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Shell Canada Seeking Government Support for Carbon Capture and Sequestration Project

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.



The lack of government involvement is just shameful.


I'm not entirely sure why the government has to be involved in CCS (it would be nice if they were). Shell could significantly defray their CCS costs by using the CO2 for EHR in the many older fields in Alberta and Saskatchewan.


Even with in-process CCS the fuel would still attract a carbon tax if it existed because of tailpipe emissions in cars. It could work out favourably though; suppose without CCS carbon tax worked out at $30 a barrel. With CCS then carbon tax could be a lower figure say $15 a barrel plus capture costs of say $5, less any proceeds for use in enhanced oil recovery. The industry will need clear incentives to justify the major capital outlay required.


This is why multinational corporations push 'free trade' agreements. Once we can't do anything to stop the raw Canadian resources from leaving the country, then when the environmental standards are higher in one country (or just propose to be) they threaten to take their business to where the standards are lower, effectively forcing everyone to have the lowest possible standards in the name of economic growth.

Rafael Seidl

Shell doesn't have the proven crude oil reserves that Exxon does, a key reason why it is exploiting Canadian tar sands at all. At the same time, the price the end product can fetch is determined by the global oil markets. If tar sand exploitation were only permitted with deployed CCS technology, it would be unprofitable, with serious economic consequences for both Canada and Shell. Hence the old chestnut about needing a government handout.

Interestingly, Mr. Maher gets caught in a circular argument. If large-scale CCS technology were really a potentially lucrative export opportunity for Canada, then surely Shell should go ahead and develop it on its own dime. It's not like the global oil industry has been short on profits lately...


I read an article that producing oils from algae is very carbon dioxide intensive. In that, the algae need a LOT of carbon dioxide to produce oils. Would it be possible to construct such algae oil producers over or near a CO2 sequestration site to pull the CO2 from the earth, instead of storing it?

Rafael Seidl

Tony -

the arrangement usually proposed is to use scrubbed and cooled flue gases from coal-fired power stations for intensive oil algae aquaculture. While this does not represent true sequestration, at least it recycles the carbon. The ratio of useful energy produced to CO2 emitted goes way up.

Of course, as long as the CO2 is scrubbed and cooled, the source is irrelevant. For example, it could comfe from tar sand processing. The snag is that both of these require significant amounts of water, which is actually somewhat limited in Alberta, Canada. The northerly latitude and freezing winter temperatures also work against growing algae in the immediate proximity of the tar sand sites. CO2 transportation over large distances is not economical.

In more suitable locales, intermediary storage could make sense if the CO2 source must operate during the night and in winter. However, there would have to be excess oil algae production capacity during daylight hours and in summer. We're nowhere near that point yet.


Alberta and Saskatchewan both have large numbers of old wells that could benefit from EOR. The CO2 could then be used in the long (very bright) summer days for algae.
If you do need to pipe the CO2 to an old well the climate should not be much of a problem, there's not much permafrost in Alberta, you can just put the pipe a few feet under. Nor is there much in the way of geography to get in your way either.


One other thought, tar sands upgrading requires large amounts of NG. The algae could be used for methane production instead of bio-diesel.


I would hope that they could do something like generate power in a gas turbine with the NG and use the rejected heat to process the tar sands. Do something to get more out of the precious finite resources.


You could gasify algae, use the syngas in an SOFC, trigenerate with gas and steam turbines, condense the H2O and put the CO2 back into making more algae.

Farai Kufakwedu

I am a second year Chemical Engineering student studying at Ryerson University in Toronto. My program is a co-op program and my first co-op term starts in May 2007. I am interested in the field of green house gas mitigation technologies and climate change in oil and gas. I would appreciate any help securing a placement from May to December in Alberta. My website is Many thanks in advance.

Farai Kufakwedu
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