July 21, 2008

Enhance Energy plans to build commercial carbon-dioxide pipeline

RICHARD GILBERT

staff writer

Alberta’s first commercial-size carbon dioxide pipeline is one step closer to reality, as a small Calgary company plans to build a new transmission system in the central part of the province.

Enhance Energy Inc. announced that the company plans to build a new transmission system to gather CO2 from several sources near Edmonton.

It will transport the CO2 to existing mature oil fields in South-Central Alberta.

The capture and permanent storage of CO2 in these oilfields will increase production, while reducing the emission of greenhouse gases.

“There is a small CO2 pipeline in Alberta, but this will be the first long-distance, commercial-size pipeline in the province,” said Susan Cole, Enhance Energy president.

“The one we are building is a system with multiple sources and multiple sinks.”

Cole explained that the traditional method to recover oil from mature field is to increase pressure in a well using water or steam.

The approach taken by Enhance is unique, because the CO2 mixes with the oil and acts like a solvent to scrape the oil from the rocks. When the oil is processed, the CO2 is taken out and re-injected into the reservoir

“The two main goals of this project are to increase the recovery of oil in existing reservoirs and to take CO2 gasses that would normally be vented into the atmosphere and store them in a reservoir,” said Cole.

“Besides the enormous environmental benefits to Alberta, the pipeline system will benefit Albertans through the jobs it will provide and the incremental royalties and taxes it will generate through enhanced oil recovery.

The initial pipeline will be 240 kilometres long. The facilities for capture and the pipeline will cost an estimated $300 million.

The system will have a design capacity of 25,000 tonnes per day with the initial throughput planned at 5,000 tonnes per day.

Contracts for the design and project management of the new system have been awarded to Sunstone Projects Ltd.

“We are excited to be involved with this industry leading project,” said Barry Bauhuis, president, Sunstone Projects Ltd.

“This system will offer CO2 producers in the Heartland Industrial Area an economically viable way to deal with CO2 emissions and can be in service relatively quickly. The system will be designed for capacity expansion and delivery flexibility. It’s the first world scale project for dealing with greenhouse gases and we’re glad it’s happening here in Alberta.”

Construction of the project will begin at the end of 2009 and be completed in 2010. The system will be fully operational in 2011.

One of the initial suppliers of CO2 will be North West Upgrading Inc. The Calgary-based company is planning to build an upgrader that turns bitumen and heavy oil into low sulphur diesel and other value-added products.

An important element of the project is its use of gasification to make hydrogen from the heaviest components of the bitumen.

“By putting gasification in we have the opportunity to take a clean CO2 stream off the gasifier,” said Don Murray, senior vice president and COO at North West Upgrading Inc.

“We have a contract to sell to Enhanced Energy, which will transport the CO2 and sequester it.”

North West’s CO2 will be used by Enhance Energy in an enhanced oil recovery project at Fairborne Energy Trust’s Clive oil fields in central Alberta.

Enhance expects to be the first company to implement a large scale CO2 enhanced oil recovery project in Alberta using Upgrader CO2 .

Cole said the Government of Alberta’s new regulations on CO2 emissions are responsible for the rapid progress on this project.

The government announced on July 8 that it was creating a $2 billion fund to advance carbon capture and storage (CCS) projects. The funds will be allocated to encourage construction of Alberta’s first large-scale CCS projects.

The province has issued a request for expressions of interest to begin identifying those CCS proposals with the greatest potential of being built quickly and those which provide the best opportunities to significantly reduce greenhouse gas emissions.

“We are still looking at how the fund is structured to see if the project is a good fit for government funding,” said Cole.

The $2 billion fund will support CCS projects by reducing emissions at facilities such as coal-fired electricity plants and oil sands extraction sites and upgraders.

The program is expected to reduce emissions by up to five million tonnes annually, which is the equivalent of taking one million vehicles off the road, or one-third of all vehicles registered in Alberta.

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