Petroleum News: Alberta: Probing profits from pollution

Provincial government and industry launch joint effort to evaluate economics of reducing carbon dioxide emissions into atmosphere

By Gary Park

The Alberta government and its petroleum industry are trying to turn an environmental minus into an economic plus.

A joint study will try to figure out ways to turn a profit from carbon dioxide, which is the worst contributor to greenhouse gases and which some environmentalists have campaigned to have declared a toxic substance.

In an Environment Canada inventory of 324 facilities in 2004, Alberta-based companies took seven of the top 10 spots as the largest sources of greenhouse gases, led by a coal-fired TransAlta power plant and the Suncor Energy and Syncrude Canada oil sands plants.

In trying to head off punitive measures, such as a federal carbon tax, a government and industry coalition is taking proactive measures.

The Petroleum Technology Alliance Canada has tendered out a contract to calculate the capital and operating costs for operations that would capture, cleanse and transport CO2 from Edmonton-area industrial facilities, notably oil refineries.

The alliance committee includes Suncor, Husky Energy, Shell Canada, EnCana, Penn West Energy Trust and Enbridge, as well as provincial and federal representatives.

Oil sands make solution more crucial

The challenge to find answers is becoming more pressing as the Alberta oil sands press ahead with more than C$100 billion worth of projects over the next decade.
Currently, oil sands mining operations spew about 88 pounds of CO2 for every barrel of bitumen produced, while thermal projects, which rely heavily on natural gas, generate 143-176 pounds of CO2 per barrel produced.

Upgraders contribute 165-198 pounds of CO2 for every barrel of bitumen turned into synthetic crude.

If the oil sands sector reaches one forecast goal of 5 million barrels per day it would produced 145 metric tons of CO2 a year, more than the entire province of Alberta produced in 1990.

John McDougall, president and chief executive officer of the Alberta Research Council, said earlier this year that environmental challenges will “govern the pace of oil sands growth and are as much of an issue facing companies as the shortage of labor. It’s an issue that will have to be addressed.”

Matthew Bramley, a director at the Pembina Institute environmental think-tank, said “the spotlight is on Alberta to deal with climate change … but this doesn’t mean the cost of dealing with emissions has to be crippling.”

Conventional fields inject CO2

On the conventional oil and gas front, measures have been taken to liquefy CO2 and inject the gas into older oil fields, rebuilding reservoir pressures and recovering billions of barrels that were once considered lost.
CO2 injections along with a whole range of more efficient drilling methods cold recover an additional 6 billion barrels of oil and 22.5 trillion cubic feet of gas from fields in Alberta, British Columbia and Saskatchewan, according to a recent proprietary report by the Petroleum Technology Alliance Canada and Energy Net, a government-industry information partnership.

Alliance President Eric Lloyd told the Globe and Mail that the new study hopes to break a deadlock, which has many industry leaders debating whether removing CO2 before it enters the atmosphere is an economic strategy without government aid.

The objective is to develop a cost estimate, accurate within 25 percent either way, by early 2007 and give the industry a basis for negotiating deals to start building CO2 capture plants in 2007.

The study could also provide leverage for those seeking government assistance if it is shown that private profit alone is not sufficient to reduce greenhouse gases.

Penn West plans 160-mile CO2 pipeline

Penn West, which is taking a leading role in sequestering CO2 by building a C$750 million, 160-mile pipeline to move CO2 from Edmonton to its mature oil fields in west-central Alberta, says its own engineering work shows it is already feasible to build the infrastructure to transport and inject the gas.
Penn West expects to take a one-third stake in the pipeline, with an unidentified partner owning and operating the facility for capturing and processing CO2.

Other pioneering CO2 projects taking place include:

• EnCana’s CO2 flood project at Weyburn, Saskatchewan, which started operations in 2000 and expects to recover 130 million barrels over 20 years.

• Apache established a similar project at Saskatchewan’s Midale field and aims to increase recoveries by 45 million barrels. ARC Energy Trust is a partner in both Weyburn and Midale.

• Glencoe Resources is drawing high-purity CO2 from petrochemical plants to liquefy and inject into central Alberta oil fields.

 

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