January 24, 2005

Oil and gas firms awarded $10.8 million to demonstrate CO2 capture, storage for GHG reduction

Suncor Energy and three other Calgary-based companies have been selected to receive a total of $10.8 million in federal funding to demonstrate the capture and storage of carbon dioxide (CO2) as a way to reduce greenhouse gas (GHG) emissions while increasing resource recovery and extending the life of an oil field. Along with Suncor, the companies awarded funds through the government's CO2 Capture and Storage Incentive program include Anadarko Canada, Apache Canada and Penn West Petroleum.

The four companies were selected after a call for proposals on March 1, 2004. Their projects are all located in Alberta and involve converting and reconfiguring existing wells or using new processes to explore the potential and benefits of CO2 storage. Details of the projects are as follows.

Anadarko Canada Corporation will capture the CO2 currently being vented from its Hays gas plant for injection into the Enchant Arcs reservoir. The company plans to inject CO2 into five existing wells of the reservoir.

Apache Canada Ltd. has reconfigured amine-extraction units at its Zama gas plant. Processing the solution gas generated from the Zama pools will produce a high-CO2, low-hydrogen sulfide gas for re-injection and reservoir support. The CO2 will help enhance oil recovery for the Zama Keg River oil pools, of which nine have been identified. Starting with two pools in the first year, the plan involves incremental addition of one to two pools a year with continuing capture and re-injection of breakthrough CO2 solvent.

Penn West Petroleum Ltd. will convert two existing wells in its Pembina field to CO2 injection wells. During the two-year injection process, and for one to three years thereafter, six offset wells will be produced to test enhanced oil recovery and CO2 storage. The Pembina area is the largest oil pool in Canada with significant potential for CO2 storage capacity.

Suncor Energy, on behalf of its partners, is proposing to conduct a pilot project 20 kilometres south of Drayton Valley to drill a CO2 injection well and a production well. The project is intended to test the response of Alberta coal seams to injection of CO2 and to determine the parameters of CO2 storage and potential enhanced methane production from coal.

In addition to announcing funding for these projects, Natural Resources Canada (NRCan) Minister John Efford put forward a call for a second round of proposals, for which a total of $4.2 million in funding is available. This round of proposals will continue to build on the co-operation between NRCan and the Alberta government to manage GHG emissions and enhance conventional resource recovery. Applications from prospective proponents must be received by NRCan no later than March 1, 2005. Detailed application information is available on-line at www2.nrcan.gc.ca/es/erb/prb/english/View.asp?x=619.

The CO2 Capture and Storage Incentive is a two-year, $15-million program. The purpose of the program is to demonstrate CO2-based enhanced oil and gas recovery in small-scale commercial projects that are near-economic in order to help abate the higher costs of CO2 capture and storage and to facilitate the development of the CO2 capture and storage market.

The technology involves the capture of CO2 from large single point sources, its processing, compression, transportation to a potential storage or disposal site in a geological formation, and injection into the formation. CO2 is typically captured as a byproduct of production processes from industrial plants such as a petrochemical or hydrogen plant. CO2 may also be captured from facilities emitting it as a flue gas from hydrocarbon production, such as a coal-burning power plant. The geological formations in which CO2 may be stored include oil or natural gas reservoirs, deep coal beds, or deep saline aquifers.

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