Environment Committee on May 15th, 2007

[Dr. David Keith]

I'd like a very quick follow-up.

[The Chair, Conservative, Bob Mills]

Can we just carry on? We're considerably over time with Mr. Cullen. I'd like to go on to Mr. Warawa, and hopefully you can get your answer in during this next round.

Mr. Warawa and Mr. Harvey are next, I believe.

[Mark Warawa, Conservative, Langley, BC]

Thank you, Chair. Please cut me off at five minutes so that I don't cut into Mr. Harvey's time. I've done that before, and I don't want to do it today.

I want to really thank you, Chair. We're talking about solutions today, and I want to thank each of the witnesses who are here today. It's refreshing to have the environment committee working together, looking for what is realistic by way of solutions and learning what the options are for our government. This is a very refreshing day, at least from my perspective.

I'd like to ask some more about the costs. I believe it was Mr. Hassan who was mentioning the costs. For new facilities—the Weyburn example—it was approximately $1 to $2 per 100 kilometres of pipeline per tonne, and then injection was also about $2 per tonne of carbon. Are those the correct dollar amounts?

[Dave Hassan]

I'm quoting a study that was done by the International Energy Agency in 2003. They estimated transport costs at $1 to $5 U.S. per tonne per 100 kilometres, and $1 to $2 U.S. per tonne for the injection part of it. The big part of the cost is the capture part, getting the concentrated CO₂; that's the $25 to $50 a tonne cost.

[Mark Warawa, Conservative, Langley, BC]

So it really depends on how far the carbon dioxide has to be transported through the pipeline and where it's going to be going. The example we have in the studies and reports I've read say that British Columbia, Alberta, and Saskatchewan are an ideal area.

But as we consider carbon capture and storage as one of the many tools to deal with climate change in Canada, and Dr. Keith talked about that, how feasible is that technology for other parts of Canada, and what happens to the cost if we do not have geological formations to be able to store it deep underground?

Take Ontario, for example. If we require carbon capture and storage.... We have coal-fired generating plants in Ontario that need to be shut down and replaced, and that's the debate. If the new plants are required to have carbon capture and storage, which I believe is a good suggestion, how does it work out? What are the costs now that we have to build that infrastructure in new plants and capture it?

What happens to the costs, then, when we're moving away from B.C., Alberta, and Saskatchewan into Ontario? Do you have any idea?

[The Chair, Conservative, Bob Mills]

Go ahead. That's for Malcolm Wilson, I think.

[Prof. Malcolm Wilson]

We have looked at the Ontario situation, and you're absolutely right: the opportunities for geological storage in Ontario are very limited at best. However, there are opportunities south of the border, so if we could reverse the situation that exists in going from North Dakota to Saskatchewan, we could look at probably 300 to 400 kilometres of pipeline going down into the MIchigan basin, with large potential storage opportunities in that basin.

So it's not a case of shipping Ontario's carbon dioxide across to Alberta or Saskatchewan, or across to the offshore sub-sea sediments on the east coast. It would actually be looking at the opportunity south of the border and moving the CO₂ down there.

[The Chair, Conservative, Bob Mills]

Mr. Hassan, I believe you had a comment, did you?

[Dave Hassan]

No, actually, I was going to say that the Alberta Geological Survey, Stefan Bachu, has done an inventory of carbon capture and storage options all through Canada and has worked with the U.S. Department of Energy on a North American study, which was just released by the Department of Energy. You'll find storage estimates in there, and it will confirm what Malcolm has said.

[Dr. David Keith]

When businesses actually look and have money on the table to do a storage project, they often find opportunities. I'm personally working with a business in Ontario that has found them, so there may be more in Ontario than you think.

[The Chair, Conservative, Bob Mills]

Great. Thank you.

We'll go on to Mr. Harvey.

[Luc Harvey, Conservative, Louis-Hébert, QC]

I only have five minutes. I will move right away to my last question: how much should a ton of CO₂ cost on the market? I am giving you four minutes to think about this.

Mr. Thomson, you carried out a project that allowed you to capture 150 kilotons of CO₂. What distance did you have to cover, in kilometres, between the point of emission and the point of capture?

[Grant Thomson]

We gather and capture the CO₂ right at our Joffre facility. The ethane is piped from our extraction plants, which are in a number of different places in Alberta. Joffre basically sits right on top of the western sedimentary basin, so to go from Joffre to the Viking pool we have with Penn West, it is basically right underneath us. So we had build pipelines over a very short distance. That's one of the reasons why the economics worked.

[Luc Harvey, Conservative, Louis-Hébert, QC]

How much time is required to build these facilities and put them into operation?

[Mark Lesky]

The time it took to negotiate the agreements was longer than the time it took to put the facilities in place. We're talking about a year to put the facilities in place, whereas sometimes the negotiations of the agreement take several years, if not longer.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Mr. Hassan, you stated that you carried out a $1.3 billion project to treat 30 million tons. I made a quick calculation, and the result I get is $43 a ton. That is just for capture and none of the previous elements.

How much does the part preceding the work that you did cost?

[Dave Hassan]

The $1.3 billion investment is not just for capture; it's for an enhanced oil recovery operation. With that $1.3 billion we'll be recovering an extra 155 million barrels of oil, so that will help offset the cost. A lot of the cost is related to oil production facilities, but during that process we will store 30 million tonnes of CO₂.

[Luc Harvey, Conservative, Louis-Hébert, QC]

We know that gases have a tendency to dissolve in water. Is the same for CO₂? Does it tend to dissolve in water?

[Dave Hassan]

Yes, CO₂ dissolves in water. In fact, many of us have a favourite carbonated beverage that contains CO₂ dissolved in water, and when you open the cap on the bottle, those bubbles of CO₂ come out. At the IEA Weyburn project the researchers concluded that the pressure from the CO₂ that's injected into an oil and gas reservoir will dissipate within about 100 years--the excess injection pressure that's required to push the CO₂ in there. The CO₂ will dissolve in oil and in water, and some of it will actually carbonate and turn into minerals. So that enhances the security of the storage. You don't just have a big bubble of gas sitting underground.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Quickly, Mr. Knight, how much in taxes should a ton of CO₂ cost?

[Simon Knight]

How much should it cost ?

[Luc Harvey, Conservative, Louis-Hébert, QC]

How much should it cost?

[Simon Knight]

You're asking a professional whose job is to reduce climate change effects on the planet. I think carbon should be as cheap as we could afford it to be.

It is, in Alberta, likely going to be set around $15 a tonne, because the technology fund that is in place now, with legislation coming forward, is not going to be enough to do carbon capture and storage. That's why we need to look to the respective governments and the companies and industry involved to invest heavily in carbon capture and storage. At $15 a tonne you're not going to get major CCS projects, especially along geological sequestration lines.

I just want to leave a couple of points, since you've mentioned my name.

First, carbon capture and storage is one of the tools we need. Energy efficiency is just as important—David and I have had numerous discussions around this—but carbon capture and storage is one of the major tools we need in the future. The cost will come down as we make major investments in this, especially in how we capture. There are multiple streams of R and D going on concerning how to capture CO₂ at less cost than we're doing it currently.

I also think we have to consider that the CO₂ that's being produced is not always where you want it. When you're producing it in the oil sands.... We're not talking about storage in central Alberta—not where the oil sands are located—but about a large backbone moving CO₂ from Fort McMurray down into central Alberta.

That is a place the government should be investing its money, because it is costly. It is something we know how to do very well, very quickly. If there's nothing else in Alberta we know how to do, we know how to drill and how to build pipelines, but it has to be done where we need it. If it is for enhanced oil recovery or enhanced gas recovery, there is an opportunity to recover costs. But if it's straight geological sequestration, I believe that is an area where governments need to be investing.

Thank you.

[The Chair, Conservative, Bob Mills]

Thank you very much.

We'll now go to our second round. I'd ask members to be really tight on this to get the maximum number in.

Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

When Mr. Knight talks about the capacity for storage not being where you want it, I think of my own province of Nova Scotia, which may face some challenges in this regard. We obviously have great production of coal-produced electricity, and we've heard today there is some capacity offshore in sub-sea reservoirs where there is now gas being produced, and perhaps elsewhere in saline deposits. But it is something that concerns me.

I want to turn to another point. You mentioned that $15 is not enough. I don't know whether others agree with that, but let me put forward a scenario and get your reaction, particularly those from industry, on how this would work.

If you put an absolute price on carbon levels above a certain point and said that if you were above that point you'd pay a certain amount into a fund and could get it back if you actually had projects that would reduce your carbon production, and we'd also give you an accelerated capital cost allowance and place a price on carbon of around $30, as opposed to $15, for example, what would you see as the advantages and disadvantages of that kind of system?

I want to ask the people here from industry.