Isramart : Taxpayers fund CO2 pipeline

Isramart news:
Alberta will spend up to $495 million over 15 years to support the world’s largest pipeline system for collecting and storing carbon dioxide, The Journal has learned.

A letter of intent between the province and Enhance Energy will be signed at a ceremony today, and follows previous announcements for Shell’s Quest project at Scotford and TransAlta’s Pioneer Project at the under-construction Keephills 3 coal-fired turbine near Wabamun.

The three projects together will receive$ 2 billion from the province’s carbon capture and storage fund.

Enhance plans to begin laying pipe in 2011 and start operations in 2012 for its Alberta Carbon Trunk Line.

Much as the 1950s’ Alberta Gas Trunk Line formed the backbone for a network of a natural gas collection lines that laid the foundation of a large and profitable gas export and petrochemical industry, the carbon trunk line is expected to grow to deliver CO2 to hundreds of depleted oil reservoirs.

“We feel we are on the verge of really creating a new industry in Alberta,” said Enhance CEO Susan Cole.

“What will be attractive to firms coming to Alberta is there is a CO2 solution here, and that’s one piece of the puzzle they don’t have to worry about.”

The pipeline has an initial capacity of 15,000 tonnes per day and was initially budgeted at $600 million, but that will be higher if the system is expanded to 40,000 tonnes per day and secondary lines are added. Carbon dioxide under pressure flows as a liquid.

At maximum pressure, the line would carry more than 14 million tonnes a year to mature oilfields for enhanced oil recovery. The world’s second-largest proposed project, Australia’s Monash complex near Melbourne, which aims to store CO2 from a coal-to-petroleum liquids conversion facility, will store more than 12 million tonnes a year, but without the advantage of EOR.

Initially, Enhance’s CO2 will come from the Agrium fertilizer plant near Fort Saskatchewan and the proposed North West Upgrader, which will turn bitumen into high-grade diesel fuel. Those two will contribute 5,000 tonnes per day, but Cole expects once the system is working other firms will join.

“We feel it will be full to its initial capacity in 10 to 15 years, and we will have enough demand after that to increase its capacity.”

Enhance’s pipeline route to the Clive area, where it has a joint venture with Fairborne Energy Trust, follows a 240-kilometre route that was designed to get close to more than 100 mature oilfields.

Enhance foresees lateral lines running off the trunk line to the fields, and CO2 collection lines extended to both Fort McMurray and the coal-fired power plants near Lake Wabamun.

Ian MacGregor, chairman of North West Upgrading and Enhance board chairman, said the project could earn the province billions in royalties from new oil production.

“We think EOR could revitalize the whole light oil business in central and southern Alberta.”

And big oilpatch players such as Shell, Total and Suncor should join the trunk line when Enhance proves itself, said MacGregor.

“We are a small Alberta company, and the rubber has to hit the road before the big guys believe us.”

Neil Shelly, executive director of Alberta’s Industrial Heartland, a municipal group, said the trunk line could have a huge impact in the area.

“If we can establish a line that firms can tap into, that would be an advantage over the U.S. The Midwest has fewer geological options for carbon storage, and under carbon cap and trade this could level the competitive playing field for us in Alberta.”