Mr. Brent Lakeman at the Natural Resources Committee

Sure.

I'll move to carbon management.

Just as the province was a champion and an investor in oil sands technologies, Alberta has also been a leader in advancing the global adoption of carbon management technologies, including CO₂ capture and storage. It was through the innovation and foresight of scientists in Alberta that CCS, or CO₂ capture and storage, was identified as a key technology for carbon management and value-added resource recovery. As other nations started to investigate this option, the International Energy Agency estimated in 2008 that CCS could lead to approximately 17% of the global emission reductions necessary to prevent dangerous levels of greenhouse gases in our atmosphere. Alberta's work in this area, which dates back to the late 1980s, contributed to building the base of support in industry and government that has led to significantly larger-scale demonstrations, complemented by a supportive regulatory framework.

Currently, Alberta and Canada are regarded internationally as the leading jurisdictions for advancing CCS technologies in a timely and effective manner. What do these two examples have in common? They demonstrate the value of early investments in key technical capabilities; a collaborative approach involving industry, government, academia, and other stakeholders; and the wisdom of a clear road map and vision in unlocking the potential of these resources and technologies.

Before I get into the specific innovation topics the committee is exploring, I would like to summarize the process known as CO₂ capture and storage, or CCS.

While the focus is typically on the capture, transport, and storage of carbon dioxide associated with industrial facilities, it is important to remember that the process for converting the resource—coal, bitumen, oil, or natural gas—into useful energy, such as electricity, greatly influences the technologies and costs of CO₂ capture.

For example, a coal gasification process will result in a high-purity and high-pressure stream of CO₂ that can be captured relatively easily. Conventional coal combustion technologies used for power generation, while lower cost, result in low-purity and low-pressure CO₂ streams that require more expensive CO₂ capture systems.

Depending on the nature of the CO₂stream, different technologies can be used to capture it, including conventional amine chemical-based systems. Emerging capture technologies include the use of membranes and solid absorption, and other technologies. Over the past decade there has been a global effort to develop new approaches for CO₂ capture that are less costly and less energy-intensive than the current amine processes.

The CO₂ enters a pipeline, where it is transported for storage in a geological formation or utilized for value-added resource recovery. Formations where CO₂ is injected are at least one kilometre underground, beneath several layers of non-permeable caprock. The formation may be a deep brine formation or a depleted oil and gas well, an underground coal seam, or an existing oil reservoir. Each formation will have undergone a detailed geological characterization. As with other similar industrial practices, companies model the expected behaviour of the CO₂ and undertake surface and subsurface monitoring to verify that the CO₂ is behaving as predicted.

It is important to recognize that in addition to the technological issues related to CCS, there are a variety of important socio-economic factors that must be taken into consideration, including public and stakeholder perspectives and financial and economic analysis, all of which can be as important to a project as the technical details.

Canada has built its leadership in CCS literally from the ground up. Recognizing that one can't import geology, Canada has based its leadership on the country's significant geological endowment. The western Canadian sedimentary basin, spanning the four western provinces, is truly a world-class location for CO₂ storage. The same geological forces that have provided Canada with vast amounts of oil and natural gas and coal also provide value-added opportunities for using CO₂ as well as for storing it in a safe and permanent manner. Our geological expertise around CO₂ storage and other similar applications is sought out from around the world, with our experts collaborating with leading international organizations in advancing CCS technologies.

Our leadership is also a reflection of the extensive regulatory framework that has been established to manage oil and gas development in Alberta. Because Alberta has had the foresight to develop regulatory expectations related to applications such as CO₂ enhanced oil recovery and acid gas injection, the province has been able to move forward in a clear and logical manner in the regulation of future CCS projects. Alberta's CCS regulatory framework assessment process, which will soon be delivering recommendations back to government, is providing leadership to other jurisdictions from around the world that are now starting to advance their own CCS projects. As well, Alberta experts have made contributions to a new CCS standard recently developed through the Canadian Standards Association.

Alberta's leadership comes from the collaborative approach the province has taken in engaging industry, the academic sector, and government. This approach has been used by organizations such as Carbon Management Canada, which pulls together 27 research institutions from across Canada to pursue interdisciplinary research related to CCS.

Much of our focus is on key industry sectors, such as oil sands producers searching for carbon management solutions. While the costs of CCS technologies will be higher in the oil sands sector due to the dilute nature of much of its CO₂ emissions, reducing capture costs will result in an acceleration of the deployment of CCS technology in this sector.

Where should we focus our efforts? With respect to CCS, the issue is not necessarily one of research but of accelerating commercial deployment of integrated CCS systems to reduce costs for greater economy of scale deployment. Globally this has been challenging, as the focus has been on integrating CCS into the coal-based power generation sector, a typically risk-averse sector. The situation is further complicated in North America, where low-cost natural gas resources have deferred investment in CCS demonstration projects.

Since 2008 there has been a global effort to acquire practical experience with CCS through commercial or near-commercial demonstrations. In Alberta, the Quest project at the Shell Scotford upgrader and the Alberta Carbon Trunk Line that will take CO₂ from the proposed North West upgrader in Fort Saskatchewan are being closely watched. In Saskatchewan, the Weyburn CO₂ EOR project has been a leading example of CO₂ injection for over a decade, and the proposed aquastore project will allow for CO₂ capture and storage associated with SaskPower’s coal-fired power generation facility at Boundary Dam.

CO₂ capture costs remain significantly higher than costs of CO₂ compliance. For example, while Alberta has a CO₂ charge of $15 per tonne for CO₂ emissions above regulated levels, the cost to implement CCS at an in situ oil sands project may be more than $150 per tonne of CO₂. I put together a chart that's prepared by Alberta’s CCS Development Council, which shows the gap between CCS costs and the benefits of action, including avoided compliance costs and the sale of CO₂ for value-added activities.

Industry and governments are investing in a range of alternative technologies for CO₂ capture, and some of them will ultimately drive down capture costs, but the challenge is enormous. In Alberta, organizations such as the province’s Climate Change and Emissions Management Corporation, known as CCEMC, have recently invested in several projects aimed at driving down CO₂ capture costs.

In the short to medium term, what is required is an economic driver encouraging CO₂ use, such as the production of more oil from depleted formations or the production of new products with existing markets. While CCS represents a backstop technology that can be turned to when no other options are available, it would be preferable to find ways to make use of CO₂ so that it ultimately does not need to be captured at a high cost and stored in geological formations.

Finally, we should not forget about building greater public understanding and confidence. In certain jurisdictions like Alberta, there is a strong history and good understanding of subsurface operations such as oil and gas operations. In many other jurisdictions, however, there is a degree of public fear and distrust about this technology. For example, the Netherlands has recently seen public opposition result in the cancellation of several industrial CCS projects.