Canada: Industry looks to CCS
Canada's energy industry is embracing carbon capture and storage (CCS) to reduce its greenhouse gas (GHG) emissions. Two alliances, both comprising companies from the oil, gas, coal, power and pipeline sectors, have set two separate goals: to build an Alberta-based carbon dioxide (CO2) capture and pipeline network; and to find deep saline aquifers suitable for storing up to 0.6bn tonnes a year (t/y) of CO2 – or 40% of the country's projected GHG emissions in 2050. Carbon limits are due to be set by the Canadian and provincial governments shortly.
The Integrated Carbon Dioxide Network (ICO2N) – including Suncor Energy, Syncrude Canada, Imperial Oil, Nexen, Husky Energy, ConocoPhillips and Canadian Natural Resources – has proposed using Alberta as the springboard for a national GHG collection grid for its 15 member companies, targeting a reduction of 10m t/y in CO2 emissions within 10 years, eventually rising to 100m t/y. It estimates the cost of capturing and storing carbon in geological formations starts at C$45 a tonne, rising to as high as C$150/t.
ICO2N's chairman, Stephen Kaufman, says these costs are greater than the potential offsetting revenues from using CO2 to rebuild reservoir pressures for enhanced oil recovery (EOR). But although industry is ready to contribute "significant up-front costs", government money will be needed to bridge the economic gap by "mitigating risks and encouraging investment", says Kaufman.
The second alliance, the Alberta Saline Aquifer Project, is a consortium of 19 companies, including Enbridge, TransCanada, BP Canada, Chevron Canada and EnCana. It will spend C$0.75m this year identifying locations for long-term sequestration of CO2 in deep saline aquifers. The second phase, costing up to C$30m, will involve a pilot project, with later phases planned to achieve long-term commercial sequestration at an initial cost of C$200m-300m. Enbridge's chief executive officer (CEO), Pat Daniel, says the partnership is a chance for companies to "collaborate in an effort to find climate-change solutions that work".
The government-appointed Alberta Research Council expects to see more industry initiatives once carbon limits are legislated. The Canadian government has set a national goal of reducing GHGs by 20% from today's levels by 2020 and by 60-70% by 2050, although Alberta plans to lower emissions by only 14% from 2005 levels by 2050. The two governments have yet to indicate if, or how, they will close that gap, but Alberta premier Ed Stelmach has rejected the federal plan, claiming it could "destroy" 335,000 jobs in his province over the next 12 years.
Meanwhile, a task force appointed last year by the Canadian and Alberta governments says three to five CCS projects with a combined 5m t/y of storage capacity could be operational by 2015 if the two governments and industry each commits C$2bn. Task force chairman Steve Snyder, CEO of utility company TransAlta, says the "long-term benefits of CCS in Canada are huge, but we must get started".
A task force report says that unless provincial governments show they are serious, more than C$150bn of oil-sands operations will be built with conventional technology, making them too expensive to retrofit with CCS equipment.
Pierre Alvarez, president of the Canadian Association of Petroleum Producers, doubts the 2015 time-frame is achievable because of the regulatory, legal, technical and funding challenges. But he says the task force has demonstrated the importance of an industry-government partnership to put in place a policy framework.
The government task force says "growing public concern", supported by the scientific community, requires action to mitigate the effect of GHG emissions if Canada is to continue using fossil fuels to meet 77% of its primary energy needs and to enjoy the economic benefits of producing and exporting those resources. It says CCS technology can allow Canada to build on its existing energy infrastructure and its "fossil energy endowment" while managing GHG emissions.
The report says deep saline aquifers beneath the Western Canada Sedimentary Basin offer storage potential many times larger than the reservoirs holding Canada's largest oil and gas deposits. It also says the use of CO2 in EOR schemes can unlock some commercial value, but concedes that market is "relatively small compared with the total volume of capturable CO2 in Western Canada" – preliminary estimates suggest only 10m t/y could be injected over 50 years.
The initial government response to the proposals and reports was restrained and contained no promises of financial support. The federal natural resources minister, Gary Lunn, rated CCS as just one option for government and industry to "take advantage of new opportunities". However, Alberta energy minister Mel Knight says developing a viable CCS technology would "allow us to maintain an economic advantage for Albertans and all Canadians".