Wednesday, September 12, 2012

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.

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