Reuters
Rod Nickel and Nia Williams
Publishing date: Aug 30, 2021 •
Equipment used to capture carbon dioxide emissions is seen at a coal-fired power plant owned by NRG Energy where carbon collected from the plant will be used to extract crude from a nearby oilfield in Thomspsons, Texas, U.S. on January 9, 2017.
PHOTO BY ERNEST SCHEYDER /REUTERS
WINNIPEG — C anada is pushing to provide incentives for at least two new massive carbon capture projects by 2030, a federal government document showed, with nearly a dozen oil and gas companies already pursuing rights to store carbon dioxide in Alberta’s vast underground caverns.
The hubs to collect carbon from clusters of emitters would advance Prime Minister Justin Trudeau’s goal of cutting emissions by 40-45% from 2005 levels by 2030. The global oil industry is betting heavily that carbon capture utilization and storage (CCUS) can become a multi-billion-dollar global business with government and private investment.
To encourage private investment in CCUS projects, Canada is counting on its carbon price, which is set to rise to C$170 ($134.8) per tonne of carbon by 2030 from C$40, a planned tax credit, and its Clean Fuel Regulation (CFR), which requires lower emissions intensity in fuel.
The cost of building the projects, and their locations, are not yet known.
The two carbon storage hubs would be planned or under construction by 2030, with Canada sequestering at least 15 million tonnes of carbon annually by that year in total, according to the Natural Resources Department’s draft CCUS strategy, obtained by Reuters after it was shared privately in July with industry stakeholders.
“The big takeaway is the federal government is pretty serious about CCUS,” a Calgary oil industry source said.
Canada’s four existing projects, representing 15% of global facilities, currently capture 4 million tonnes per year, according to the Canadian government.
Canadians vote for a new federal government on Sept. 20. On Sunday, Trudeau said he would cut oil and gas sector emissions based on five-year targets starting in 2025. His Liberal party is in a tight race with the Conservatives, a party that also supports carbon capture and has promised to introduce a tax credit to encourage investment.
The Natural Resources Department is doubtful whether its incentives will be enough to stimulate widespread adoption.
“It is not yet clear whether this elevated pricing signal, combined with other federal policies yet to be implemented, such as the CFR and the investment tax credit announced, will be sufficient to drive widespread CCUS adoption,” the federal strategy said.
The government’s doubts highlight challenges such as high costs and complex technology required to capture carbon.
Natural Resources Minister Seamus O’Regan could not be immediately reached.
In September, Alberta is expected to call for expressions of interest to store carbon underground, with formal project selection next year, according to two sources familiar with the process.
WINNIPEG — C anada is pushing to provide incentives for at least two new massive carbon capture projects by 2030, a federal government document showed, with nearly a dozen oil and gas companies already pursuing rights to store carbon dioxide in Alberta’s vast underground caverns.
The hubs to collect carbon from clusters of emitters would advance Prime Minister Justin Trudeau’s goal of cutting emissions by 40-45% from 2005 levels by 2030. The global oil industry is betting heavily that carbon capture utilization and storage (CCUS) can become a multi-billion-dollar global business with government and private investment.
To encourage private investment in CCUS projects, Canada is counting on its carbon price, which is set to rise to C$170 ($134.8) per tonne of carbon by 2030 from C$40, a planned tax credit, and its Clean Fuel Regulation (CFR), which requires lower emissions intensity in fuel.
The cost of building the projects, and their locations, are not yet known.
The two carbon storage hubs would be planned or under construction by 2030, with Canada sequestering at least 15 million tonnes of carbon annually by that year in total, according to the Natural Resources Department’s draft CCUS strategy, obtained by Reuters after it was shared privately in July with industry stakeholders.
“The big takeaway is the federal government is pretty serious about CCUS,” a Calgary oil industry source said.
Canada’s four existing projects, representing 15% of global facilities, currently capture 4 million tonnes per year, according to the Canadian government.
Canadians vote for a new federal government on Sept. 20. On Sunday, Trudeau said he would cut oil and gas sector emissions based on five-year targets starting in 2025. His Liberal party is in a tight race with the Conservatives, a party that also supports carbon capture and has promised to introduce a tax credit to encourage investment.
The Natural Resources Department is doubtful whether its incentives will be enough to stimulate widespread adoption.
“It is not yet clear whether this elevated pricing signal, combined with other federal policies yet to be implemented, such as the CFR and the investment tax credit announced, will be sufficient to drive widespread CCUS adoption,” the federal strategy said.
The government’s doubts highlight challenges such as high costs and complex technology required to capture carbon.
Natural Resources Minister Seamus O’Regan could not be immediately reached.
In September, Alberta is expected to call for expressions of interest to store carbon underground, with formal project selection next year, according to two sources familiar with the process.
Alberta already has received informal interest from at least 10 groups, including publicly announced projects involving Royal Dutch Shell, TC Energy and a consortium of the five biggest Canadian oil producers, said David Knight Legg, board advisor to economic development agency Invest Alberta.
Many global oil and gas producers see CCUS as a way to prolong their capacity to produce fossil fuels, by locking away their emissions.
A massive expansion of carbon sequestration facilities is vital if the world is to reach net-zero emissions by 2050, according to the International Energy Agency (IEA), from around 40 million tonnes a year currently to 7.6 billion tonnes.
Julia Levin, program manager at Environmental Defence, called CCUS a “dangerous distraction” from transitioning to cleaner sources of energy.
“It’s been five decades of huge amounts of resources, research, public and private investment and we have a global capacity to capture 0.1% of emissions from the fossil fuel sector,” she said.
IEA research suggests storing carbon deep underground is safe and stable. However, the pipelines required to transport carbon to injection sites need to be monitored to mitigate the risk of ruptures.
One industry source said dozens of oil and gas companies are considering projects, awaiting details of Alberta’s competitive process.
Jennifer Henshaw, spokeswoman for Alberta’s energy minister, said the government is still developing the competitive process.
Analysts say hubs are the most economic way to store carbon. Alberta is a rare place where suitable geology, a cluster of high emitters and government regulation are all in place, said Neeraj Nandurdikar, global head of power and renewables consulting at Wood Mackenzie.
Hubs make sense because the more carbon they sequester, the lower costs will be, said Tim McKay, President of Canadian Natural Resources, Canada’s biggest oil producer.
Some smaller oil producers warn that hubs could stymie their plans to inject carbon close to their operations, many in remote regions.
Whitecap Resources, an oil producer that already stores carbon, will propose to Alberta that it manage underground space for small producers that want to inject their carbon locally, CEO Grant Fagerheim told Reuters.
Whitecap could sequester 6 million tonnes of carbon per year under the proposal, triple what it currently buries, he said.
Michael Belenkie, head of Advantage Energy’s Entropy unit, a company making modular carbon capture technology, said Alberta needs to prevent speculators from securing underground space, which would kill off CCUS projects.
For now, uncertainty is keeping interest in check.
After the election, more companies are likely to propose projects, said Chris Severson-Baker, Alberta regional director of the Pembina Institute.
“You might get a stampede of interest,” he said.
Many global oil and gas producers see CCUS as a way to prolong their capacity to produce fossil fuels, by locking away their emissions.
A massive expansion of carbon sequestration facilities is vital if the world is to reach net-zero emissions by 2050, according to the International Energy Agency (IEA), from around 40 million tonnes a year currently to 7.6 billion tonnes.
Julia Levin, program manager at Environmental Defence, called CCUS a “dangerous distraction” from transitioning to cleaner sources of energy.
“It’s been five decades of huge amounts of resources, research, public and private investment and we have a global capacity to capture 0.1% of emissions from the fossil fuel sector,” she said.
IEA research suggests storing carbon deep underground is safe and stable. However, the pipelines required to transport carbon to injection sites need to be monitored to mitigate the risk of ruptures.
One industry source said dozens of oil and gas companies are considering projects, awaiting details of Alberta’s competitive process.
Jennifer Henshaw, spokeswoman for Alberta’s energy minister, said the government is still developing the competitive process.
Analysts say hubs are the most economic way to store carbon. Alberta is a rare place where suitable geology, a cluster of high emitters and government regulation are all in place, said Neeraj Nandurdikar, global head of power and renewables consulting at Wood Mackenzie.
Hubs make sense because the more carbon they sequester, the lower costs will be, said Tim McKay, President of Canadian Natural Resources, Canada’s biggest oil producer.
Some smaller oil producers warn that hubs could stymie their plans to inject carbon close to their operations, many in remote regions.
Whitecap Resources, an oil producer that already stores carbon, will propose to Alberta that it manage underground space for small producers that want to inject their carbon locally, CEO Grant Fagerheim told Reuters.
Whitecap could sequester 6 million tonnes of carbon per year under the proposal, triple what it currently buries, he said.
Michael Belenkie, head of Advantage Energy’s Entropy unit, a company making modular carbon capture technology, said Alberta needs to prevent speculators from securing underground space, which would kill off CCUS projects.
For now, uncertainty is keeping interest in check.
After the election, more companies are likely to propose projects, said Chris Severson-Baker, Alberta regional director of the Pembina Institute.
“You might get a stampede of interest,” he said.
Shell proposes new carbon capture and storage project at Scotford Complex
By Amanda Stephenson The Canadian Press
Posted July 13, 2021
Alberta Premier Jason Kenney wants to see more investments like the proposed new carbon capture and storage project at Scotford Complex coming from the energy sector and plans to push for projects when he sits down with energy executives later this week. Tom Vernon reports – Jul 13, 2021
Shell Canada Ltd. has announced plans to build a large-scale carbon capture and storage project at its Scotford Complex near Edmonton, part of its strategy to become a net-zero emissions company by 2050.
The proposed Polaris CCS project will capture carbon dioxide from the Shell-owned Scotford refinery and chemicals plant, the company said Tuesday, adding it expects Polaris to have storage capacity of about 300 million tonnes of C02 over the life of the project.
“It’s a significant reduction of emissions,” said Shell’s senior vice-president of products and chemicals Mark Pattenden in an interview, adding the project’s initial phase alone could see Shell capture and store 750,000 tonnes of C02 per year.
He said that would result in direct and indirect emissions reductions of up to 40 per cent from the refinery and up to 30 per cent from the chemicals plant.
Pattenden declined to disclose a price tag for the project, and said Shell won’t make a final investment decision until 2023. But he said Canada’s soon-to-be-implemented Clean Fuel Standard — as well as the federal carbon tax which is set to increase to $170 per tonne by 2030 — means that Polaris makes financial sense and won’t require government funding.
“We’re confident we have a robust project,” Pattenden said.
READ MORE: Several Canadian oilsands operators commit to become net zero emitters by 2050
Shell already has experience with carbon capture and storage, a technology that captures carbon dioxide and stores it underground instead of allowing it to be released into the atmosphere. The company’s Quest facility — which it operates on behalf of the Athabasca Oil Sands Project joint venture at the Scotford Complex — has safely stored more than six million tonnes of C02 in its six years of operation and has proven to be 30 per cent cheaper to operate than anticipated, Shell said.
Shell is also involved in other major carbon capture projects around the globe, including the Northern Lights CCS project in Norway and the Porthos CCS project in the Netherlands.
According to a recent report by energy consultancy Wood Mackenzie, Canada is a world leader in carbon capture and storage, with 14 per cent of the current global operating capacity. Other major carbon capture projects in Canada include the Boundary Dam coal power plant in Saskatchewan and the Sturgeon Refinery CCS project in Alberta.
READ MORE: Robot dogs the newest ’employees’ at Alberta Shell refinery
But Chris Severson-Baker, spokesman for clean energy think-tank The Pembina Institute, said significantly more capacity is required if Canada is to have a shot at meeting its 2050 climate change commitments.
“We don’t know exactly how much carbon capture we will need in Canada, but we will need a certain amount of it and certainly a heck of a lot more than we’ve already developed,” he said.
READ MORE: Climate Change: Oil sands producer aims at net zero with carbon capture
Shell’s announcement Tuesday is significant in that it reduces emissions from an existing facility rather than a new project, Severson-Baker said.
“Often when there’s announcements . . . of new technology that will result in better environmental performance. it’s usually on a new project, so it’s actually adding emissions overall even though it might be lower on a per-unit basis,” he said. “In order for us to achieve the kind of targets Canada has set, we need to achieve really significant reductions in existing emissions from oil and gas operations.”
Shell also said Tuesday it wants to transform the Scotford Complex into one of five energy and chemicals parks owned by the company around the world. In the first phase of the Polaris project, Pattenden said, carbon dioxide captured from the Scotford refinery’s hydrogen plants would produce blue hydrogen for use in the refining process, with the potential for large-scale blue hydrogen production later on.
Shell is also exploring opportunities around biofuels, Pattenden said, adding within this decade, the company will use carbon capture and storage and renewable power to process new feedstocks such as bio-oils or waste oils to reduce the C02 emitted in the production of fuel.
“These would be potentially blended into existing fuel streams that we sell to customers or in the future they could be produced as stand-alone fuels . . . they could immediately be put into vehicles,” he said.
By Amanda Stephenson The Canadian Press
Posted July 13, 2021
Alberta Premier Jason Kenney wants to see more investments like the proposed new carbon capture and storage project at Scotford Complex coming from the energy sector and plans to push for projects when he sits down with energy executives later this week. Tom Vernon reports – Jul 13, 2021
Shell Canada Ltd. has announced plans to build a large-scale carbon capture and storage project at its Scotford Complex near Edmonton, part of its strategy to become a net-zero emissions company by 2050.
The proposed Polaris CCS project will capture carbon dioxide from the Shell-owned Scotford refinery and chemicals plant, the company said Tuesday, adding it expects Polaris to have storage capacity of about 300 million tonnes of C02 over the life of the project.
“It’s a significant reduction of emissions,” said Shell’s senior vice-president of products and chemicals Mark Pattenden in an interview, adding the project’s initial phase alone could see Shell capture and store 750,000 tonnes of C02 per year.
He said that would result in direct and indirect emissions reductions of up to 40 per cent from the refinery and up to 30 per cent from the chemicals plant.
Pattenden declined to disclose a price tag for the project, and said Shell won’t make a final investment decision until 2023. But he said Canada’s soon-to-be-implemented Clean Fuel Standard — as well as the federal carbon tax which is set to increase to $170 per tonne by 2030 — means that Polaris makes financial sense and won’t require government funding.
“We’re confident we have a robust project,” Pattenden said.
READ MORE: Several Canadian oilsands operators commit to become net zero emitters by 2050
Shell already has experience with carbon capture and storage, a technology that captures carbon dioxide and stores it underground instead of allowing it to be released into the atmosphere. The company’s Quest facility — which it operates on behalf of the Athabasca Oil Sands Project joint venture at the Scotford Complex — has safely stored more than six million tonnes of C02 in its six years of operation and has proven to be 30 per cent cheaper to operate than anticipated, Shell said.
Shell is also involved in other major carbon capture projects around the globe, including the Northern Lights CCS project in Norway and the Porthos CCS project in the Netherlands.
According to a recent report by energy consultancy Wood Mackenzie, Canada is a world leader in carbon capture and storage, with 14 per cent of the current global operating capacity. Other major carbon capture projects in Canada include the Boundary Dam coal power plant in Saskatchewan and the Sturgeon Refinery CCS project in Alberta.
READ MORE: Robot dogs the newest ’employees’ at Alberta Shell refinery
But Chris Severson-Baker, spokesman for clean energy think-tank The Pembina Institute, said significantly more capacity is required if Canada is to have a shot at meeting its 2050 climate change commitments.
“We don’t know exactly how much carbon capture we will need in Canada, but we will need a certain amount of it and certainly a heck of a lot more than we’ve already developed,” he said.
READ MORE: Climate Change: Oil sands producer aims at net zero with carbon capture
Shell’s announcement Tuesday is significant in that it reduces emissions from an existing facility rather than a new project, Severson-Baker said.
“Often when there’s announcements . . . of new technology that will result in better environmental performance. it’s usually on a new project, so it’s actually adding emissions overall even though it might be lower on a per-unit basis,” he said. “In order for us to achieve the kind of targets Canada has set, we need to achieve really significant reductions in existing emissions from oil and gas operations.”
Shell also said Tuesday it wants to transform the Scotford Complex into one of five energy and chemicals parks owned by the company around the world. In the first phase of the Polaris project, Pattenden said, carbon dioxide captured from the Scotford refinery’s hydrogen plants would produce blue hydrogen for use in the refining process, with the potential for large-scale blue hydrogen production later on.
Shell is also exploring opportunities around biofuels, Pattenden said, adding within this decade, the company will use carbon capture and storage and renewable power to process new feedstocks such as bio-oils or waste oils to reduce the C02 emitted in the production of fuel.
“These would be potentially blended into existing fuel streams that we sell to customers or in the future they could be produced as stand-alone fuels . . . they could immediately be put into vehicles,” he said.
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