Wednesday, September 5, 2012

Shell to proceed with carbon capture and storage (CCS) project in Alberta oilsands: likely to rely on Saskatchewan experience with CCS at the SaskPower Boundary Dam Project

Shell announced this morning that it will go ahead with the world's first carbon capture and storage (CCS) project for an oil sands operation in Canada. The Quest project will be built on behalf of the Athabasca Oil Sands Project joint venture owners (Shell, Chevron and Marathon Oil) and with support from the Governments of Canada and Alberta.

The Athabasca Oil Sands project produces bitumen, which is piped to Shell's Scotford Upgrader near Edmonton, Alberta. Quest will capture and store deep underground more than one million tonnes a year of CO2 produced in bitumen processing. Quest will reduce direct emissions from the Scotford Upgrader by up to 35%.

Both the Canadian federal and Albertan provincial governments have identified CCS as an important technology in their strategies to reduce CO2 emissions. The Alberta government will invest $745 million CAD in Quest from a $2 billion CAD fund to support CCS, while the Government of Canada will invest $120 million CAD through its Clean Energy Fund.

"Today's announcement reaffirms Alberta's position as a global leader in carbon capture and storage," said Energy Minister Ken Hughes. "Technologies like CCS will play an instrumental role in helping to lower greenhouse gas intensity from the oil sands and demonstrate to the world Alberta's commitment to responsible energy development."

There was some question as to Alberta's commitment to CCS technology, when other CCS projects in Alberta were delayed earlier this year.

Construction is currently underway on the SaskPower Boundary Dam Integrated Carbon Capture and Storage Demonstration Project in Saskatchewan. The Boundary Dam Project will transform Unit 3 at Boundary Dam Power Station into a reliable, long-term producer of 100 MW of clean base-load electricity, while enhancing oil production in Saskatchewan and reducing greenhouse gas emissions by capturing 1 million tonnes of CO2 per year. SaskPower has been developing CCS technology and projects for several decades. The Government of Saskatchewan approved the Boundary Dam project in April, 2011.

SNC Lavalin is undertaking engineering, procurement and construction at the Boundary Dam project and Hitachi is providing the turbine. Cansolv, a wholly owned subsidiary of Shell, will supply the carbon capture process. It is expected that Shell will rely on their experience in Saskatchewan to build the Quest project in Alberta.

The $1.24 billion CAD SaskPower Boundary Dam project in Saskatchewan is expected to reach commercial operation in late 2013. The $865 million CAD Quest project in Alberta is expected to reach commercial operation in late 2015.  

Sources: Shell Canada Press Release, SaskPower, Government of Saskatchewan, Government of Alberta

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