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Cleaning up the planet TransAlta enters Kyoto trading game with Chilean hog farmer; EnCana gets backing for carbon dioxide injections in EOR project Gary Park Petroleum News Calgary Correspondent
Chilean hogs and the bleak, windswept Canadian prairie are playing a role in the campaign to reduce greenhouse gas emissions.
Paving the way in these innovative attempts to tackle climate change are two Calgary-based energy giants, TransAlta and EnCana.
Power producer TransAlta, which generates about 30 million tonnes a year of greenhouse gases, has taken a bold step into the uncertain world of carbon credits trading by signing a deal with Chilean hog farming giant Agricola Super Ltd.
It will spend about US$9 million for credits worth 1.75 million tonnes of gas emissions and use those credits during Canada’s initial Kyoto Protocol implementation phase from 2008 to 2012.
Meanwhile, EnCana is buoyed by results of a four-year international study that concluded large volumes of carbon dioxide (the largest source of greenhouse gases) can safely be stored in enhanced oil recovery projects.
The study covered EnCana’s EOR activities at Weyburn, in southeastern Saskatchewan, where CO2 is piped from North Dakota and injected into a 50-year-old oil field to enhance light-oil recovery.
About 20 million tonnes of CO2 is expected to be pumped into the reservoir, boosting oil recovery by 130 million barrels over 30 years, in addition to the 380 million barrels produced since 1954.
The C$40 million study was funded by the Petroleum Technology Research Centre under the auspices of the International Energy Agency, Natural Resources Canada, the U.S. Department of Energy, Saskatchewan Industry and Resources, the Alberta Energy Research Institute and the European Community.
Industry participants included EnCana, BP Canada, ChevronTexaco, Dakota Gasification Co., ENAA (Japan), Nexen, SaskPower, TransAlta and Total (France).
In total the project involved 24 research and consulting organizations in Canada, the United States and Europe. TransAlta first to purchase reductions Although legislation laying out the terms of Canada’s participation in Kyoto has yet to be introduced, TransAlta has decided to become the first Canadian company to purchase certified emissions reductions.
That arrangement allows companies in the developed world to buy credits from companies in the developing world that have launched projects to lower their greenhouse gas emissions.
It adds another element to TransAlta’s commitment to “encourage and promote socially and environmentally sustainable economic development.”
Through a wind energy division, TransAlta operates 49 percent of Canada’s total wind power capacity and aims to have renewable energy make up 10 percent of its total generation capacity in the next decade.
“Meeting Canada’s Kyoto commitment will be a huge challenge,” said Steve Snyder, TransAlta’s president and chief executive officer.
The Chilean emissions trade allows TransAlta to “cost effectively take action now” to cut emissions, he said.
The company said the 1.75 million tonnes in the Chilean deal is the equivalent of eliminating gas emissions at a 240-megawatt coal-fired power plant, or the emissions from 62,000 cars, for one year.
Although it is not yet clear when and by how much Canadian companies will be required to lower emissions, Snyder said TransAlta will “need every tool at our disposal” to make progress towards meeting Kyoto targets.
The Delphi Group reported recently that 37 million tonnes of carbon credits were traded in 2003, not all qualifying as certified emission reduction under Kyoto.
It estimates that figure will rise to 270 million tonnes a year by 2010.
The Weyburn project was the “largest, full-scale, in-the-field scientific study ever done anywhere in the world involving carbon dioxide storage,” said Malcolm Wilson, an energy specialist with the Petroleum Technology Research Centre.
“There’s keen worldwide interest in the results,” he told the Globe and Mail. “This wasn’t a small pilot test, or simulated results. We’re doing big tests in a real-world environment.”
He said the results, indicating that the geological conditions at Weyburn are favorable for long-term storage of CO2, are good news for global warming remedial measures.
The CO2 is injected into an oil well and, as it blends with oil, helps the crude flow more easily to the surface.
The study concluded that 100 percent of the injected CO2 would remain stored underground after 5,000 years, rather than being vented into the atmosphere.
But the researchers cautioned that critical work remains to complete a comprehensive risk assessment of the long-term fate of the stored CO2.
Weyburn has stored about 5 million tonnes of CO2 over the four-year study period, equivalent to taking about 1 million cars off the road for one year.
EnCana Executive Vice President Gerry Protti said the results were an encouraging confirmation that oil production can be enhanced “in an environmentally responsible manner.”
Canada’s Environment Minister Stephan Dion added his weight to the CO2 work by challenging energy executives to play a leading role in what he described as a new Industrial Revolution.
He told a business audience in Calgary Sept. 10 that there is a need for “research such as the sequestration of carbon dioxide that could one day replace water as a means of enhancing oil recovery, a true win-win situation for our environment and our economy.”
He called for the creation of permanent groups to share ideas from industry, environment, science and government.
Further CO2 experimentation is under way at the huge Pembina field in west-central Alberta, where Penn West Petroleum is testing CO2 injections in hopes of doubling its crude oil output.
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