Calgary firm plans province's first carbon-dioxide pipeline
$300M commercial project to link Edmonton upgraders with old oilfields in southwest Alberta
Shaun Polczer
Calgary Herald
Friday, July 11, 2008
CALGARY - A small Calgary company unveiled plans on Thursday for Alberta's first carbon dioxide pipeline to increase oil production from old oilfields.
Enhance Energy Inc., a private firm that specializes in enhanced oil recovery (EOR), is proposing to build the system to link upgraders and processing facilities around Edmonton to old fields in the south-central area of the province to increase oil production.
When it's operational in 2011, the system will remove 5,000 tonnes of CO2 gas per day that would have been vented into the atmosphere -- the equivalent of taking 1.6 million cars off the road. Eventually, the line will be expanded to 25,000 tonnes per day, or nearly 10 million tonnes per year.
"Besides the enormous environmental benefits to Alberta, the pipeline system will benefit Albertans through the jobs it will provide and the incremental royalties and taxes it will generate through enhanced oil recovery," said company president Susan Cole.
Cole previously helped PanCanadian Petroleum design the pipeline that feeds the Weyburn CO2 flood, which is one of only four commercial sequestration projects in the world.
Cole says Weyburn is roughly similar to what Enhance is proposing with its project. "All we're doing is doing it here in Alberta," she said.
Although it's not the first time a CO2 pipeline has been proposed, it's the first time anybody has come forward with a commercial project.
Costs have not been finalized, but Cole said the company has a preliminary estimate of $300 million for a 240-kilometre line.
It has signed North West Upgrading and Agrium Inc. on as CO2 suppliers. The gas will be used in a joint venture with Fairborne Energy to increase production at Clive, an aging field southeast of Edmonton.
By injecting CO2 into a pair of reservoirs originally discovered in the 1960s, the partnership hopes to recover 24 million barrels that would have otherwise stayed in the ground.
In 2004, the Paris-based International Energy Agency (IEA), along with the Organization for Economic Cooperation and Development (OECD), identified 15 old or abandoned oil fields in Alberta with potential to recover nearly 16 billion additional barrels.
Among them include "crown jewels" like Redwater, Pembina, Judy Creek and Turner Valley.
The Turner Valley field, for instance, was discovered in 1914 and has only given up 150 million barrels of its original billion-barrel endowment -- less than 15 per cent of the original oil in place.
In an interview, Cole said the potential for future recovery from old fields is huge, and described the Fairborne deal as "essentially a farm-in" arrangement to share the incremental volumes at Clive. In addition, Enhance owns a second field at Bashaw, which was also discovered almost half a century ago.
Contracts for the design and management of the pipeline portion have been awarded to Sunstone Projects Ltd. Other technical and support contracts have been awarded to Synergas Technologies Inc. for facilities engineering, Scott Land and Lease as land agent, and Worley Parsons for environmental services.
"It's the first world-scale project for dealing with greenhouse gases, and we're glad it's happening here in Alberta," said Sunstone president Barry Bauhuis.
Earlier this week, the Alberta government committed $2 billion for initiatives to capture and sequester carbon dioxide from industrial activities. Although Enhance has been working on the initiative for three years, Cole said the program would attract investment needed to advance future sequestration initiatives.
"We do believe the announcement is very timely. It provides tremendous momentum for this project."
Likewise, Shell Canada is moving ahead with its Quest project to capture and store carbon gas from the Scotford upgrader near Fort Saskatchewan.
Spokeswoman Janet Annesley, who indicated that the plan has been in the works since 2006, said the project will capture up to one million tonnes of greenhouse gas per year that could be stored underground or used for oil recovery.
Although the work is in preliminary stages, she said it could be up and running by 2015.
"We view carbon capture and storage as a key part of our CO2 mitigation strategy. Our view is that this is a challenge Shell needs to address."
Shell also welcomes the government announcement, but Annesley said it's too early to determine if the company will directly benefit. She hopes it will attract investment and speed up existing projects.
"Shell's view is that the challenge cannot be met by any one company or industry alone."
spolczer@theherald.canwest.com
© The Edmonton Journal 2008
