# Presentation: 209546

## The Integrated CO2 Network: A Path Forward for Carbon Capture & Storage

- March 31, 2008
- US Senate Energy Committee

## Discussion Topics

- Introduce ICO2N
- Strategic importance and CCS Potential for Canada
- Value of an integrated network
- CCS as a nascent market - challenges to overcome
- Partnership to enable CCS deployment
- Transitional economics of CCS
- Key principles of deployment
- Background Material

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## ICO2N

- 18 leading companies from a variety of industries
- Power, oil & gas, chemicals, fertilizer, metal refining
- ICO2N represents:
- More than 100 Mt/yr of industrial emissions (>14% of Canada’s emissions)
- More than 60% of Alberta’s power generation
- Approximately 95% of oil sands petroleum production
- Mandate is to work with governments to develop the CCS solution.
- ICO2N has conducted a comprehensive engineering/economic analysis of CCS.
- Results shared with federal, Alberta governments and summarized for public

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## ICO2N Conclusions: CCS is ImportantA Strategic Investment for Canada

- A critical component of Canada’s GHG reduction strategy
- Canada’s largest single sector reduction option
- A critical component of Canada’s energy strategy
- Continued use of affordable and plentiful coal for power generation
- Development of oil sands resources while addressing the resulting GHG emissions
- CCS is a ‘Made in Canada’ solution
- Investment and infrastructure development will occur in Canada
- CO2 emissions reductions will be realized in Canada

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## ICO2N’s Long-term Vision of CCS in Canada

**The network concept can work across Canada, limited only by available geologic storage capacity, and proximity to large emission points**

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## ICO2N’s Long-term Vision

**Focused on the desired result: **Limited, short-term support for individual projects, absent a broad CCS incentive system, could preclude large-scale deployment across the country

**Vision of a First Stage Integrated Network:** Potential CO2 Pipeline Routing for first stage development in Western Canada

- A large-scale, long-term vision is essential to realize the full potential of CCS
- Large-scale integrated CO2 network will enable lowest cost, smallest environmental footprint and highest GHG reduction potential over time
- Direct storage of CO2 is important. EOR can help fund initial stages of deployment, but is not the whole story
- Network will be open access and can be deployed in stages

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## CCS – Nascent Market Development

**CCS has characteristics of an immature market, and without inherent economic value to the activity Government involvement can advance adoption.**

|  | Mature Markets | Nascent Markets |
| --- | --- | --- |
| Price disclosure | Open | Limited |
| Number of buyers and sellers | Many | Few of both |
| Transaction Costs | Usually low | Usually high |
| Supply/Demand 
Balance | Close | Can be widely
divergent |
| Monopoly supply or demand | Infrequent | Typically an actual or effective monopoly |
| Market Growth rate | Low | High, and volatile |
| Technology  | Mature, low rate of change | New, competing alternatives |

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## The challenges to CCS development in Canada

- CCS is technically viable, but economic risks remain
- Capture using current processes is $60-$100/T - new technology may be more cost effective
- Pipelining is proven at $5-10/T and storage is low cost (<$5/T).  Challenge is geotechnical, regulatory and liability
- CCS could proceed as “economic” with a $50-$80/T CO2 emission penalty. North America is not contemplating this level of constraint in the near future
- High front end capital costs – not a matter of a uniform $/T payment
- High energy penalty for CCS – significant upscaling of power generation to accommodate large scale CCS
- Large policy uncertainty: level of reductions, timing, and mechanisms (domestic and cross border) along with incompatible Federal and Provincial regulations
- GHG regulations should be implemented in a manner that supports CCS and reflects energy supply and security concerns in North America
- Fundamental economic gap – EOR revenue is inadequate and most industry unable to pass through increased costs to end products

**A comprehensive solution with multiple industry participants and direct government support is needed to enable CCS deployment**

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## Vision of CCS Deployment: Industry / Government Partnership

- Vision of CCS Deployment: Industry / Government Partnership

**Choice of path affects ability to meet national emissions reductions over 10 - 20 years while protecting economic growth.**

**Priority Development**
- A path of accelerated development will be very expensive.  It needs attention to regulations to ensure growth and investment continue while meeting climate change goals
**Industry/Government Partnership**
- A collaborative approach with industry and government risk sharing can achieve large reductions at reasonable cost
**Market Based**
- Reliance only on compliance mechanisms and an increasing offset cost with no government risk sharing will result in late_r_, lower volume reductions from CCS

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## A Case for Partnership

- Currently in a transition period - economics and risk profile deter investment.  There is a role for government to help kick-start CCS.
- Initial volumes will be small, but will need the most assistance.

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## ICO2N’s Key Principles to Make CCS a Reality

- ICO2N’s Key Principles to Make CCS a Reality

_**GOAL**_: The staged development of a long-term, large-scale CCS solution that strategically addresses environmental, energy and economic growth.

_**APPROACH**_**: **A strong public-private partnership to drive initial deployment of an integrated approach to CCS

_**IMPLEMENTATION**_**: **Range of tools and policy innovation to encourage major investments in CCS

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## Supplementary Information

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## Conceptual CCS Economics

**The EOR market and CO****2**** credit/offset market are inadequate revenue sources in the near term**

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## Source: Environment Canada 2004 CO2 Emissions Inventory

- Source: Environment Canada 2004 CO2 Emissions Inventory

**Potential role **
**for CCS**

**Unsuitable **
**for CCS**

- GHG Emission Sources in CanadaOnly Select Industries can Pursue CCS

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## Current CCS Activities in Canada

**Commercial CO2 EOR Projects (with enabling circumstances)**
**Weyburn:  **2 Mt/yr CO2 from gasifier with prior provision for CO2 capture in N. Dakota via 320km pipeline to Saskatchewan.  Low electricity costs for capture; ideal world scale oil reservoir;  US Federal support for CO2 pipeline;  Canadian Federal, Provincial & International funding of CO2 monitoring
**Glencoe:  **Small ~0.2 Mt/yr strategically combining low cost CO2 from chemical plant with local EOR
**Midale: ** 	Apache project beside Weyburn and taking advantage of low cost CO2 and similar reservoir
**CCS Related Tests/Studies**
- CSEMP - Suncor group evaluating CO2 enhancement of coal bed methane gas production
- CCPC/EPCOR - $30M FEED study for coal power plant with gasifier and CCS
- Enbridge/PTAC -  ASAP Phase I to identify best Aquifers and design a pilot
- TransAlta Wabamun – Evaluating single location aquifer storage near power plants
- ARC Redwater Project – Assessment of specific saline aquifer underlying oilfield
- Several small scale EOR pilots (<100 KT/yr trucked in CO2 at >$100/T
**Proposed full scale projects**
- Sherrit coal gasifier with CCS will sell CO2, H2, and power ( in FEED study, not committed to)
- Northwest Upgrading – gasifier based bitumen upgrader to incorporate CCS (awaiting financing)
- SaskPower 100 MW Boundary Dam coal fired power plant with CCS and CO2 delivery to Weyburn area ($250M Federal and $750M provincial funding just announced)

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## GHG Reduction Challenge for the Energy Sector and Canada

- Canada’s energy industries responsible for significant CO2 emissions
- Need to maintain energy sector growth while meeting GHG abatement targets
- Transition to a lower carbon intensity basis will be a multi-year effort
- Requires creation of policies that will outlast typical government mandates
- Industry will continue to deploy all GHG reduction options
- Energy conservation and lower energy use technologies
- Lower carbon fuels based on full life cycle analysis
- Alternative, renewable energy sources
- Significant investment in CO2 capture and storage is next major effort

**With the proper collaboration the government and industry can set the path to Canada becoming a **_**Clean Energy Superpower**_

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