Carbon capture and storage - Energy and Climate Change Contents


Annex


Canada programme and visit notes

18 November 2013

PROFESSOR JAMES MEADOWCROFT AND GRAHAM CAMPBELL

Professor James Meadowcroft, Canada Research Chair in Governance for Sustainable Development and Graham Campbell, Executive Director, Carleton Sustainable Energy Research Centre provided an overview of the politics and policy landscape of CCS in Canada.

·  Canada has very large energy resources including oil, gas, hydro, uranium and biomass. The combination of abundant energy resources and lots of space has resulted in Canada developing a very carbon intensive industrial structure. This makes it very difficult for Canada to tackle climate change because the whole economy is carbon intensive.

·  Climate change is not really in the public or Federal Government's consciousness and as a result it has not made much progress on developing policies to tackle climate change.

·  Canada abandoned its Kyoto targets because they were over ambitious and not achievable.

·  There is some interest in new renewable in Canada although it has a lot of hydro. However, the presence of oil and gas sector effects the flow of capital and disadvantages the development of renewables.

·  The Federal Government's current approach is 'accelerated resource development'. The objective is to utilise its resources as quickly as possible. As such, it has abandoned sustainable development and built on responsible (use) development. The current Government's position is unhelpful and partisan.

·  Policy fragmentation and jurisdictional diversification makes it difficult to develop a national response to climate change.

·  There has been progress to tackle climate change at a provincial level. British Columbia has introduced a carbon tax. Ontario has phased out coal and replaced it with gas.

·  Decarbonising will be cheaper with CCS in the mix. It is better to have more tools rather than less (even though currently more expensive).

·  There are, however, several barriers. The biggest is the cost of developing CCS. CCS also presents a split incentive: developers should in theory benefit by developing CCS, however, currently it is more beneficial not to develop CCS. CCS is different to other low carbon technologies. It has a 'structural problem' in that as a bolt on technology it is undesirable to develop.

·  CCS will acquire strategic importance in the future especially for fossil fuel exporting countries.

·  There is currently low public acceptance of CCS. The public are concerned about the safety of storing carbon dioxide underground, end of pipe treatment, and lock-in to high carbon technologies. There have also been low levels of public engagement.

·  CCS is seen by Federal Government as a problem to resource extraction. CCS is, however, not dead. It is still important. It is only because Canada is not taking climate change as seriously as should be. It will come back into fashion when it does.

·  CCS future still very uncertain in Canada. CCS in 2050 scenarios 1) high usage 2) geographically fragmented usage 3) specialised usage (e.g. Industrial processes and biomass). Industrial CCS is definitely a potential starter. There would be merit in public policy focusing on industrial CCS. This is also because there is demand for pure CO2 sources. However the key problem is what you do with it (storing or other commercial uses)

·  CCS in Canada is closely related to enhance oil recovery. More so than a response to climate change. Shell Quest project is one such example. Boundary Dam is also interlinked with fossil fuel production. Basic problem in Canada is that there isn't a national price on Carbon. EOR dilutes the benefit of the CCS. There are trade-offs there. However, benefits are that it already has existing infrastructure and it is possible to continue to inject carbon dioxide after EOR has finished.

·  CCS costs are clouded in uncertainty. People and industry are propagating the uncertainty.

·  It is hard to say when Canada might realistically see commercial scale CCS. Need to progress CCS along the learning curve. This requires many power plants with CCS to be built. This is, however, a long way off. Depends on whether enough projects get up and running and on how much investment and when.

·  The International Energy Agency (IEA) CCS roadmap outlines 7 key barriers. Financial barriers: good. Policies re CCS: none. Laws and regulations requiring CCS: no. Other uses for CCS: no, not looking at industrial. Public info and engagement: no. Reducing costs: no. Infrastructure requirements: doing quite well. Useful check list would be difficult.

DR. ROMAN SZUMSKI

Roman Szumski, Vice-President Life Sciences, National Research Council (NRC) outlined research being undertaken on algal carbon conversion a potential second generation CCS technology.

·  The NRC is a departmental agency. It has a President which reports to Cabinet. The detailed research agenda is developed by the NRC and government provides a high level steer.

·  The NRC jointly develops technologies with industry. It expects to make a return, along with its industry partners, which is recycled back into research.

·  Algal carbon conversion involves converting a waste product-gas emissions and waste water from an industrial process-and using algae to convert it into valuable products (as well as remediated waste water and industrial emissions).

·  This technology has the potential to be applied to an oil sands site and in other industrial sectors such as cement

·  The NRC has ambitions to develop a 100,000 litre test plant. This is small enough so as to be easily transportable (to remote parts of the country) and large enough to be scaled up if desired.

·  The algae which is being used is a local and natural strain to reduce the potential risk of contaminating the Canadian environment.

·  Industry believes the technology could be commercially viable. The NRC is partnering with several companies. Industry buy-in came when the NRC switched from saying 'making biofuels' to 'managing carbon dioxide'.

·  There are, however, several barriers to taking up the technology. Questions remain over how 'transferable' the technology because of the unknown attributes on algae strains. It is still uncertain the extent to which the technology can be scaled-up.

DAVID MCLAUGHLIN

David McLaughlin, Strategic Advisor to the Dean of Environment, University of Waterloo provided an overview of the politics of energy and climate policy in Canada.

·  At the moment Canada will not meet its 2020 carbon targets.

·  It will not meet them unless the oil and gas industry plays its part.

·  Modelling how to achieve carbon reductions in Canada always includes CCS.

·  Incentivising CCS will require the development of a carbon price. This would need to be over $100. However, it is unlikely that the economy will not bear a carbon price this high. As such it is unlikely that there will be significant CCS in Canada any time soon.

CLARE DEMERSE

Clare Demerse, Director of Federal Policy, Pembina Institute provided an overview of the politics of energy and climate policy in Canada.

·  Even though energy is a provincial competency, it is still highly influenced by the Federal Government.

·  The Federal Environment Minister says that Canada will meet its 2020 carbon targets. But nobody else thinks there is a plan in place that will help Canada actually achieve it.

·  The projected growth in oil sands, according to the Federal Government's own projections show that it will cancel out and eclipse any other carbon savings made elsewhere in the economy.

·  Understanding what solutions there are to reduce the carbon impact of oil sands are crucial for climate change action in Canada. CCS will be fundamental but is very expensive when applied to the oil sands-even more than coal with CCS.

·  CCs would require a carbon price of $100 a tonne of more. However, there is currently vehement opposition to economy wide carbon pricing. Instead Canada is taking a sector by sector, bottom-up approach. But there is very little attempt to scale it up to meet Canada's 2020 targets. At present the fossil fuel industry is not going to be a strong enough policy signal to incentivise the development of CCS. There are unlikely to be new CCS subsidies in the short term.

·  Originally, Canada was expecting to be requiring CCS level standards on oil sands and coal in order to help meet Canada's 2020 carbon targets. No longer think this is remotely on the table.

DAVID SAWYER

David Sawyer, Associate, International Institute for Sustainable Development provided an overview of the politics of energy and climate policy in Canada.

·  In 2008/09 Canada was looking at how to achieve it targets and at this time CCS featured strongly. Large allocation of resources were given over to incentivising CCS. Today CCS doesn't come up as an issue at all. As such, we are not asking enough of our fossil fuel companies.

·  Internal drivers (such as market access, carbon prices and competition) in Canada are not strong enough to drive CCS development in Canada.

·  External drivers are however starting to develop which may incentivise CCS in Canada. This includes the potential development of a clean fuel standard in the US (a key export market for Canada). The oil and gas industry in Canada has an eye on these developments but is still not currently developing CCS. This is largely because there is little appetite for CCS in the whole of North America.

·  Canada is going to have to require global drivers to develop CCS. This will develop if Canada is able to build pipelines which allow it to export fossil fuels to Asian and European markets.

ALEX WOOD

Alex Wood, Senior Director, Policy Markets provided an overview of the politics of energy and climate policy in Canada.

·  Canada cannot meet its targets without CCS. But Canada also has a lot of cheaper emissions reduction opportunities which are currently not being realised. The Canadian Government is currently pursuing a high cost carbon reduction pathway.

·  The economics of CCS projects are very daunting. Shell's Quest project is considered to be a money loser (even with the money they are getting from the Federal and Provincial Government's). Shell is pursuing this project because of reputational issues and their vulnerability when looking at the oil sands involvement. They are doing CCS because of the reputational gain of being able to say that they are cleaning up the oil sands.

·  What policy would take CCS forwards in Canada? It will require a combination of carbon pricing, mandating CCS, and external pressures.

MICHAEL KEENAN

Michael Keenan, Associate Deputy Minister at Natural Resources Canada outlined what his Department was doing to incentivise the development of CCS in Canada.

·  CCS is a key part of the overall energy strategy of the country. Canada has some of the best geological stores for CCS as well as a number of potential streams for using CCS.

·  Canada will have an emissions performance standard for new coal. Existing coal has to close down at the end of its economic life unless it retrofits CCS. This is a CCS 'runway'. There is a significant incentive to continue the use of coal with CCS.

·  Federal Government greenhouse gas emissions regulations have a positive impact on CCS. He believed that that there is an opportunity for collaboration on CCS between Canada and UK. Energy is important to the Canadian economy.

·  CCS will enable continued and sustained use of fossil fuels.

·  The Federal Government has a role to facilitate investment in CCS and looks to promote national and international work on CCS.

·  CCS in Canada is comprised of 3 things 1) technology evolution 2) market evolution 3) government policy evolution.

·  Canada has 4 objectives 1) reducing technological risks 2) providing a stable regulatory framework 3) gaining public acceptance 4) learning-by-doing to reduce costs and risks (sharing learning).

·  Canada is active in R&D on all types of capture technologies not just post combustion but main focus is on 'step change technologies'.

·  The Government has increased its expenditure on CCS (20% of expenditure in 2011-2012). However, this will peak because a lot of the money is going into large scale demonstration projects. The rest will be on ongoing R&D but which is a much smaller proportion of funding.

·  Federal Government has said it's not pursuing a national carbon pricing strategy. It is pursuing a regulatory strategy instead. The Government thinks that this strategy will be successful. Doesn't think to price is essential. The Government supports 4 large scale CCS projects 1) Weyburn-Midale 2) SaskPower Boundary Dam 3) Shell Quest project 4) Albert Carbon Trunk Line. These projects are helping to increase the efficiency of CCS technology. Boundary Dam project specifically should, it is hoped, help to move CCS along the cost curve.

·  Canada is doing quite well in relation to other countries evidenced by the global CCS institute. In fact Canada's investments have put Canada on the world stage in terms of CCS.

·  Public engagement efforts are ongoing.

·  Government is trying to share learning internationally through both bilateral and multilateral forums.

·  Canada has advanced 3 large-scale CCS projects (on time and on budget).

MIKE BEALE

Mike Beale, Assistant Deputy Minister at Environment Canada outlined what his Department was doing to incentivise the development of CCS in Canada.

·  Focus is environmental outcomes: in this case greenhouse gas emissions (GHG) emissions.

·  To what extent can CCS be incorporated into our regulations? Example, coal fired regulations. That is 420 grams of CO2 equivalent. This is structured unit by unit. So, therefore, either need to have CCS on a plant or not at all. Sets emissions performance standard both for new coal and old coal which has reached the end of its economic life.

·  Boundary dam. Worked closely with SaskPower to develop these regulations so that it made sense to potentially apply CCS to its units 4 and 5.

·  However, under these regulations it may make more sense to build a new gas fired power station rather than a new coal fired power station with CCS.

·  Regulations are time based. There is very little flexibility in the regulations (no trading etc). There is, however, a 10 year deferral mechanism.

·  The regulations are driving significant reductions in coal fired electricity generation. Unfortunately however coal is not a big enough part of the pie to ensure it is able to meet its targets.

·  Actions taken today brings Canada 50% of the way to meeting its targets

·  Departments approach to incentivising reducing emissions. No financial incentives. Function is regulatory. Taking a sector by sector regulatory approach. Started with transportation sector. Now developing a suit of regulations for oil and gas sector including for oil sands. Have another suit of regulations for energy intensive industries. These regulations are designed to help reach the target (the extra 50%)

·  It is hard to see that CCS will make a major contribution to the 2020 targets.

Dinner hosted by Howard Drake, British High Commissioner with Leon Benoit MP, Chair of the Standing Committee on Natural Resources; the Hon. Geoff Regan, PC, MP, Vice-Chair of the Standing Committee on Natural Resources and Liberal Natural Resources Critic; the Hon. John McKay PC, MP, Liberal Critic for the Environment; Christine Moore MP, Member of the Standing Committee on Natural Resources and NDP Deputy Critic for Energy and Natural Resources; Linda Duncan MP, Member of the Standing Committee on Natural Resources and NDP Critic for Public Works and Government Services; Mike Allen MP, Member of the Standing Committee on Natural Resources; and Brad Trost MP, Member of the Standing Committee on Natural Resources.

19 November 2013

KYLE WORTH

Kyle Worth, Project Manager, Aquistore, Petroleum Technology Research Centre outlined work being done to store carbon dioxide underground.

·  Petroleum Technology Research Centre is a not-for-profit research and development organisation. Aquistore is a research and development project looking to store carbon dioxide in a saline aquifer pulling together lessons learnt from nearby carbon capture and storage projects.

·  This site has a number of advanced technologies which, it is hoped, will facilitate and improve the injection, storage and monitoring of future carbon storage projects. They are also hoped to bring down the cost of future projects.

·  Aquistore is only six miles from the nearest city. There are 20 families nearby. They have undergone a significant amount of proactive public engagement with the local community. This includes actively visiting the local community to inform them of the project, holding an open house, allowing visits during operations (which is not normally allowed) and having a clear and comprehensive document explaining how Aquistore were going to move through the process. They have also developed materials which explain how the local geology will stop any leaks from occurring.

·  They are hoping to start commercial injection into the aquifer in early 2014.

·  They are also hoping to work with UK academics to collaborate and share data.

ROBERT WATSON

Robert Watson, Chief Executive Officer at SaskPower provided a background briefing on SaskPower.

·  SaskPower is a fully integrated power company with generation, transmission and supply businesses. It produces almost all its own power. Five years ago it entered into its first power purchase agreements with privately owned gas power plants and a wind farm.

·  SaskPower has 4,104 MW generating capacity. 50 per cent is coal, 25 per cent is gas, 20 per cent is hydro, three per cent is wind and 2 per cent comes from other sources. The strategic aim of the company is to diversify is generation sources. It wants to expand gas but not become over reliant on it. It also wants to protect its coal assets. It is also looking at geothermal and solar will probably come into the fleet as the costs come down.

·  SaskPower has seen an eight per cent increase in energy consumption. This increase is mostly coming from industrial developments such as pot ash mines, uranium, oil sands and agriculture.

·  Saskatchewan is the first jurisdiction in Canada to be completely smart metered both business and domestic customers. Hope to be able to test out the smart grid as well as smart generation.

IAN YEATES

Ian Yeates, Vice-president at SaskPower outlined SaskPower's approach to CCS.

·  SaskPower has a lot of experience in CCS in Saskatchewan including in the Weyburn-Midale, Aquistore and Boundary Dam projects.

·  At Boundary Dam, units one and two (65MW) are old, worn out and will be shut down. Unit 3 (150MW) being fitted with CCS. The futures of units four and five (300MW) have not yet been decided.

·  There is a potential future difference between supply and demand in Saskatchewan. For example, the province has seen significant growth in demand while faced with the prospect of closing its coal facilities. The development of CCS would, however, mean that this is less of a problem.

·  SaskPower has estimated that their new CCS plant will cost them $1.4bn. When comparing the cost of Coal plant with CCS to the best alternative, gas fired plant you see that the majority of costs for gas are in the fuel while for coal the majority of costs are in the capital investment. Furthermore, they estimate that when you factor in the revenue from selling carbon dioxide for enhanced oil recovery the costs of coal with CCS fall within the gas cost range.

Dinner with Robert Watson, Chief Executive Officer at SaskPower and Provincial Government representatives.

20 November 2013

Tour of SaskPower's Boundary Dam CCS project with Michael Monea, President of SaskPower.

21 November 2013

CHRIS HOLY

Chris Holy, Branch Head, Research & Technology, Resource Development Policy Division, Alberta Department of Energy provided an overview of the energy landscape in Alberta and its approach to resource development with specific emphasis on CCS.

·  Alberta has been an energy producing province for over 100 years. There is a high level of social trust in Alberta. The provinces resources are owned by the Crown. Private companies are used to extract the resources. As such, it only takes royalties and collects information using a third party regulator which provides a quality control function. There is a high degree of labour mobility which helps to transfer knowledge and creates a culture of innovation.

·  Alberta has a huge resource base. Primary energy production is dominated by fossil fuels.

·  Demand is lower than supply. Alberta therefore exports most of its energy. Alberta is looking for new markets to export to.

·  Alberta is also looking at opportunities to diversify their energy production. This includes looking at what other opportunities there are outside of fossil fuel production. There has been a trend away from coal fired generation towards gas generation with some renewables. This shift to gas is also being used for heat (both industrial and domestic).

·  Tax in Alberta is very low. Corporation tax in Alberta is 10 per cent compared to 15 per cent at the Federal level. Similarly, there is no sales tax in Alberta but five per cent at the Federal level.

·  There is lots of innovation in the oil and gas extraction industry. In general the oil and gas industry has moved on significantly over the last century. It is much more high tech today. This helps to improve efficiency through managing complexity. One specific example is the use of 'big data' which to improve resource extraction.

·  There is also a focus on moving fossil fuel resources into reserves. In the shale context, this involves technology changes to allow both light and heavy crude oils to be fracked. In the oil sands context, mining technologies are maturing. There is now a move towards in situ production (steam assisted gravity drainage). This is going to overtake mining. This development is an economic reality rather than an aesthetic reality. It has developed to reflect a financial regime rather than a geological basis. The in situ method of extracting oil sands has taken off because the technology has developed enough over the last decade to make it economically viable.

SANDRA LOCKE

Sandra Locke, Assistant Deputy Minister, Electricity and Sustainable Energy Division, Alberta Department of Energy outlined Alberta's climate change policies and its work on CCS.

·  Alberta is an energy exporter. They recognise that their export markets are looking for and demanding cleaner sources of energy (especially when it comes to oil sands). CCS is, therefore, very important to them and acts as an important incentive.

·  Alberta is the first jurisdiction to put a limit on greenhouse gas emissions (Climate Change and Emissions Management Act).

·  Alberta also has a carbon tax set at $15 a tonne. There is no internal mechanism for revising the price. The price is only changed when the regulation is up for review. The money raised from the tax is hypothecated and put into a technology fund. The Climate Change and Emissions Management Corporation takes this money and invests it in cutting edge technology development to achieve carbon reductions. The funds have to be used in, or have a benefit to, Alberta. These funds don't apply to energy efficiency in buildings. Energy efficiency in buildings is driven by regulations.

·  In Alberta the biggest source of emissions comes from the industrial sector. The Provincial Government's target is to reduce emissions from this sector by 70 per cent through the deployment of CCS. There have, however, been a lot has changes since it was first formulated in 2008. There will have to be another review (to be completed by September 2014). It is likely that the target will be downgraded slightly to between 50 per cent and 70 per cent.

·  The main focus of the Government's efforts is on reducing the carbon intensity of oil sands. Other industrial applications (cement and steel etc) are still some time away from CCS. They are looking at what the Federal Government wants to do about CCS on the industrial sector. In theory it is likely that these sites (roughly 100 including non-industrial) will have to apply CCS.

·  Alberta's CCS program objectives include: demonstrating CCS at a large scale, building on public confidence, helping to reduce Alberta's emissions, develop a world class regulatory program and make links us with the UK to help them achieve this as well.

·  With regard to funding CCS projects, funding was able to advance very quickly. Mostly because of their funding principles which were clearly defined and include:

·  Government contributions cannot exceed 75% of the incremental cost of CCS.

·  Funding paid out in three stages: project development and construction 40% (refundable to government if project isn't completed - there is no spend it or lose it mechanism - built into initial deal so the project developers where they stand), 20% as a bonus for doing what you said you would, and 40% when the company starts operating, capturing and storing carbon.

·  Funding paid out over ten years. After that the project developer no longer has any commitments to the government. But there is an expectation there will still be a commitment to ongoing regulatory requirements.

·  No funding paid until contracts are in place.

·  Government will bear the risk of providing funding, the policy risk and the expectation that the carbon price will be high enough to make the business case for CCS, and long term liability of storing the carbon dioxide underground.

·  The Government didn't get involved in technology choices. It was indifferent on the type of storage technology the project developers used.

·  There were some notable differences between the UK and Canada on their respective CCS funding approaches. Canada decided that is wasn't preparedness to take on cost risk. Unlike the UK it could, therefore, skim over these issues. If taking on cost risk then have to get into these issues. Slows things down. Also for the time being not getting into electricity based CCS. In a market based system it is very difficult to get CCS off the ground. Recognise that it is more difficult.

MIKE FERNANDEZ

Mike Fernandez, Executive director, Sustainable Energy Branch, Government of Alberta outlined information about what the Albertan Government was doing on CCS.

·  The Albertan Government has taken a leadership role in CCS. However it doesn't want to make its industry uncompetitive. So waiting to see what the rest of the work will do. Its 50 per cent future target for CCS suggests a pipeline of projects. Expectation is that it will be a commercial technology which will be adopted for commercial decisions.

·  Regarding regulatory environment for management of storing carbon dioxide, in 2008 Alberta established regulations for taking long term liability. Companies have to apply for-by satisfying technical requirements-a closure certificate which absolves them of responsibility for storing the carbon. There is also a post-closure stewardship fund. This money goes in the bank and is available to the Alberta Government to use for monitoring and managing risks etc.

·  They believe that the UK Government will have to take the decision to take long term liability for storage. It is a deal beaker for most companies. This is, however, specifically for saline aquifers not enhanced oil recovery (EOR). Companies take liability for commercial ventures such as EOR.

·  Alberta has a very close relationship with UK on CCS going back at least five years.

·  In terms of the lessons learnt for the UK. UK has come a long way but it has also lost a lot of time by agreeing to fund its CCS alongside EU funding streams. They believe that the UK needs to realise that UK has to go it alone. They believe that HM Treasury has a lot of influence. But this is also the case in Alberta and they were still able to enshrine money in legislation giving minister ability to sign $2bn worth of checks. The 2009 legislation removes the money from general revenue. The money is protected. Only a specific Minister is able to spend the money.

·  Alberta still has $700 million left to spend. This won't expire because it is enshrined in legislation. But Alberta's Premier wants to learn from current projects and see what international community does. However, currently no political appetite (or motivation) to spend more money. Likely future funding for CCS in future is the expected to come from increases in the cost of carbon and how much that price applies to a plants emissions. In addition there is an expectation that the cost of CCS will come down - i.e. Get more bang for buck.

·  Norway has done the right thing. It originally took too much contract liability but has now reduced that liability. He still thinks they will see CCS in Norway.

HONOURABLE CAL DALLAS

Honourable Cal Dallas, Minister for International and Intergovernmental Affairs, Government of Alberta gave a high level overview of CCS and the wider energy landscape in Alberta.

·  Alberta has the third largest oil reserves in the world. There is a mismatch between the amount of oil sands and carbon savings needed. Recognise the need to reduce emissions and therefore CCS technologies are important. Enhanced oil recovery could be useful in order to ensure they can maximise resource recovery. They would like to sell technologies made in Alberta abroad.

·  As a landlocked jurisdiction, Alberta has a huge challenge getting its fossil fuel products to the coast and therefore diversify its market. The Albertan Premier is looking at how they can maximise selling its resources. There are currently two important projects in this regard; the Northern Gateway and the West to East Pipeline. To make these projects a reality requires an important dialogue between First Nations, municipalities and other provinces. The highest profile project is the Keystone XL project. They are currently looking for Presidential agreement in the United States. If successful, this pipeline would pipe Canadian product to Texas which has demand for it. There is, however, a difficulty in justifying selling oil sands because of the high carbon content. Reducing the carbon intensity of oil sands will be key to winning the argument of justifying selling the product to America.

·  There is a strange relationship between the Federal and Provincial Governments. There are issues around where responsibility lies. There are constitutional boundaries, competencies and sometimes just differing opinions. Ultimately, the Provincial Government owns the resources and is responsible for regulation of oil and gas extraction with an independent regulator.

·  Alberta has made some sweeping changes to these regulations. Countries around the world are coming to Alberta to see how they can develop similar regulations. This fits in with Alberta's desire to have a global impact.

·  The Federal Government has developed regulations which will effect greenhouse gas emissions from coal fired power stations. This will have significant future implications for coal fired generation. The dialogue on production of these regulations were productive. There were some issues but they were able to overcome them. Alberta believes that the Federal Government needs, however, to be mindful of competitiveness issues. Thinks that Alberta's financial and regulatory regime which is stable and predictable needs to be protected because it was that which has attracted investment and provided certainty. When interacting with the Federal Government they try to start from the perspective that there is a mutual desire to reduce emissions and then look to see whether they can go from there.

·  The Albertan Government expects oil sand development to develop rapidly and faster than anywhere else. The emissions reduction trajectory and reliance on CCS is important and makes the need for a long term role out of CCS very important. The upfront funding provided by the Provincial Government to the Shell Quest project was designed to develop first of a kind projects which can help the technology progress along the technology curve and reduce costs. The Government would then prefer to leave it to the market. The future of CCS is, however, uncertain but they are optimistic that CCS will succeed if there is a sharing of learning.

Lunch discussion with Michael Moore, Area Director, Energy & Environmental Policy, Bev Dahlby, Distinguished Fellow, and Dan McFadyen, Executive Fellow from the School of Public Policy at the University of Calgary; and Gianna Manes, President and CEO of Enmax.

STEPHEN LARTER, DON LAWTON, RICHARD ADAMSON AND STEFAN BACHU, PAUL CLARK AND BRENT LAKEMAN

Stephen Larter, Scientific Director, Richard Adamson, Managing Director, and Don Lawton, Research Theme Leader of Carbon Management Canada outlined the work of their organisation. Stefan Bachu, Distinguished Scientist, Paul Clark, President and Chief Visioneer and Brent Lakeman, General Manager of Alberta Innovates outlined the work of their organization.

·  Challenge for the UK is developing off-shore storage.

·  Onshore v. Offshore: Offshore has the advantage of being away from populated areas but is more expensive because it is harder to get to storage sites and platforms in the sea are required.

·  There is a window of opportunity for the UK as operational oil-fields reach the end of life and could be converted instead of decommissioned.

·  UK should direct research efforts towards monitoring/developing off-shore opportunities.

·  Research is needed into more complex CO2 storage sites. Existing projects have tended to cherry-pick the best sites (for example those with no old wells nearby that would risk compromising the storage site).

·  A robust regulatory framework is important to provide certainty which will encourage investment/involvement by industry.

HONOURABLE THOMAS LUKASZUK

Honourable Thomas Lukaszuk, Deputy Premier of Alberta, Government of Alberta gave a high level overview of energy policy in Alberta.

·  CCS is a very important component of Alberta's energy sector. It is an important feedstock and spin-off from electricity production. CCS is also being driven by acceptability of carbon content of its products in international markets as well as recognition of the need to address climate change.

·  Good geology and a sparse population makes Alberta suited to storing carbon dioxide. The population at large finds it acceptable although some NGOs are against it. The Main concern is that there will always be a risk of carbon leakage and contamination. On the whole, though, Alberta believes that it has a social licence to operate CCS.

·  It is important that third parties are involved in establishing baselines and verify stored carbon. Any organisation which is funded by Government is perceived to be bias and therefore disqualifies them.

·  The issue of the social licence also holds true for oil and gas companies in general. Over the last ten years there has been a seismic shift in their recognition that they need a social licence to operate. This includes being collaborating with government and again use third parties to verify what they are doing. Industry has realised that they have to be much more sophisticated about what they are doing.

·  Alberta is one of the only provinces to have put a price on carbon. The oil and gas industry is in favour of sitting around the table and discussing a significant increase in the carbon levy. It agrees with paying as long as the money stays within the jurisdiction and is fed into innovation which could spark new forms of revenue in the future. There is also a recognition that Albertans fuel bills will rise as a result of the tax.

·  The oil and gas industry have also already proven that captured carbon can act as a new feed stock for other industries (e.g. production of fertiliser in agriculture). These other industries are looking to relocate as a result. A big challenge remains in actually moving the carbon around. Building new pipelines is a very expensive investment but activity is starting to occur.

·  Current business analysis shows there will be a significant uptake of CCS. Factors which will influence this, however, are what will be the price of the feedstock (carbon). There is a great deal of interest. They will need to watch to see what the price of carbon will be because this will affect the viability of the technology. This is important. This will, however, need to be offset against the cost of construction is higher because of a shortage of labour.

JOHN RIND

John Rind, Vice President of operations for heavy operations (oil sands), Shell gave an overview of Shell's oil sands business and how it was applying CCS to it.

·  Shell Canada's up-stream business owns the Athabasca oil sands (in situ) project as well as Peace River assets and Orion Project near Cold Lake. It also has leases in Grosmont, located on the far west side of the Athabasca area. These projects have high carbon content compared to conventional oil projects. Shell has to upgrade the heavy oil at a refinery at the Scotford Upgrader. Shell's Quest project will capture the carbon dioxide emissions associated with these activities.

·  Shell's Quest project is a joint venture between Shell (60%), Chevron (20%) and Marathon (20%). It is a fully integrated first of a kind project in Canada and in the oil sands business. It will capture a million tonnes of carbon dioxide per year with 25 years capacity.

·  Shell's oil sands business didn't start until 1965. It was a precursor to Sun Core which started the first facility. Wanted to prove the technology in place. Sun Core started in 1973. It wanted to prove that you could reliably make a barrel of oil. There was no substantial investment up to early 1980s. The main focus was to demonstrate the technology. The amount of energy needed was cut at least in half which reduced environmental impact as well as improved the economic case. Investments were made through 1990s into early 2000s including from shell. There was a focus on heat integration and improving the performance of the assets. Protecting the environment was not the driving force behind the improvements made. As the technology developed and became a larger and larger part of the Canadian economy, the industry realised that environmental performance was not where it needed to be. Being frank there is still a long way to go. Continually trying to reduce environment al impact.

·  There is a Canadian Innovation Oil Sands Alliance. This group shares intellectual property on technology which helps to improve environmental performance.

·  The initial drivers to improve environmental performance were external to the province and external to Canada, primarily out of European Union and the United States. In last 7-8 years, there has also been pressure from within Canada. Canada's citizens have been concerned about environmental footprint of oil sands. Oil sands production has increased significantly so there's has been significant push back from the general public on what they are doing. Public acceptance has improved because they have been very transparent, improved their environmental performance, and done what they said they were going to do.

·  The Canadian Government understands that oil sands are an important economic driver.

Reception hosted by British Consul General Calgary with government, academic and industry leaders.

22 November 2013

Tour of Shell's Quest CCS project.


 
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Prepared 21 May 2014