Shell unveils new carbon capture project amid wave of new CCS proposals in Alberta

Shell Canada unveiled plans Tuesdayfor a new facility in Alberta to capture emissions from its industrial complex and store the greenhouse gases underground.

Canada is already considered a global leader in the carbon capture and storage (CCS) industry, and the latest announcement comes amid a wave of proposals for new projects in Alberta.

If approved by the company, Shell's Polaris facility would be located at itsScotford complex, northeastof Edmonton, and collect emissions from its refinery and chemical facilities.

"It is a consistent and very exciting implementation of our global strategy right here in Alberta," Susannah Pierce, president of Shell Canada, said in an interview.

Polaris would be Shell's second CCS project in the province after constructing Quest in late 2015.

Quest cost $1.3 billion to build and is able to sequester about one million tonnes of emissions per year equivalent to the annual emissions of about 250,000 cars. The project received Alberta government funding of $745 million and federal government support of $120 million.

The price tag for Polaris was not disclosed.However, officials have said it would cost about 30 per cent less to construct a new project similar to Quest.

There shouldn't be a need for government funding, Pierce said, based on the current and projected price of the carbon tax and the Clean Fuel Standard.

"This is the right type of incentive and regulation to have in place," she said.

The Polaris facility would be designed to capture the emissions and thentransport the carbon dioxidethrough a 12-kilometre pipeline to storage wells located near Josephburg, Alta.The gases would then be stored more than two kilometresunderground inthe same geological formation used to store CO2 from the Questfacility.

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Polaris CCS project is one part of Shell's plans to reduce emissions

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Duration 2:03

Shell Canada's Susannah Pierce unveils plans for a new CCS project near Edmonton.

Climate goals

The federal government officially submitted Canada's new greenhouse gas emissions targetto the United Nations on Monday, committingthe country to reducing emissions by 40 to 45 per cent below 2005 levels by 2030.

To meet the climate goal,Canada's total emissions must fall tobetween 401 and 438 megatonnesby2030. In 2018, the last year for which information is available, Canada accounted for 729 Mt of emissions.

"This project is actually reducing existing emissions, and it's getting us closer to the reduction level that we need to see from oil and gas. But we need to see a lot more of these types of projects in order to actually achieve the kind of reductions Canada has committed to internationally," said Chris Severson-Baker, Alberta regional director atthe Pembina Institute, an environmental think-tank.

Reducing emissions and relying on renewable energy instead of fossil fuels is critically important to tackle climate change, Severson-Baker said, adding that carbon capture has a clear role to play to decarbonize existing sources of materials and energy.

"We're just starting very small here, and we need to see a big scale up of this kind of thing in order to get the real big reductions that we need from the oil and gas sector in Canada," he said.

Some environmental groups suggest the investment in carbon capture facilities would bebetter spent elsewhere, such as building renewable energy projects.

CCSsector booming

The carbon capture industry is still considered nascent, but the country is punching above its weight, according to a recent report by international energy research firm Wood Mackenzie.

The report lists several global milestones Canada has already reached,including:

• Largest operating commercial CO2 enhanced oil recovery andsequestration project.
• Largest operating CO2 pipeline by capacity.
• World's first coal-fired power generation carbon capture facility.
• World's first refinery built with carbon capture included.

"This report was a little un-Canadian of us. We don't like to brag usually, and this was a little bit of a braggy report," said ScottNorlin, a Calgary-based senior analyst with Wood Mackenzie and an author of the report.

Canada emits about two per cent of global greenhouse gasesbut is home to about 14 per cent of global operational CCS capacity, Norlin said.

Shell is just the latest companyto announce plans for a new facility, following a proposed hydrogen and CCS facility by Suncor and Atcoand a carbon transportation and sequestration project by TC Energy and Pembina Pipeline.

"The last couple months here we've had megatonnes upon megatonnes of project announcements. So there's no shortage of the skill and the drive to do it," Norlin said.

Much smaller firms are also developing CCS projects, such as Entropy, a privately owned firm thatis partnering with the University of Regina on technology that the company expects to be profitableat a carbon price below $50 per tonne.

The federal carbon tax is currently $40 per tonne, rising to $50 in 2022 and then increasing by $15 annually until it reaches $170 in 2030.

There are several CCS projects already operating in Western Canada, including the $1.2-billion Alberta Carbon Trunk Line system, whichtakes emissions from the Redwater Fertilizer factory and the Sturgeon refinery near Edmonton and injects the gases into aging oil reservoirs in central and southern Alberta.

Some companies use the carbon material they capture to make various products, such aspens and soap.

Shell said several dozen employees are working on the detailed designs for the Polaris project, and a final investment decision is expected in 2023. The facility could be operational by the middle of the decade.

The first phase of the project would sequester about 750,000 tonnes of emissions per year. The second phase is focused on sequestering up to 10million tonnes of emissions annually from other industrial companies in the province.

Polaris would have storage capacity of about 300 million tonnes of carbon dioxide over the life of the project.

Shell has sold the majority of its oilsands assets in Albertabut still owns a 10 per cent stake in the AlbianSands mining facility.

The oilsands makeup about 11 per cent of the country's total emissions, according to 2018 data from the federal government, and other oil and natural gas production makes up another 11 per cent.

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Debating the value of enhanced oil recovery

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There are differing viewpoints on the technique to capture carbon emissions and use the CO2 to produce more oil from aging reservoirs.