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Shell Canada files paperwork for $1.35B carbon capture project

Regulatory application a first for Alberta

By Dina O’Meara, Calgary Herald August 2, 2011

Shell Canada took its first regulatory step toward commercializing it carbon capture and storage project Quest, which will strip carbon dioxide from its Scotford oilsands upgrader near Edmonton. Photograph by: Ted Jacob, Calgary Herald

CALGARY — Alberta could see its first commercial carbon capture and storage project as soon as 2015 if Shell Canada’s application for its Quest project is approved by provincial regulators — and the energy giant’s board.

Shell filed an application Tuesday on its $1.35-billion Quest joint venture with Chevron Canada and Marathon Oil Sands.

“This is the first application that we’ve received for a commercial-scale CCS project,” said Bob Curran, with Alberta’s Energy Resources Conservation Board, Tuesday.

If Quest proceeds, it will become one of a handful CCS projects around the world to inject carbon dioxide at a commercial level. The project is the poster child for the provincial government’s quest to mitigate the effects of fossil fuel extraction, and is expected to capture up to 1.2 million tonnes of carbon dioxide a year from Shell’s Scotford oilsands upgrader, north of Edmonton.

The controversial technology involves “capturing” carbon dioxide emissions, and transporting the gas via pipeline to deep underground storage — in Shell’s case, an ancient saline aquifer. A successful project would remove the equivalent of 175,000 carbon-emitting cars from the road per year, but comes at a high cost, say both detractors and proponents.

Alberta is funding the project to the tune of $745 million over 15 years, out of its $2-billion carbon capture and storage fund, with Ottawa adding $120 million toward the project. Shell also negotiated a two-for-one carbon credit deal with the province, the only jurisdiction in North America to impose a carbon levy on industry.

The deal was essential for Shell to move forward on the project, expected to be commercial in 2015, and breach the province’s current $15 per tonne of carbon price versus the much higher cost of CCS, the global energy giant said.

“It’s not about profit,” said John Abbott, Shell’s executive vice-president of heavy oil, in a recent interview. “It’s about breaking even.”

The Shell project is one of four the province is funding to reduce greenhouse gases by 500 million tonnes a year by 2015

TransAlta Corp.’s Project Pioneer received $436 million to capture one million tonnes annually from its coal-fired Keephills 3 power plant in Alberta.

Enhance Energy and NW Upgrading Alberta’s Carbon Trunk Line, a carbon capture and transportation project to supply gas for enhanced oil recovery, was awarded $495 million to transport 14 million tonnes annually. Swan Hills Synfuels was granted $285 million to capture 1.3 million tonnes annually from its in situ coal gasification power plant project.

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