Canada’s The Globe and Mail reports that while Shell Canada is moving ahead with a C$10- to C$13-billion plan to increase its Athabasca oil sands production, it is also looking for government support for a carbon capture and storage project for its Scotford upgrader.
The Athabasca Oil Sands Project (AOSP) Expansion 1 will increase output by 100,000 barrels per day (65%) to 255,000 barrels per day. At the same time, Shell Canada has also set two targets for greenhouse gas emissions: one for its total business, one for the oil sands component. (Earlier post).
In 2005, Shell Canada’s emissions from its base businesses were 7.6 million tonnes, 217 thousand tonnes less than in 2004 and 5.6% below its 1990 level. The company’s target for 2008 is 7.567 million tonnes. Oil sands emissions in 2005 were, however, 3.68 million tonnes, 5% more than estimated emissions at start-up. Shell has set a 2010 target for oil sands emissions of 1.750 million tonnes.
The company’s chief executive officer, Clive Mather, said the carbon capture and storage project represents a key strategy that would allow Canada to dramatically expand oil sands production while reducing—or at least not increasing—its greenhouse gas emissions.
But so far, provincial and federal governments have provided no incentives, either limits on carbon dioxide emissions or subsidies for abatement, for industry to pursue a technology that is currently uneconomic.
And Mr. Mather said, without government leadership, Canada will miss a golden opportunity to become a world leader in carbon capture and storage.
“If Canada can establish a major operational model, you may actually promote Canadian industry in this area which would give it a competitive advantage in what I and others believe will be a significant business in the years ahead,” Mr. Mather said in a telephone interview.
The Pembina Institute recently released a detailed cost analysis demonstrating 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. (Earlier post.)
But industry officials warn that Canada could lose value-added jobs in the resource industry if it moves too aggressively with emissions limits, without similar action in the United States or subsidies at home.
“We’ve always said to governments: If you want us to reduce our CO2 intensity, it’s easy: we’ll upgrade [the oil sands crude] all in the United States,” said Pierre Alvarez, president of the Canadian Association of Petroleum Producers.