July 16, 2012

Billion dollar carbon capture project gets green light

RICHARD GILBERT

staff writer

Shell Canada Limited has received approval from the Energy Resources Conservation Board (ERCB) for the construction of Alberta's first carbon capture and storage (CCS) facility.

“Shell is delighted with the ERCB’s decision to recommend approval of our Quest Carbon Capture and Storage Project”, said John Abbott, Shell’s executive vice president of heavy oil.

“This is a really important and exciting milestone for the project and takes us one step closer to implementing the first CCS project for an oilsands operation.”

On July 11, the ERCB issued its decision on the $1.35 billion Quest CCS project, which is designed to reduce greenhouse gas emissions from Shell’s Scotford Upgrader, near Fort Saskatchewan, Alberta.

According to the ERCB hearing panel, it is in the public interest to proceed with the project. The panel found that the proposed reservoir is a suitable location for the long-term storage of carbon dioxide.

The combination of geological conditions, engineering design, operational practices and the extensive monitoring program mitigate any potential project risks.

However, the ERCB applied 23 conditions to its approval, primarily regarding additional data collection, analysis and reporting.

Shell must also obtain separate approvals for any additions to the project.

“The ERCB decision report, the first-ever for an integrated CCS Project in Alberta, positions Shell and its Athabasca Oil Sands Project (AOSP) joint venture owners, Chevron and Marathon, to make an investment decision to proceed with the project in 2012 pending final project economics and costs,said Abbott.

The AOSP is a joint venture between Shell Canada Energy (60 per cent), Chevron Canada Limited (20 per cent) and Marathon Oil Canada Corporation (20 per cent).

Prior to issuing its final approval, the ERCB is required to refer the application to Alberta Environment and Sustainable Resource Development for review.

Alberta Environment and Sustainable Resource Development may impose additional conditions with respect to the environment, which will be added to the ERCB’s approval.

The project components includes CO2 capture infrastructure, which involves modifications to the existing upgrader, as well as an 80 km CO2 pipeline to transport the CO2 from the Scotford Upgrader to injection wells.

The 16 inch diameter pipeline will be buried 1.2 metres underground.

The CO2 will be injected into the deepest saline formation in Alberta, known as the Basal Cambrian Sands.

The CO2 will be trapped within tiny pore spaces between the grains of the sandstone rock formation and by dissolving into the brine of the saline formation.

The infrastructure for the capture of CO2 will be located at the upgrader.

The CO2 pipeline will extend north across the North Saskatchewan River and terminate near Thorhild.

Shell filed an application to the Energy Resources Conservation Board in August 2011.

The project is scheduled to begin construction in the third quarter of 2012 and could be completed in 2015.

It will create about 500 construction jobs per year.

The provincial government committed $745 million over a 15-year period.

The federal government pledged $120 million.

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