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Report: Carbon-Neutral Oil Sands SCO Possible for an Extra $1.76 to $13.65 a Barrel

24 October 2006

Pembina2
Annual Projected GHG Emissions (Mt CO2e) from Canada’s Oil Sands, 2003–2020 (showing the range between low and high projections). Click to enlarge.

In a report released by the Pembina Institute, a detailed cost analysis demonstrates that the oil sands industry could achieve carbon-neutral (no net greenhouse gas emissions) production of synthetic crude oil (SCO) for as little as US$1.76 per barrel or as much as US$13.65 per barrel depending upon the operating scenario and the approach taken.

The oil sands are projected to contribute up to 47% of the projected business-as-usual (BAU) growth in Canada’s total greenhouse gas (GHG) emissions between 2003 and 2010, making them the single largest contributor to Canadian GHG emissions growth.

For as little as US$2.50 per barrel an oil sands company could eliminate 100 per cent of its GHG pollution. To put this in perspective it costs up to US$1.75 per barrel to remove lead from gasoline.

—Marlo Raynolds, executive director of the Pembina Institute

The report, entitled Carbon Neutral by 2020: A Leadership Opportunity in Canada’s Oil Sands, describes a variety of solutions including energy efficiency, fuel switching, carbon capture and storage (CCS), and carbon offsets. The detailed cost analysis assessed the costs of utilizing carbon capture and storage and carbon offsets to achieve carbon neutral oil sands production. It considers three scenarios:

  1. Maximum CCS: all point sources are captured and stored;
  2. Moderate CCS: only CO2 from hydrogen production is captured and stored; and
  3. Maximum Offsets: CCS is not used and all emissions are offset.

The report evaluates those scenarios in three operating situations under both low and high emissions conditions:

  1. 55% mining and 45% in-situ;
  2. 100% mining; and
  3. 100% in-situ.

GHG emissions intensity for a given oil sands operation can vary depending on a number of key factors, including:

  • Variability in bitumen quality;
  • Level of process integration (affecting level of energy efficiency);
  • Technologies applied (gasification can greatly impact hydrogen production values);
  • Fuel source for electricity generation; and
  • Types of process controls utilized.
Pembina1
Cost range per barrel of synthetic crude oil (SCO) for carbon neutralization. Click to enlarge.

The Pembina authors conclude that costs for full carbon neutralization across the range of conditions could range from US$1.76 to US$13.65 per barrel. (See chart at right.) Costs per barrel of synthetic crude oil are slightly higher when maximizing CCS options over purchasing offsets.

The report urges oil sands companies to assume a leadership role in tackling climate change, and recommends that they set a target of becoming carbon neutral by 2020.

Resources:

October 24, 2006 in Canada, Carbon Capture and Storage (CCS), Climate Change, Oil sands | Permalink | Comments (19) | TrackBack (0)

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Wow, $1.75 to remove lead from gasoline? I could swear gasoline contains no lead, we had to add it when we wanted to use TEL as an octane booster. Did he mean $1.75 to remove sulpher from gasoline?

1.76 -> 13.65 ... that's quite the range!

They will have to get another source of natural gas (for thermal and H2)too. Canadian reserves are running out, like US reserves are. It can either be from the Arctic, overseas, or a H2/heat energy replacement (nuke, biomass, etc) sources.

This should be mandatory! Oil sands development is FAR to CO2 intensive to be acceptable given current climate risks. At least some CCS or offset purchases should be mandatory in order to reduce the carbon-intensity per barrel of oil sands-based synthetic crude to somewhere below the carbon-intensity of traditional crude. We can't afford to accept higher carbon intensity for our transportation fuels.

BTW, Allen, they are building the McKenzie Valley pipeline largely to feed oil sands development for the immediate future. Not much of the new gas available through the pipeline will make it to the US, as the rest will get eaten up by oil sands development.

My understanding is that the majority of the natural gas used is mixed with the bitumen to make it flow through pipelines to the refineries. Could that gas be separated at the refinery and sent back to the sands for re-use?

The process of cracking bitumen to syncrude yields a great deal of coke.  Gasification of petcoke can produce both hydrogen and process heat, at the cost of additional water consumption.

A single industry (oil extraction from tar sands) will produce about half of all GHG growth in Canada by 2010.

It will probably get much worse after 2010 when coal will replace natural gas to produce the energy required for mining and in-situ operations.

Extracting a major portion of the 2500 billion barrels locked into the tar sands will make Canada the worse polluter from 2020 onward unless proper investments and measures are taken now. Unfortunately, since Canada has effectively pulled out of Kyoto, nothing significant will not be done. Be prepared for huge increases in GHG from Alberta.

JesseJenkins,
Or North Slope/ANWR. All (Alaska, Yukon and Northwest Territories and Nanuvut) are in the Arctic.

I recall reading earlier this year of a California company that has developed a method of cracking very heavy oil and bitumen into something fluid enough that it can flow through pipelines, without the need for natural gas or other dilutants. Can't remember the name of the company, though.

Since the SCO contains carbon atoms from what is dug up or melted, is it not true that these carbon-neutral claims apply only to the production phase of the SCO?

When the products of refining the SCO are used, GHGs are generated just like today. These carbon-neutral claims, if true, would only mean that oil from the oil (tar) sands would be no worse than what we have today with conventional petroleum.

This is nothing like what carbon-neutral means in electricity, hydrogen, biomass, or other alternative energy production technologies. We are still retrieving carbon atoms from within the earth and putting them into the atmosphere, aren't we?

The oil sands business could do a great deal of "green-washing" by getting their process energy and hydrogen from wind power. Or at least some of it.

But I suppose that would be a step away from their "core business".

I expect the oil companies to do *nothing* for the environment without a little legislative "aid" from the Canadian government.

The only "aid" our current government is likely to give them is more handouts for their good oil buddies in exchange for a seat on the board when they get turfed our of office. Mulroney may not have invented that scheme but be certainly perfected it. Harper is no fool, he knows how to butter his bread on both sides.

Bill: you are right. there is nothing 'more' carbon neutral about using oil sands.

Oil sands require a lot of energy to separate the oil from the sands. Unless special provisions are made that adds even more CO2 to the air than more easily obtained fossil fuels.

The ideas behind reforming fossil fuels to reduce emissions depends upon the fact that it will be more effective to capture or otherwise prevent CO2 release at a central facility rather than at literally millions of end users (autos, home furnaces, etc.)

Conventional oil sand mining is terrible - it totally destroys the environment. This has been mitigated by the fact that the area was bleak anyway; almost no one would want to live there.

If you think oil sand extraction is bad take a look at oil shale.

You guys have been saying the answer.
If climate change is taken seriously then we have to power the entire process with a carbon neutral technology. The product sold must be carbon neutral or a small percentage Carbon to Hydrogen as well. Alcohol is something like 80%H and 20%C in it's makeup. If burned.... With the technology of Syngas and CCS we can make a more Carbon friendly fuel and reduce our energy imports. We pipe Natural Gas from the earth to burn it. Why not pipe it back down once used?
Has anyone tried plasma here? Tires work well with plasma because of their amazing energy density, 700ton yeilds a million gallons of ethanol. This is after powering the process with 1/3 of the Syngas, so do Oil Sands have enough BTU's to work well? Ethanol is 80% Hydrogen so a great bridge product to the H economy.

I guess what I'm saying is that political will is the answer to Climate Change! We have no technology vacuum to fill just an infrastructure to upgrade/replace and a politcal will/monitary vacuum to ammend. Carbon polluters should be taxed!!!!! This money should replace the North American power grid with non-polluting electricity and low carbon fuel where fossil is used now. It's just tough to get the old system to accept change with all that money made and $400 Billion wars for oil seeming OK.

Oil companies are already taxed. Tar sand oil development means jobs and big money for both the local and federal Canadian government. If you want change, then elect different people into office. There is >$100B dollars being spent on these projects and don’t think you are ever going to be able to stop it. The general public must be fools to think otherwise. And yes, you most likely will not want to visit the area after the oil companies leave the mess behind when they are done extracting the oil from it.

To: Harvey D,

I agree, Canada is going to be the in the top 10 GHG producing countries within a decade. And what about the water use issue?

Current Canadian legislation requires remediation of oil sand exploration sites to “green lawn condition”. Locals could hype environmental damage from oil sand exploration in order to increase their royalties. But the truth is that Canada employs the most strict on the face of the Earth environmental legislation, backed by independent judicial litigation system. You claim that oil sand exploration is damaging to environment – file a law suit. If you don’t – STF up.

Andrey STF UP. Wow what a great comment, almost as good as kill people for oil!

Oh WTF Adrey? You have me all wrong, I just want cheap Canandian oil that can be processed into cheap gas for the my SUV. Don't force me to call My Prez (You know George) and ask him to invade your itty bitty country up north! So did you foreget to take your meds today? LOL

No need for new natural gas resources. Just use MSAR fuel. http://www.quadrisecanada.com/technical.html

MSAR™ offers the following advantages:
Lower overall cost than natural gas
Manufactured on site
Excellent carbon burnout characteristics, similar to natural gas
Uses bitumen and heavy residue feedstock in the range of -10o to 14o API

As a note the bitumen in the Alberta formation is with in the above range. So natural gas is no longer the limiting factor for tar sand production. As for the green house gas hysteria wow you people really need to do some research into paleoclimatology. The earth climate has never been “stable” in geologic time. We humans only see in human time measured in 10s to hundreds of years the planet works in geologic time measure in tens of thousands to millions of years. Every 250K years or so the planet swings rapidly from hot to cold. With 3 smaller changes every 12-25k years within those large climate changes. That means from ice age to interglacial for the scientists in the group. The earth has had 10 times as much CO2 in its atmosphere in its past this is proven scientific fact not political debate, and has been upwards of 12’c warmer & -15’C cooler in its pass. Coincidentally the period that had 10x the CO2 was not the warmest on record, and was actually cooler than now. Imagine that with all the CO2 hype going on. Do some research, REAL research not web googling on solar output, and paleoclimatology, oh and look up Milankovitch Cycles too what you find will surprise you, please get off the web"research" and stop regurgitating political mantra. Go to your local college. Get with their Geology department they will be more than happy to point you to REAL legitimate peer reviewed research on paleoclimate. They would be happy to provide reams upon reams of real non politically biased research. Good day.

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