Four large carbon capture projects inch closer to construction
The pieces are starting to fall into place as four ambitious, multi-billion-dollar projects aimed at capturing CO2 move towards construction.
The projects are an outgrowth of the government's Climate Change Strategy, which the province announced in 2008. The strategy is aimed at reducing projected greenhouse gas (GHG) emissions by 200 megatonnes by 2050. Of that, carbon capture and storage is projected to provide 70 per cent of Alberta's GHG emissions cuts.
Total GHG emissions in 2009 in the province were 240 megatonnes, with emissions from the 109 large industrial facilities in Alberta reporting about 111 megatonnes.
The climate change strategy includes a number of components that either have been put into place or will be. The first was the Specified Gas Emitters Regulation, which requires that industries emitting over 100,000 tonnes reduce emissions of existing facilities by 12 per cent. They can do this through using new technology, paying into a technology fund (at $15 a tonne) or buying emissions offsets.
Another key element of the strategy is a $2-billion Carbon Capture and Storage Fund and that has been the spark that has ignited the go-ahead for four large carbon capture related projects, which proponents say will eventually create thousands of new jobs.
The projects are aimed at reducing GHG emissions by five million tonnes annually starting in 2015. That's the equivalent of taking one million vehicles, or a third, of Alberta vehicles off the roads. The projects are:
- Calgary-based Enhance Energy Inc.'s Alberta Carbon Trunk Line, a 240-kilometre pipeline that will transport CO2 from the Agrium Redwater Complex northeast of Edmonton and the North West Upgrader, which will be built near Fort Saskatchewan, Alta. The CO2 from those plants and from other CO2 producers would be transported to depleting conventional oilfields near Clive, Alta., and used in enhanced oil recovery.
- Swan Hills Synfuels, which will tap into a deep, unmineable coal bed in the Swan Hills-Whitecourt area and turn the coal into synthetic gas. That gas will be used for enhanced oil recovery in the area and in a planned 300-megawatt power plant.
- Project Pioneer, which would see partners TransAlta Corporation, Capital Power Corporation and Alstom Power and Enbridge Inc. develop a leading-edge "clean coal" power plant at the Keephills 3 plant west of Edmonton.
- The Quest Project, which would capture and store 1.2 million tonnes of CO2 annually from Shell Canada Limited's Scotford oilsands upgrader near Fort Saskatchewan.
ALBERTA CARBON TRUNK LINE
Susan Cole, president of Enhance, says engineering work on the four components of Enhance's Alberta Carbon Trunk Line Project is well underway.
The project includes drying and compression facilities for the CO2 at the north end of the Industrial Heartland Region at the Agrium and North West sites, a pump station east of Fort Saskatchewan, to be called the Elk Island Pump Station, the pipeline operations and control centre at the Elk Island station, receipt facilities at the south end of the system near Clive, and a high-vapour pressure pipeline between the source and the delivery point.
Initially, the 16-inch diameter pipeline (except for a small section that is 12 inches) will only deliver about 5,000 tonnes a day of CO2 to Clive, but there is the potential to expand its capacity to 40,000 tonnes daily with more pumping stations, she says.
Most of the detailed engineering has been done for the CO2 capture facility at the Agrium plant and a 4,800-horsepower compressor has been purchased.
CO2 from the North West Upgrader, on which final engineering is underway, will be "dry," so all Enhance will need to do is to compress it for pipelining.
Enhance, which has 20 employees overall, has retained two Calgary-based engineering firms to help with facility design: Caber Engineering Inc. and WorleyParsons Ltd. Construction on all the components will be underway by next year and the target date for the initial injection of CO2 at Clive is sometime in 2013.
"We've already started the procurement of equipment and we've awarded about two dozen packages, mostly in Alberta," she says.
Enhance will have a 40 per cent working interest in enhanced oil recovery projects being developed by Fairborne Energy Ltd., which has the majority interest. Enhance is negotiating with other producers in the area as well, she says.
"There're 260,000 barrels of oil a day being produced in the U.S. as a result of CO2 injection," Cole notes. "We don't see anything to stop us from moving in that direction in Alberta. The biggest barrier to its expansion is access to CO2."
As it is, Cole says there are only 20,000 tonnes a day of CO2 now being produced in Alberta, but most of it is in a diluted form as a by-product at natural gas processing plants, or coal-fired power and bitumen production.
Cole likens the development of the Enhance project to the evolution of the Alberta Gas Trunk Line, the natural gas gathering system created in the 1950s by then-premier Ernest Manning. That line signalled the birth of the province's natural gas industry and subsequently to its petrochemical industry. Cole predicts the project will lead to other similar projects and to unlocking billions of barrels of oil. There is the potential for Enhance to build lateral pipeline to ship CO2 to other fields in Alberta, for example.
"I don't think people realize what it will do," she says. "I can see a lot more petrochemical plants and other uses of CO2 as well."
Cole says the project could lead to the development of more heavy oil upgraders and refineries in the province. "Rather than shipping our resources from Alberta, there is the potential for more value added here."
And the environmental benefits of the project are also significant "because 50 per cent of Alberta's emissions are in the area where our pipeline is serving."
Cole maintains that there's already proof the project will spur new development, since the North West Upgrader, which will ultimately involve an investment of about $5 billion, is somewhat linked with it.
That project, which will ultimately upgrade 150,000 barrels a day and will be built in three phases of 50,000 barrels daily, is being designed to produce 3,500 tonnes daily of CO2. Using what is called a gasifier-based process, the facility will also produce ultra-low sulphur diesel, diluent, ethane and other sought-after products.
The project, on which final engineering is proceeding, is not receiving direct funding under the CO2 capture program. However, the province is giving it a financial boost by agreeing to sell North West discounted bitumen it is taking in lieu of royalties as part of its Bitumen Royalty in-Kind program.
The project will create 8,000 jobs in construction, equipment supply and manufacturing. It will also mean several hundred permanent jobs. Work is now underway on the plant.
North West formed an alliance with SNC-Lavalin Group Inc. and PCL Industrial Management Inc. for overall project management services and also for prime contractor site services. They are performing about 50 per cent of engineering, procurement and supply for the plant.
IJK Consortium has been awarded the contract to fabricate the high-temperature and high-pressure vessels in the hydroprocessing and hydrocracking units of the upgrader. (It's a consortium of companies led by Japan Steel Works, Ltd.) Voice Construction Ltd. of Canada will do the earthwork and site preparation. Other companies involved in the project are Jacobs Engineering Group Inc. (sulphur recovery unit) and Chevron Lummus Global LLC (residue hydrocracking unit).
Lurgi AG of Frankfurt, Germany, was awarded the EPC contract for the gasifier (about $500 million).
SWAN HILLS SYNFUELS
The next development to have finalized negotiations with the province is the Swan Hills Synfuels project.
Douglas Shaigec, president of Calgary-based Swan Hills Synfuels L.P., says the first $1.5-billion commercial phase of its in situ coal gasification project, which the province is helping to fund, is likely to be the first of several such projects that will eventually create hundreds of permanent jobs in the Swan Hills-Whitecourt area of Alberta.
"We envision the development of multiple phases," he says of the project, which Alberta Construction Magazine first reported on last year. "The coal resource is there and the market is there. While our first phase involves a plant that will produce electricity, we envision further phases that would involve the use of the output for liquid transportation fuel."
The in situ coal gasification project involves the conversion of coal that is so deep underground that it cannot be mined into a clean, low-carbon synthesis gas, or syngas.
The project will be linked with the planned in situ coal gasification/Sagitawah power plant, which would produce 300 megawatts of electricity that Swan Hills would sell into the Alberta grid. The company seeks a partner to operate the power plant.
The company, which is still the funding stage, plans to start construction in late 2012 or early 2013, with a project start-up in late 2015. The company has selected Edmonton-based PCL Industrial Management to build the clean syngas processing facility on a fixed-price, schedule-certain basis.
The project has four components: a coal gasification plant, a power plant, a pipeline to carry the syngas to the power plant and the use of a pipeline to transport CO2 for enhanced oil recovery.
Swan Hills has operated a demonstration plant in the area since 2009. The $30-million plant was financed partially through an $8.83-million grant from the Alberta Energy Research Institute (now Alberta Innovates). As with the planned commercial project, it gasifies coal at a depth of 1,400 metres. It uses technology first developed by the Lawrence Livermore National Laboratory in California.
Company officials say advances in horizontal drilling helped make the project viable.
The first commercial project would produce 17 million gigajoules a year of syngas and capture about 1.3 million tonnes of CO2 a year. Shaigec says the potential to expand the use of the technology in Alberta is vast, with the commercial project only occupying a surface area of five sections of land.
"We have the potential to develop projects 30 times this size," he says.
Swan Hills argues that it is vital to unlock the vast hydrocarbon reserve potential of deep coal in Alberta in an environmentally acceptable way. The Alberta Geological Survey has estimated there is 600 billion tonnes of coal in the Mannville zone alone (the coal the project would tap). The Mannville zone coals cover about one-quarter of Alberta and hold more than two times all of the energy in the oilsands.
Shaigec says that, in addition to tapping those coals and producing syngas-based power, which is would produce less than half the CO2 emission of a coal-fired power plant, it is estimated the CO2 from the project could lead to about 70,000 barrels a day of oil being recovered.
The project would create about 800 peak construction jobs and an average of 300-400 over the three years it is being developed. It would cost about $60 million a year to operate the project, which would create about 80 full-time jobs.
Don Wharton, vice-president of sustainable development with Calgary-based TransAlta, says the company's Project Pioneer could be the salvation of the coal-fired power sector, as well as of Alberta's and Canada's thermal coal industry.
"If [carbon capture and storage] can't be made to work, it means the enormous energy we have in Alberta's coal deposits stays in the ground," he says.
More than half of Alberta's electricity is produced by coal-fired plants and TransAlta and partner, Edmonton-based Capital Power generate much of it. Pipeline giant Enbridge Inc. is also a partner, with all three owning equal shares. It would utilize Alstom Canada's proprietary chilled ammonia process.
Project Pioneer would be "the cleanest coal-fired power plant in the world," Wharton says.
Aside from Alberta providing $436 million in funding, the federal government has allotted $330 million. The project, including $600 million in operating costs for 10 years, would cost about $1.3 billion, Wharton says.
Wharton says that front-end engineering and design is being done now, with Edmonton-based Stantec Inc. being the principal engineering firm involved.
TransAlta and partners will probably make a final decision on a go-ahead for Pioneer later this year.
It would be attached to Keephills 3, a 450-megawatt coal-fired generating facility located 70 kilometres west of Edmonton. TransAlta and Capital Power are partners in that plant, on which construction was completed last year.
Wharton says the CO2 capture facility will be retrofitted to that plant and would capture about one million tonnes a year of CO2, which is about one-third of the emissions from Keephills 3.
The partners plan to explore the potential for selling the captured CO2 for enhanced oil recovery, Wharton says.
The partners would need to build a 50-kilometre pipeline to move CO2 to areas where it can be utilized for enhanced oil recovery or for storage. That cost isn't included in the current price.
The Quest project will involve the retrofit of CO2 capture technology to the existing Shell Canada Energy Scotford Upgrader. The partners in that project are the same as those involved in oilsands mining projects in northern Alberta that eventually may produce up to 770,000 barrels daily of bitumen. Shell has a 60 per cent share. Chevron Canada Ltd. and Marathon Oil Corporation each holding 20 per cent shares.
Adrienne Lamb, communications specialist with Shell for the Quest project, says the project is in the regulatory review phase and the partners expect to make a final decision on a go-ahead early in 2012.
It would involve an investment of $1.35 billion overall, with $745 million coming from Alberta, another $120 million from Ottawa and the remainder operating funding from the partners for 10 years.
The Scotford upgrader, which was recently expanded to process 255,000 barrels daily, would have the CO2 capture unit attached to it, which would be designed to capture one million tonnes a year of CO2.
"The CO2 would be injected more than two km into the subsurface, in the Cambrian rock formation," Lamb says. "Once injected, the CO2 would remain underground."
The project could be designed to capture the CO2 for enhanced oil recovery.
If the companies proceed, construction could start in 2012, with a completion by 2015.
The partners have awarded the contract for the capture facilities to Calgary-based Fluor Canada Ltd. and the engineering and procurement contract for the pipeline was awarded to Calgary-based Tri Ocean Engineering Ltd.