs because of the cost of capturing CO2 from sources such as oil refineries, oil sands upgraders or power plants and from the lack of pipelines to move the gas to the field for injection.

However, the government said there is a “significant opportunity” to link the supply of CO2 with the sources for demand, with oil sands upgraders rated as a potentially large and reliable source of pure CO2.

The province anticipates its new programs will generate about C$30 million in incremental royalties over 20 years, while providing up to C$15 million in royalty deductions over five years, with credits peaking at 30 percent of approved project costs.