CHOA eJournal 27 October 2022

ESSENTIAL REPRINTS

Alberta Advances Multiple Carbon Storage Hubs

Martin King, RBN Energy, LLC

Capturing carbon dioxide (CO2) emissions from industrial and oil and gas activities is already a big challenge but having a safe, permanent place to store them is vital if the goal is to meet or exceed emission-reduction targets. To this end, Alberta, home to most of Canada’s oil and gas industry, including the vast oil sands, is steadily advancing plans to develop carbon sequestration hubs and underground reservoirs across the province in parallel with above-ground CO2 capture plants and pipelines. In separate announcements this year, the province gave the go ahead to 25 projects to develop sequestration hubs and determine if they can achieve commercial viability. In today’s article, we consider Alberta’s latest efforts to push forward with its emissions capture and storage plans.

“… this year, [Alberta] gave the go ahead to 25 projects to develop sequestration hubs and determine if they can achieve commercial viability.”

Alberta has long been a leader in the production of hydrocarbons — and the emissions associated with them. Although there has been intensified focus on increasing production of oil and gas in light of the current North American and global focus on energy security, and in response to greatly improved prices for oil and gas, Canada’s producers and provincial regulatory agencies have also kept their eye on the ball in terms of advancing plans to reduce and capture anthropogenic-CO2 (A-CO2) emissions — those associated with human activities. In the year or so since we last looked at this topic, Alberta has been advancing legislation and laying the groundwork for the development of carbon sequestration hubs through which A-CO2 would be injected deep into underground reservoirs where it would be permanently sequestered “forever and for always.” With the pressure being increased on the oil and gas sector by the Canadian federal government to meet emission-reduction targets by 2030, determining sites for sequestration has taken on added urgency.

“With the pressure being increased on the oil and gas sector by the Canadian federal government to meet emission-reduction targets by 2030, determining sites for sequestration has taken on added urgency.”

In Part 1 of this series, we undertook a high-level review of the A-CO2 emissions profile for Canada and its oil and natural gas industry. In that discussion, we mentioned that Canada accounts for under 2% of global A-CO2 emissions, a share which has been falling slowly over the past 20 years as emissions and the share of emissions from other major developing economies such as China have been growing steadily.

We also noted that even though Canada’s overall emissions profile has held relatively steady over the past two decades, decreases in some sectors of its economy have been offset by a rising share of emissions from the oil and gas sector, from around 20% in 2000 to near 27% in 2019, with a majority of that increase driven by emissions from Alberta’s oil sands. Finally, we discussed three project proposals put forward by major energy players that would capture and sequester emissions from the oil sands and other energy-related activities.

“… even though Canada’s overall emissions profile has held relatively steady over the past two decades, decreases in some sectors of its economy have been offset by a rising share of emissions from the oil and gas sector …”

We moved past proposals in Part 2 by examining active and pending capture/sequestration projects in the oil and gas sector. The first of these is the Weyburn-Midale site in southern Saskatchewan, at which captured and injected A-CO2 is used for enhanced oil recovery (EOR). In operation since the late 1990s, it remains one of the most successful carbon capture and sequestration (CCS) projects in the world, handling emissions from a synthetic fuels plant just across the U.S.-Canada border in North Dakota, as well as a nearby coal-fired power plant in southern Saskatchewan. Aspects of the use of A-CO2 for EOR projects can be found in our The Air That I Breathe series. Two other operating projects, Quest, operated by Shell Canada at its Scotford Upgrader, and the Alberta Carbon Trunkline (ACTL), which transports captured A-CO2 for EOR operations in Alberta, continue to advance the goal of capturing an ever-increasing share of emissions in the province. Another Shell project in advanced planning is Polaris, which would capture additional emissions from its Scotford Upgrader as well as establish a larger carbon sequestration hub for use by third-party emitters. Two other initiatives being advanced involve the production of blue hydrogen from natural gas, which would capture the emissions associated with the production process. Readers that want to learn more about the technologies, challenges, and economics of CCS should reference our Way Down in the Hole series.

Canada’s Standing in the World’s Emissions

There is certainly plenty to consider in terms of projects that capture A-CO2, primarily in Alberta, but before we get to the all-important part of our discussion in terms of sequestration hubs, let’s update ourselves on Canada’s standing in terms of emissions since our discussion in Part 1. In that prior analysis, we discussed emissions data by sector up to 2019 from Environment and Climate Change Canada (ECCC), which has since released 2020 figures and to which we have added our own estimates of 2021 emissions using data from the 2022 edition of the BP Statistical Review. A curious item that we did note was that ECCC has revised upward its greenhouse gas (GHG) emission estimates from 2005 onward compared to the dataset that we used one year ago, with all of the upward revisions being attributed to the oil and gas sector.

Canada’s total A-CO2 equivalent (A-CO2e) GHG emissions fell nearly 9% in 2020 to 673 million tonnes (MMT), in line with the reduced economic activity that was the hallmark of COVID lockdowns that year (height of the stacked columns in Figure 1). With recovery getting underway in 2021, total GHG emissions are estimated to have risen just over 2% to 687 MMT.

The share of emissions from the oil and gas sector (solid black line) was around 28%, very close to the share it has held since 2013 (but higher than in last year’s dataset).

“… in 2021, … the share of [Canada’s] emissions from the oil and gas sector was around 28%, very close to the share it has held since 2013 …”

Figure 1. Canada’s GHG Emissions by Sector. Source: ECCC, BP, RBN.

In terms of emissions from the oil and gas sector, after falling 12% in 2020 to 179 MMT, we estimate these rebounded by 6% to just under 190 MMT in 2021 as the sector recovered from the market devastation of 2020 (height of stacked columns in Figure 2). What is of note is that emissions from the oil sands are estimated to have risen by 7% in 2021 to their highest level on record at 86.5 MMT and constitute just under a 46% share of all the emissions from the oil and gas sector (solid red line). With crude oil output from oil sands upgrading and in-situ operations hitting record levels in 2021, these activities account for the bulk of the increase in emissions from oil and gas as well as their significant share in the sector’s total. Clearly, there appear to be plenty of emissions across the oil and gas sector in Alberta that could find a home deep underground via CCS.

“Clearly, there appear to be plenty of emissions across the oil and gas sector in Alberta that could find a home deep underground via CCS.”

Figure 2: Canada’s Oil Gas Sector GHG Emissions. Source: ECCC, RBN

Progress on Alberta CCS Projects

Alberta is no stranger to CCS projects, especially for EOR operations. Small-scale EOR has been under continuous development in Alberta since 1984, with two sites still operating to this day. An additional EOR project, Clive EOR in central Alberta, ramped up its operations in the past two years and receives its CO2 via the ACTL pipeline; however, all current CCS projects in Alberta, excluding the Weyburn-Midale site in Saskatchewan, are injecting less than 3 MMT/year of CO2. With a sequestration challenge that could be in excess of 60 to 80 MMT/year by 2030, depending on how rigorously future emissionreduction targets are imposed, there is a lot more work that needs to be done to identify sequestration sites and hubs through which CO2 from various emitters can be injected.

To that end, the Alberta provincial government has been developing legislation and identifying potential sequestration sites across the province. Sequestration rights are being established through a competitive process whose goal is the development of sequestration hubs and underground pore spaces where CO2 can be permanently stored. The hubs are intended to be open access for third-party emitters and gather CO2 from a variety of local or regional industrial sources.

“Sequestration rights are being established through a competitive process whose goal is the development of sequestration hubs … intended to be open access for third-party emitters and gather CO2 from a variety of local or regional industrial sources.”

Alberta Requests for Carbon Hub Full Project Proposals

(RFPPs)

In the fall of 2021, the government gathered expressions of interest from companies intent on developing and operating sequestration hubs. Given extensive interest from that initial exercise, the government went to the next step, developing a Request for Full Project Proposals (RFPPs) in which successful companies would ultimately be granted a carbon sequestration agreement. Successful candidates would have the right to drill wells, evaluate geologic zones, and monitor any injected CO2, while providing a just and reasonable cost recovery structure for the development and management of such hubs, including open access to potential emitters for injection.

Figure 3. Alberta March 2022 Carbon Hub RFPPs. Source: Government of Alberta

Six RFPPs were announced by the government in March 2022 (Figure 3) that would allow the companies to further explore the development of carbon hubs in the Alberta Heartland Region, just outside the provincial capital of Edmonton, home to numerous large emitters in the form of fertilizer, cement, petrochemical, and refining operations. That does not guarantee that these projects will go ahead but sets the stage for further development under the purview of the provincial government. Based on posted data for these proposals, we estimate that the six could have a combined sequestration capacity of at least 60 MMT/year (red box in Figure 3). Such a figure would capture just over 23% of Alberta’s 2020 emissions of 257 MMT, as reported by ECCC. These projects would not cover most oil and gas activities but could provide a base for sequestration in the region into which those activities could be tied.

The government announced an additional 19 RFPPs (Figure 4) in early October that would be considered for further development and cover other regions of the province outside its industrial heartland. Though details are scant for many of these projects, they suggest at least 27.7 MMT/year of sequestration potential (blue box in Figure 4). That potential will increase as additional details emerge for other projects. What is noteworthy is that the much-discussed Oil Sands Pathways to Net Zero project (dashed green box) was chosen. It is being strongly pursued by six of Alberta’s oil sands producers, which account for 95% of the production from the oil sands and the majority of the emissions. At 22 MMT/year, this would cover roughly a quarter of the 2021 oil sands emissions we mentioned earlier, although other projects will likely be proposed and developed.

“The much-discussed Oil Sands Pathways to Net Zero project … is being strongly pursued by six of Alberta’s oil sands producers, which account for 95% of the production from the oil sands and the majority of the emissions.”

Figure 4. Alberta October 2022 Carbon Hub RFPPs. Source: Government of Alberta

Of course, not all of these projects from the March or October announcements will reach the finish line as the onus is on the companies to demonstrate that their concept will work and meet the guidelines established by the province. That said, there is much debate about cost, scalability, and the sheer technical challenge of capturing so much CO2, as the province and the oil and gas sector are feeling the collective pressure to have CCS projects up and running sooner than later, given the federal government’s current view that emissions from the oil and gas sector need to be reduced 42% (85.5 MMT) by 2030 versus 2019 emission levels. As to whether this magnitude of emission capture in such a short timeline can be met remains an open question and vigorous discussions continue among the province, affected companies, and the federal government as to the best means to implement or modify such a policy.

Beyond Carbon Hub Proposals

The development of carbon hubs is a cornerstone of Alberta’s emission-reduction goals, but the province is also moving ahead on other fronts. In July, it announced grants totalling C$40 million (US$29 million) intended to advance CCS technologies under its Carbon Capture Kickstart program, part of the larger Emissions Reduction Alberta initiative. A great deal of other government-funded research is being pursued through the Alberta Innovates program.

Vast CCS Potential in Alberta and Saskatchewan

Being an oil and gas producing region, Alberta does have geology on its side based on data from the North American Carbon Storage Atlas. Numerous deep geologic zones have been identified across the province which appear very suitable for long-term sequestration, with one zone (Basal Cambrian Sands) estimated to have the potential to store up to 19,200 MT of CO2. Based on the province’s 2020 emissions of 257 MMT we mentioned earlier, this would represent about 74 years of emissions storage and nearly 150 years of storage if only half of those emissions were captured. The storage potential for the same zone in neighboring Saskatchewan is measured in thousands of years. That might not be quite forever and for always, but it’s pretty close.

This article was authored by Martin King and originally published by RBN Energy, LLC. Read the original HERE