You might find it hard to believe CO2 capture technology has been used since the 1920s for separating CO2 found in natural gas reservoirs. It’s been proposed as a theoretical solution for capturing CO2 and preventing it from being released into the atmosphere since 1977.
Global Aspirations
The current intense focus on CCS globally has been spurred on by the International Energy Agency (IEA)’s aspirational promotion of CCS to make a “maximum contribution to emissions reductions” globally and their insistence that “the pace of development and deployment needs to increase substantially to get projects up and running in time to meet global targets.”
“In their 2019 technology report, the IEA anticipates that CCS could provide 24% of the global industrial sector emissions reductions needed to meet Paris Agreement targets. The assertion is that “CCS has the potential to make a big difference to greenhouse gas emissions, but action is needed swiftly to allow the impact to take effect before temperatures rise, and the cost of battling climate change goes up.”
This push for CCS development is good news for the Canadian energy industry as data from the Government of Canada suggests that GHG emissions from oil and gas production have gone up 23% between 2000 and 2019 and Canada has a rich treasure trove of CCUS expertise to access for emissions reduction.
From CCS to CCUS
Saskatchewan and Alberta have long been leaders in CCS development, and are recognized globally for CCS projects like Saskatchewan’s Boundary Dam Carbon Capture Project – one of the first large scale coal-fired CCS plants in the world, and Alberta’s ACTL (Alberta Carbon Trunk Line)- one of the world’s newest and largest CCS projects. Since carbon dioxide has value- an increasing value with current and contemplated prices on carbon- CCS projects have morphed into CCUS projects that incorporate utilization – capturing CO2 to be recycled for further usage in conjunction with permanent and temporary sequestration.
For an update on the current and future state of CCUS development in Canada, I turned to Greg Owen and Trisha Macdonald of GLJ energy consulting services. According to Trisha MacDonald, senior manager of engineering, with reserves and resources being their historical turf, GLJ is now working with all facets of energy producers, providers, and pipeline companies – infrastructure owners, subsurface owners and investors, and they are involved in multiple areas for CCS and CCUS projects.
Greg Owen, VP of business development adds that there are three main types of CCUS they work with. The first is CCUS for EOR – they do screening studies and have been helping companies with developments for almost 30 years going back to the early Weyburn- Midale CO2 storage project and the Joffrey Viking CO2 injection project. They are currently working with Enhance Energy’s projects to reducing carbon emissions through carbon capture and storage, including alternatives that utilize the CO2 for enhanced oil recovery (EOR). The second type of CCUS GLJ works in developing is CCUS in depleted gas pools and the third type is CCUS in saline aquifers.
As Trisha MacDonald explains, “we can accurately screen any reservoir for CCUS in Alberta, BC and Saskatchewan quickly. For CCS, also can screen depleted gas reservoirs and we’re doing a lot of the saline aquifer studies, like Shell’s Quest CCS Facility. Studies reveal the location, how much could you put away, the features of the aquifer, and more. We’ve been spending a lot of time unpacking Alberta’s expression of interest (EOI) guidelines for carbon storage pore space that came out recently.”
Alberta’s EOI for carbon sequestration rights
As far back as May 12, 2021, the Government of Alberta announced that it would be granting carbon sequestration rights through a competitive process.
According to Trisha MacDonald, “If you think about it – historically the industry was not drilling for an aquifer. Traditionally we stopped drilling when we reached water- you would not collect any funds from it. As a result, there hasn’t been enough sampling and testing done and this is where the new EOI from the Alberta government comes in. We’re finding it to be really competitive area, with large interest, as people are looking for that pore space so they can go out there and start testing the aquifers and find out exactly what they can put away (store) and where those unknowns and uncertainties might exist.”
Before that EOI came out there was a process to obtain carbon sequestration rights according to Greg Owen. He says back in the day when Shell established Quest, there were some existing regulations but Quest was the only project. Currently, the Alberta government is wary of speculation- people buying up all the rights without having the financial wherewithal to complete the projects. A big part of the new EOI is that the companies must demonstrate the ability to execute the project-technically and economically.
Developing EOR vs Gas Pool vs Saline Aquifer CCUS
GLJ has a history of developing EOR projects. As Greg Owen points out, “We have a method of calculating EOR but when somebody picks a field, we would do all the geological reservoir engineering work up including doing anything from building the Petrel model which is a sub-surface model, to doing simulation, doing different optimizations and we would have some partners to suggest. We could help get a cost estimate for first facilities etc so we can provide a full EOR development plan.”
EOR involves a certain degree of CO2 recycling. CO2 is produced with the oil and then recycled to send back down to recover more oil from the reservoir. According to Owen, in most instances, the CO2 remains in the reservoir but you end up recycling a fair amount. So projects will have a big demand for CO2 at the beginning and then recycle a fair amount of that CO2. At the end of the project, the remaining CO2 is sequestered. The calculation of the number of megatons of CO2 an EOR project could put away includes the recycled CO2 put back in when the EOR recovery process is complete. Another advantage of CO2-EOR projects is that, once the project is completed, the site may be used for further injection for permanent CO2 sequestration, without additional investment.
Besides providing studies for the best estimate of EOR opportunities for producers, Owens says EOR can be a solution to assist major power plants to design solutions for their associated emissions and attracting partners.
For depleted gas pools, there are different possible advantages over EOR. What’s interesting with depleted gas pools is that there are many known gas pool locations with existing information about their properties. It is possible to calculate from established information how much CO2 could be sequestered. Worldwide, there’s not a lot of people that have put CO2 into depleted gas pools yet according to Owens. He says it is interesting to compare the amount that can be put away in a small gas pool versus EOR versus an aquifer. He states the smallest capacity is in EOR. Gas pools have the next larger capacity and the largest amount of capacity is in a saline aquifer. There are a lot of opportunities in Alberta and BC for both gas pool and saline aquifer sequestration according to Owens.
Storage and sequestration mechanisms in gas pools and aquifers
Gas pool and saline aquifer mechanisms for sequestration are quite similar as described by Owen. A gas pool that’s mostly depleted is filled with water The difference with gas pool sequestration is there is a certain amount of dissolution of CO2 in the water itself- what he calls “the fizzy water effect” but most of the CO2 fills the pore space that was previously occupied by natural gas. With a lot of existing data, a company can be sure of the nature of the formation that ensures the CO2 is trapped or sequestered in the formation. Saline aquifers have the advantage that they are located at great depth and higher pressures, so a greater volume of CO2 can be sequestered. According to Owen, “Saline aquifers are deep and so if you are 800 to 1,000 meters deep, CO2 is four times less the volume than it was at atmosphere and there is higher pressure. So you can put away a greater volume of CO2. The other thing is there are massive saline aquifers underlying Alberta. So the view is that they could take a lot more volume than a depleted gas reservoir could.”
The growing interest in CCUS
Growth of interest in CCUS projects in Alberta is prompting calls for incentives. The biggest projects in Alberta are getting bigger. The ACTL – fed by Nutrien and the Redwater refinery is one. Shell’s Scotford complex is feeding the Quest project. Shell just announced another large disposal application southeast of Edmonton-the proposed Polaris CCS project, the largest in a series of low-carbon opportunities Shell is exploring at Scotford. The Oilsands Pathways to Net Zero initiative was just announced – a collaboration between CNRL, Cenovus Energy, Imperial, MEG Energy Suncor. In addition, power producers are looking to CCUS because they are large emitters.
Canadian vs U.S Incentives
The popularity of CCUS extends beyond Canadian borders. The IEA has come out as a strong proponent of CCUS to fight climate change globally. In a commentary earlier this year titled “Is Carbon capture too expensive?”, the IEA declared “Achieving net-zero goals will be virtually impossible without CCUS“ while pointing out “The idea that CCUS is “high cost” ignores the bigger picture- to dismiss the technology on cost grounds would be to ignore its unique strengths, its competitiveness in key sectors and its potential to enter the mainstream of low-carbon solutions.”
One supporter of the CCUS as a solution to achieve Net Zero goals and stimulate the Canadian energy sector is Federal MP, Greg McLean. McLean introduced a private member’s Bill C- 262 promoting CCUS in parliament last spring that would level the playing field for Canadian companies looking to engage in CCUS. Currently, U.S. companies have a huge tax advantage over Canadian companies because they can access Section 45Q of the U.S. Internal Revenue Code which offers a tax credit that varies from just under $12 up to $50 for each metric ton of carbon captured. McLean wants to create a Canadian version of the U.S 45Q. He says the 45Q advantages American CCUS development because it allows the split of the tax credit between those who were capturing the carbon and those who are storing the carbon.
As McLean stated in parliament: “The intent of the bill was to continue to allow our energy sector in Canada to lead the world. It (the energy sector) lost that lead in carbon capture, utilization, and storage in 2018. How did it lose it? It lost it because the United States offered the 45Q. This split tax credit moved investment from Canada to the United States very quickly. We have to bring it back here.”
Although the bill did not pass, McLean sees the need for a Canadian version of the 45Q to attract investment back to Canadian CCUS. This incentive is critical as there are proposals now in Congress that could boost the 45Q from $12 to $50 to as high as $175 per ton as recently reported by Forbes.
The need to split the tax credit is spurred on by a wrinkle in the IEA’s support of CCUS. An IEA commentary published in April this year commented: “It is important to track who claims credit for the avoided CO2 emissions. A credit associated with storing CO2 underground can only be counted once: either it can reduce the emissions from the original source when it was captured or it can reduce the emissions from oil production. It cannot do both.”
Greg Owen says he likes the idea of a Canadian version of the 45Q tax credit proposed by McLean.
“I will say that if you actually wanted to subsidize it – something like a 45 Q that is actually legislated and that people can actually bank on to do financing is the way to go.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry