Shell Canada's call for carbon management

The Globe & Mail reports that the president of Royal Dutch Shell Canadian division said that "carbon management" must be part of an approach to balance protecting the environment with meeting the need for oil and gas.

Shell is one of several companies exploiting Canada's tar sands, where oil extraction typically releases significantly more CO2 than crude production from conventional oil fields. Oil and gas companies have been working on ways to reduce the environmental impact, particular excess CO2 emissions that has come with tapping the extensive petroleum reserves associated with the tar sands resource. One of the options for doing so is carbon capture and storage (CCS).

In a project known as "Quest" partly supported by the Canadian government, Shell is putting together a system to capture CO2 from an upgrader near Edmonton, Alberta. The upgrader processes the heavy bitumen extracted from the nearby Athabasca tar sands to an oil that can be refined like conventional crude oils. The Quest project is slated to start operating in late 2015 and aim to capture one million tonnes a year of CO2 that would otherwise be emitted by the upgrader. The captured CO2 will be piped to a location about 80 km away for injection and storage in a porous sand formation that rests about 2 km underground beneath layers of impermeable rock.

Shell's Canadian division president, Lorraine Mitchelmore, pointed out that such CCS technology will not be widely adopted unless there is a price on carbon. In discussing this policy need, she implicitly clarified the figurative nature of the phrase, "price on carbon", noting that it could be achieved not only by imposing a carbon tax, but also through a cap-and-trade system or CO2 emissions regulations.

Thinking about a regional liquid fuels carbon study

One way we might better understand the opportunities to counterbalance the carbon in liquid fuels is to assess the immediate opportunities in a given region. Being based in Michigan, a midwest regional scope makes sense for practical reasons. Such a scope is of particular research interest for several other reasons as well:

• Michigan, and the industrial midwest more generally, is home to the U.S. auto industry as well as a major global center of automotive research and manufacturing. The auto industry can potentially benefit from the identification of cost-effective options for counterbalancing the CO2 emissions from the use of their products. 
• The midwest is the heart of the U.S. biofuel industry, where most corn ethanol production is located, and is a major agricultural region with extensive rural land now used for many purposes (including suburbanization) but which could also have a significant potential for reforestation or other forms of terrestrial carbon uptake and storage. 
• The midwest has been struggling economically, as its traditional industries have both increased productivity (reducing the need for labor) and been adversely affected by outsourcing many aspects of production. New opportunities for value creating tied to the land itself could provide robust economic opportunities for the future. 
• Much of the region has dispersed settlement patterns and so is not particularly suitable for either extensive mass transit or vehicle electrification based on available and near-term technological capabilities. Therefore, its transportation systems will remain almost exclusively dependent on liquid fuels for the foreseeable future. 

The region is already experiencing climatic risks of the sort expected to worsen as global warming progresses. Most of the region's political leaders have opposed strong policies for GHG mitigation (opposition that is by and large bipartisan, though it may be expressed differently by members of different parties). However, this policy challenge may be related to the fact that many proposed solutions are seen as having an adverse economic impact on the region's interests, given its historical heavy industry and agricultural base and dependence on coal for power generation. Identifying new opportunities for carbon mitigation that work better with the region's resources and economic base may be more attractive politically than what has been previously proposed.