The Globe and Mail: Jeffrey Jones - October 9, 2009
Governments will provide $865-million for Shell Quest venture aimed at capturing, storing carbon dioxide from Scotford upgrader
Reuters - Calgary: The federal and Alberta governments have promised $865-million to help oil major Royal Dutch Shell PLC RDS.A-N develop carbon capture and storage at its oil sands processing plant as they seek to meet goals to cut emissions and curb global warming.
The governments said in a letter of intent they would spend the money over 15 years on the project, which Shell said has a total estimated cost of $1.35-billion.
The public funding to develop the fledgling technology comes as the governments search for ways to reduce greenhouse gas emissions from Canada's vast energy resources while preventing a drop in oil investment.
Alberta signalled it will contribute $745-million and Ottawa will kick in $120-million for the Quest project at Shell's Scotford upgrader near Edmonton.
Shell, the world's second-largest non-state oil company, is still in the early stages of developing Quest, which would start storing emissions from the plant underground by the end of 2015, Shell vice-president Graham Boje said.
“There's a couple of years of work ahead of us. There's a lot more technical work to do, and then there's also the regulatory application process and approval process, as well as consultation with people in the area,” Mr. Boje told reporters.
Alberta is known for its vast oil sands, the largest source of crude outside the Middle East and a major target of investment for the world oil industry.
But developing and producing the tar-like oil is carbon-intensive and environmental groups have launched high-profile campaigns to warn of the developments' harm to the fight against global warming.
In the past month, activists from Greenpeace have breached security and staged occupations at three oil sands plants to hammer home their message.
Alberta has set aside $2-billion to invest in carbon capture and storage, which has yet to be proven on a large industrial scale. The federal government has set up a $650-million CCS fund as it seeks to reduce emissions by 20 per cent from 2006 levels by 2020.
Tony Hayward, chief executive of oil major BP PLC said in Buenos Aires Thursday that he believed widespread use of the technology was years or even decades away.
“Carbon capture and storage is an expensive, expensive mitigation device,” Canadian Natural Resources Minister Lisa Raitt said. “That's why the government has to be involved in partnership with industry to demonstrate that, on a large scale, it can be commercial and it can be utilizable, and it can reduce GHG emissions.”
Shell, with partners Chevron Corp. CVX-N and Marathon Oil Corp., MRO-N aim to capture 1.1 megatonnes of greenhouse gas emissions annually, representing a cut of about 40 per cent of those emissions from the upgrader. That plant is being expanded to pump out 255,000 barrels of synthetic crude a day.
Under the plan, the CO2 would be captured from bitumen processing units then piped to a nearby injection site, where it would be stored in a geological formation 2,300 metres underground.
The project is among three that had made the short list for public funding. The governments had also weighed proposals from groups including Epcor and Enbridge Inc. as well as Enhance Energy and Northwest Upgrading.
Spokesmen for those companies said the letter of intent with Shell did not mean that their projects had been rejected, only that they were not as far along in their talks with the governments