Shell to Test Capturing of Carbon in Canada

New York Times (blog)/ By CLIFFORD KRAUSS

AP/ An oil sands mining operation near Fort McMurray, Alberta.

HOUSTON — In a bid to make oil sands production less polluting, Royal Dutch Shell announced on Wednesday that it would go forward with the first carbon capture and storage project ever tried in the fields of western Canada.

The announcement of the Quest project after years of study comes just months before Washington will reconsider whether to approve the Keystone XL pipeline to increase imports of heavy oil from the oil sands. Environmentalists have fought the project, arguing that refining and burning oil from the oil sands emit far more carbon than conventional oil.

The project, which is scheduled to begin operations by 2015, is intended to capture and permanently store underground more than a million tons of carbon dioxide a year, which Shell estimated was equivalent to taking 175,000 cars off the road. Carbon capture projects have lost favor in recent years because of concerns about their heavy costs, which have typically been subsidized by governments.

The Shell project, with an estimated cost of about 1.35 billion Canadian dollars ($1.36 billion), will be heavily subsidized by the Canadian federal government and the provincial government of Alberta, which together are putting in 865 million Canadian dollars (about $874 million) over more than a decade.

Shell said it was hoping to reduce the carbon emissions from a treatment plant in Scotford, outside Edmonton, that processes extra-heavy oil called bitumen so it can be shipped to refineries in the United States.

“We recognize that our growth requires that it be accompanied by improved environmental management,” said John Abbott, Shell’s executive vice president for heavy oil, at a news conference in Calgary, Alberta. “Quest is a very big part of that.”

Mr. Abbott said that Quest would reduce the emissions from the Scotford plant by 35 percent and demonstrate the technical viability of carbon capture and storage techniques. He added that it would help lead to wider application “through the energy industry and other sectors in the years to come.”

Canada is already the top source of imported oil for the United States and currently produces more than 1.7 million barrels a day of synthetic crude from oil sands. The country’s leaders hope to more than double oil sands production by 2025. To accomplish that, they need the Keystone XL pipeline — which would run to Gulf Coast refineries — to export more oil to the United States, or they must build an alternative pipelines to Canada’s western coast to export the crude to Asia. More >>