EDMONTON — The Alberta and federal governments promised $865 million in funding for a carbon capture and storage project near Edmonton on Thursday, but officials acknowledge that it will be years before any greenhouse gas emissions are piped underground.
“We have to start somewhere,” said federal Natural Resources Minister Lisa Raitt. “We start today, and we think – we know – we’re on the right path.”
The two levels of government have teamed up with Shell Canada, Chevron Canada and Marathon Oil Sands to push forward the Quest project, which is projected to eventually collect up to 1.1 million tonnes of climate change-causing carbon dioxide a year from the Scotford oilsands upgrader, pipe it to a wellhead and inject it more than two kilometres underground.
Total cost of the project is expected to be $1.35 billion, with the balance coming from the companies involved.
It would be the first funding agreement to draw on Alberta’s $2-billion carbon capture and storage fund and Ottawa’s $1-billion pool for such projects. Alberta Energy Minister Mel Knight said other projects will be announced soon.
If the project proceeds, it would become one of a handful around the world injecting CO2 on this scale.
Carbon capture and storage is held out by industry and government as a major part of the strategy to reduce Canada’s greenhouse gas emissions by 20 per cent over 2006 levels by 2020. It works by collecting carbon dioxide from large emitters, piping it to wellheads and injecting it deep underground in geological formations that are sealed off from the surface by impermeable rock or clay caps.
The technology has worked on a small scale but remains unproven in large, commercial projects. In addition to engineering challenges, questions about the regulatory regime and legal liability for the CO2 remain unanswered.
Those unknowns are a big part of the reason why Shell won’t promise to start injecting gas until 2015. The companies won’t even make a final decision on spending the money to go ahead for several years to come, said Shell vice-president Graham Boje.
“This project has gone through a couple of decision gates, but it’s still got more to go before it gets to what we call final investment decision,” Boje said.
Boje said the location of the injection site hasn’t been determined. He expects it will be within “10s of kilometres” of the Scotford facility.
Knight said any new infrastructure for the project would have to go through public hearings in front of the Energy and Resources Conservation Board.
“There’s ample opportunity at that point for full public hearings,” said Knight. “Not just public meetings, but public hearings in front of a quasi-judicial board to address those issues that will come forward.”
Knight said that not only will the Quest project develop technology and practices that will be shared openly with other industrial emitters, it will allow Alberta oil companies to squeeze more oil from depleted wells by injecting them with CO2. Knight said wide use of carbon capture and storage could increase the amount of recoverable oil in the province by 10 to 15 per cent.
Amy Taylor of the environmental think-tank the Pembina Institute said the announcement was welcome, but still lacked the most important component of what she called a “serious” climate change program. She said the government has to radically increase the price it levies on carbon emissions from the current $15 per tonne.
“What we really need to do is get a price on carbon to get these technologies economical without huge taxpayer subsidies,” she said.
Taylor notes that taxpayers are shouldering 65 per cent of Quest’s costs.
“We like to see polluters pay more of their fair share,” she said.
Most experts agree that carbon emissions need to cost emitters between $70 and $80 per tonne to make carbon capture and storage economical.
Taylor said the federal and provincial governments are placing too much emphasis on projects such as Quest and not enough on renewable energy sources.
“That’s what’s really missing, is the balance.”
Copyright © 2009 The Canadian Press. All rights reserved.
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