Royal Dutch Shell Plc  .com Rotating Header Image

Global and Mail (Canada): Greenhouse gas could boost oil production: Shell

SHAWN MCCARTHY

OTTAWA — As it moves ahead with a $10-billion plan to expand oil sands production, Shell Canada Ltd. C is looking for government support for an ambitious project that would see it capture carbon dioxide emissions from its Edmonton-area upgrader and inject them into underground storage.

The company’s chief executive officer, Clive Mather, said the carbon capture and storage project represents a key strategy that would allow Canada to dramatically expand oil sands production while reducing — or at least not increasing — its greenhouse gas emissions.

But so far, provincial and federal governments have provided no incentives, either limits on carbon dioxide emissions or subsidies for abatement, for industry to pursue a technology that is currently uneconomic.

And Mr. Mather said, without government leadership, Canada will miss a golden opportunity to become a world leader in carbon capture and storage.

 “If Canada can establish a major operational model, you may actually promote Canadian industry in this area which would give it a competitive advantage in what I and others believe will be a significant business in the years ahead,” Mr. Mather said in a telephone interview.

In the United States — and in some isolated projects in Canada — oil companies already inject carbon dioxide into old producing wells to boost their output. But most so-called enhanced oil recovery in Canada makes use of water or natural gas liquids.

Kinder Morgan Inc., the principal supplier of commercial carbon dioxide in the United States, announced this fall that it is looking at engineering and cost estimates for a proposed pipeline that would move carbon dioxide from sources around Edmonton’s refinery district, and Fort McMurray’s oil sands operations, to oil fields that would benefit from enhanced recovery efforts.

Industry officials caution that the issue remains fraught with complexity and difficulties, including issues like apportioning the cost and benefit of enhancing recovery in adjacent oil fields, to liability for carbon dioxide leakage from storage, to constructing a regulatory framework.

Mr. Mather said Shell has studied building a carbon capture facility at its Scotford upgrader east of Edmonton, which is being expanded to produce up to 155,000 barrels of synthetic oil a day. Shell is also part of a group of a dozen companies that has examined the feasibility of constructing a network that would collect carbon dioxide from upgraders, refineries and coal-fired power plants and feed it into a pipeline, either for use in enhanced recovery projects or for injection into underground storage.

The Shell executive said the companies are waiting for signals from the province and the federal government. With the retirement of Premier Ralph Klein, Alberta Conservatives are now selecting a new leader who will take over as Premier in December; the province has said it will publish long-awaited greenhouse gas emission limits in the first half of 2007.

In Ottawa, Prime Minister Stephen Harper’s government has said it will lay out emissions targets for sectors next year.

Environmentalists worry that Ottawa and Alberta will set targets that merely reflect the energy efficiency improvements that oil sands producers are already expected to achieve in their expansions.

Unlike the former Liberal government, the Conservatives will not allow Canadian-based companies to purchase credits from other countries in order to exceed their notional limits. Instead, the government has promised to focus on technological innovation, including carbon sequestration.

“Therefore, I believe there will be support for these sorts of projects,” Mr. Mather said. “The issue will be exactly how much and when, and that will determine whether they go ahead and on what time scale.”

He acknowledged that governments have to be careful not to be seen as subsidizing the highly profitable oil industry, but added government-industry partnership is critical to kick-start the development of an expensive, new technology. David Keith, a University of Calgary professor of environmental engineering, played down the importance of enhanced oil recovery for carbon capture and storage. He said the opportunity for such use of carbon dioxide is relatively modest compared with the need to reduce carbon dioxide emissions.

But even without the economic return from enhanced oil production, Mr. Keith said industry would adopt carbon capture and storage systems if they were backed up by serious caps on emissions, a trading system that put a value on carbon dioxide, and some government financial support for early adopters.

He said the cost for oil sands producers would be “a few dollars a barrel.”

But industry officials warn that Canada could lose value-added jobs in the resource industry if it moves too aggressively with emissions limits, without similar action in the United States or subsidies at home.

“We’ve always said to governments: If you want us to reduce our CO2 intensity, it’s easy: we’ll upgrade [the oil sands crude] all in the United States,” said Pierre Alvarez, president of the Canadian Association of Petroleum Producers.

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comment Rules

  • Please show respect to the opinions of others no matter how seemingly far-fetched.
  • Abusive, foul language, and/or divisive comments may be deleted without notice.
  • Each blog member is allowed limited comments, as displayed above the comment box.
  • Comments must be limited to the number of words displayed above the comment box.
  • Please limit one comment after any comment posted per post.