Shell’s plans to build the world’s first oil sands carbon-capture storage facility in Alberta, Canada will make only a modest reduction in that project’s overall carbon emissions but could set an important precedent in establishing the credibility of CCS worldwide, analysts said.
The oil giant said Wednesday that the US$1.36 billion project will create underground storage starting in late 2015 for more than 1 million tones a year of C02 produced in the processing of bitumen from Alberta’s oil sands, one of the world’s largest reserves of crude oil.
The project, named Quest, will reduce CO2 emissions from a nearby upgrader – where the bitumen is processed for pipeline transmission to refineries – by up to 35 percent, or the equivalent of taking 175,000 North American cars off the road annually, Shell said.
We finally have a project that’s going ahead,” – Whittingham, Pembina Institute
The company said the project will become a template for other applications of CCS. “Quest is important because it is a fully integrated project that will demonstrate existing capture, transportation, injection and storage technologies working together for the safe and permanent storage of C02,” said John Abbott, Executive Vice President of Heavy Oil, in a statement.
“The knowledge it provides will help to enable much wider and more cost-effective application of CCS through the energy industry and other sectors in years to come,” Abbott said.
That would allow the project to set an important precedent in the face of widespread skepticism about the viability of CCS as a means of reducing greenhouse gas emissions, said Ed Whittingham, executive director of the Pembina Institute, a Canadian energy-policy think tank.
“This is precedential,” Whittingham told Breaking Energy. “We finally have a project that’s going ahead.”
Step in the Right Direction, but Long Way to Go
The promised 35 percent emissions reduction from the upgrader is “nothing to sniff at” although that represents just a fraction of the overall carbon emissions from the controversial tar sands project, he said.
“We’ve still got significant GHG management issues to deal with on tar sands,” he said.
While the tonnage reduction may not be significant, the announcement is important because it will be closely watched by other projects both inside and outside Shell. A “sharing mechanism” has been set up by the government of Alberta, allowing other companies to use the technology if it’s successful, Whittingham said.
The oil sands project has aroused strong opposition in the U.S. because the heavy crude produced would be pumped across the U.S. to Gulf Coast refineries via the controversial Keystone XL pipeline, which has not so far been approved by President Obama, amid concerns that any leakage of crude would contaminate an important Midwestern aquifer.
Anthony Swift, an attorney with the Natural Resources Defense Council in Washington, DC, said CCS has the potential to contribute to cutting greenhouse gas emissions but the Shell project will not be a credible demonstration of that because the resulting reduction will be minimal by comparison with the overall tar sands project.
He said the carbon impact of the heavy crude that would be pumped by the Keystone pipeline would total 26 million tons a year, not counting deforestation and other land-use changes stemming from tar sands production and pipeline construction, overshadowing Shell’s promised carbon savings.
“This is not a drop in the bucket,” he said.
Swift argued that the plan was mostly motivated by the government of Alberta, the biggest backer with a $745 million investment, which wanted the CCS plan in order to bolster public backing for the oil sands project.
He predicted that Shell’s plan won’t increase the chances that President Obama will eventually approve Keystone because it won’t lessen domestic opposition to the pipeline.