March 4, 2013

Alberta is still supporting carbon capture projects

RICHARD GILBERT

staff writer

Alberta is still moving forward with the creation of a Carbon Capture and Storage (CCS) industry, despite the cancellation of two CCS projects in the province over the last year.

“At present, it’s more economical to purchase natural gas than it is to manufacture synthetic gas,” said Swan Hills Synfuels CEO Martin Lambert.

“It’s a market reality that has led to significant delays on the CCS side of the project.”

The provincial government and Swan Hills Synfuels recently agreed to discontinue their $285 million CCS funding agreement.

Lower than expected natural gas prices have pushed back timelines for Swan Hills Synfuels’ production of synthetic gas and associated carbon capture plans.

The carbon capture components of this project were moved beyond the scope of the government’s funding, due to deferred project timeline requirements.

As a result, the provincial government has yet to advance any money for the project.

The Swan Hills Synfuels project was planning to use an in-situ coal gasification process to access coal seams located about 1.4 kilometres beneath the earth’s surface that have traditionally been considered too deep to mine.

The access wells, similar to conventional oil and gas wells, would have been used to convert the coal underground in its original seam into a clean synthetic gas known as syngas.

The syngas was going to be used to generate 300 megawatts of new clean power generation capacity, which is enough for about 300,000 homes.

The project was also going to capture up to 1.3 million tonnes of CO2 per year that was going to be used for enhanced oil recovery in the area.

Enhanced oil recovery (EOR) uses CO2 to reduce the viscosity of the oil in the depleting conventional oilfields, allowing more oil to be extracted.

It also creates pressure in the reservoir and pushes the oil to the surface more easily.

The overall cost of the syngas project and CCS system is estimated at $1.5 billion.

Synfuels was one of four CCS projects the provincial government was helping to finance with a $2 billion fund.

A plan to build the backbone of the world’s largest carbon capture project in Alberta is moving forward due to a deal between the provincial government and two Calgary-based companies.

“We haven’t started construction, but we have already bought long delivery equipment, acquired right of way and have full approval,” said Ian MacGregor, chairman of Enhance Energy.

“Most of the CO2 for the project is coming from the North West Upgrader, which is under construction and will be completed in 2016. We will be in front of them but not by much.”

The Alberta government has a $495 million deal with Enhance Energy and North West Upgrading to construct a 240-km pipeline system that will collect (CO2) from sources in the Industrial Heartland near Fort Saskatchewan.

The North West Upgrader will upgrade bitumen from the oilsands.

The captured CO2 will be transported to depleted conventional oilfields near Clive, north of Red Deer and used in EOR.

MacGregor said the CO2 pipeline will be able to handle 15 million tonnes of CO2 a year, in comparison the oilsands produce about 40 million tonnes of CO2 a year.

Royal Dutch Shell is moving forward with the construction of the first commercial-scale CCS facility in the world at the Scotford Upgrader located near Fort Saskatchewan.

Shell approved the $1.35 billion Quest CCS project and provincial approvals were received in July 2012.

The project components include CO2 capture infrastructure, which involves a process modification to the existing Scotford Upgrader, as well as an 80 km pipeline to injection wells for CO2 storage.

The pipeline, which has a diameter of 16 inches, will be buried 1.2 metres underground.

The project, which is scheduled for completion in late 2015, will employ an average of about 400 skilled workers over roughly 30 months.

At peak construction, the project will employ about 700 workers.

The Quest project will be built for the Athabasca Oil Sands Project joint venture, which is owned by Shell Canada Energy (60 per cent), Chevron Canada Limited (20 per cent) and Marathon Oil Canada Corporation (20 per cent).

TransAlta, Capital Power and Enbridge abandoned their plans for the construction of a $1.4 billion Pioneer carbon capture and storage facility in April 2012.

The group of energy companies and the federal and provincial governments proposed to build a facility to capture, transport and store carbon dioxide from the Keephills 3 coal-fired generation plant west of Edmonton.

The companies made the decision after completing a front end engineering and design study and evaluating the project’s economically feasibility.

The project involved using chilled ammonia to strip carbon dioxide out of emissions from the new 450-megawatt power plant.

The CO2 was to be transported for enhanced oil recovery in nearby oil fields as well as for permanent storage in deep saline formations.

TransAlta estimated the technology would reduce one million tonnes of greenhouse gas a year.

Print | Comment