Little steps before the big ones with CCS: Shell says use of carbon dioxide for enhanced oil recovery is distant goal

Gary Park, GREENING OF OIL, Jan. 29 2010--Those counting on carbon capture and storage, or CCS, as a destination in the fight against climate change had best buckle in for a long journey.

That was part of the message from Royal Dutch Shell’s Canadian unit Jan. 22 when it gave a progress report on its government-subsidized scheme to dispose of carbon from its Scotford refinery operation near Edmonton.

Rob Seeley, Shell Canada’s general manager of sustainable development, told a conference call that the C$1.3 billion Quest CCS project is at least a year away from seeking regulatory approval.

Beyond that, he said Quest would not be capable of supplying carbon dioxide for enhanced oil recovery until much later in the project’s life, without indicating when that might be.

Backed by C$865 million in Canadian and Alberta government pledges, Quest is focused, for now, on strictly the CCS aspect of the program, he said.

Preparing permit apps, sanctioning take time
Moving to the next phase of using CO2 for enhanced recovery is still a “fairly new” and evolving industry in Alberta, Seeley said, suggesting that even when EOR projects come onstream they will initially consume only small volumes of CO2.

“We have a year’s worth of work to prepare for regulatory filing,” he said, estimating approval will likely take another year before Shell Canada and its partners—Chevron Canada and Marathon Oil, each holding 20 percent stakes—can make a corporate sanctioning decision.

Too much CO2 for EOR demand
Under terms of the government agreement, Quest must start operations by 2015, with the aim of removing 1 million metric tons of CO2 from the two Scotford upgraders, reducing CO2 emissions from the facility by 35 percent. (Alberta has set a goal of reducing GHGs by 200 million metric tons a year by 2050 and expects CCS to achieve 70 percent of that goal).

Seeley noted that several large CCS projects could come onstream about the same time, generating more volumes of CO2 than could be used for EOR projects.

Currently, a handful of EOR ventures are conducting pilot tests of small-scale commercial ventures in Alberta, although Cenovus Energy (previously EnCana) is running the Weyburn project in Saskatchewan, a larger commercial operation that is being closely monitored by international researchers.

Looking for a place deep underground to store

Seeley said that over time some CO2 may be diverted to EOR, with the balance injected into Basal Cambrian sands.

To date, Shell Canada has drilled two geological appraisal wells and is currently choosing the site for a third test well this year to identify suitable locations for CO2 storage, while advancing feasibility and engineering studies as well as developing cost estimates.

Cooperation with United States
Speakers at a Calgary conference Jan. 26, while urging Canada and Alberta to take a leadership role in carbon management technologies, made a case for close cooperation with the United States to advance the research and development, or R&D, work.

Corinne Boone, managing director of Hatch Energy, a firm of consulting engineers and project managers, said there is a “huge opportunity” for Canada and the United States to collaborate on technology, specifically CCS technologies.

“Given that we haven’t got a clear climate policy, we still have as a society an obligation to look at options to address our global warming concerns and manage carbon.”

Robert Wright, a senior advisor in the U.S. Department of Energy, agreed that cross-border cooperation is essential to build on a decision last June to establish a bilateral working group to seek compatible rules and standards of practice that are acceptable to both governments.

“It was recognized that we are not going to adopt the same rules and regulations,” he said. “But what we don’t want to happen is to have whatever we adopt make it impossible to work across the international boundary.”

Sharing technology across borders
Dubravka Bulut, a science and technology advisor with Natural Resources Canada, said collaboration among Canada’s provinces and industry, as well as its international partners, is vital to “resolve our challenges in a timely manner.”

Bruce Herdman, with the management consulting firm Ian Murray & Co., said more funding is needed for change to occur on a large, emission-reduction scale and to bring together CO2 capture, building infrastructure and transportation systems and storage facilities.

“The objective is not just to deal with our own CO2 emissions and CCS projects, but also to share some of those learnings,” he said. “We are all in a learning mode, so it would be helpful to share as much as possible.”
Now that tentative plans have been announced to put Canadian government money in the hands of industrial partners, the process has moved to developing grant agreements, which should be signed early this year, said a spokeswoman for Alberta Energy.

Skepticism from environmental community
But there is skepticism from the sidelines, especially among environmentalists, who object to public money being used to subsidize the companies that are responsible for CO2 emissions.

Simon Dyer, of the Alberta-based think tank Pembina Institute, noted that the governments haven’t yet agreed on an “outline for a national approach to reducing greenhouse gases.”

But none of the government-supported projects in Alberta can start injecting CO2 into storage until a range of complicated issues is resolved from how and when money will be distributed to more complicated legal liability issues.