Shell to build world’s first oil sands CCS project

Shell will build the world’s first carbon capture and storage project for oil sands production, a more than $1 billion effort to cut Canada’s greenhouse gas emissions.

Leaders of Royal Dutch Shell and Canadian energy officials announced Wednesday that they have green-lighted the project to capture more than one million tons  of CO2 per year. The project, called Quest, will store greenhouse gas emissions from the Athabasca oil sands in northern Alberta.

The Quest carbon capture and storage, or CCS, project is slated to begin operation in late 2015. It’s a joint venture led by Shell and partnered by Chevron and Marathon Oil, which jointly own an Athabasca Oil Sands operation.

Quest’s construction and first ten years of operation are expected to cost $1.35 billion Canadian dollars, officials said.

The Alberta government is providing $745 million in funding and the Canadian government is investing another $120 million.

“Innovation has been and will continue to be critical to reduce the environmental footprint of oil sands development,” said Joe Oliver, Canadian minister of natural resources, during a press conference announcing the project. “CCS places Canada at the vanguard of this leading edge technology.”

The Quest CCS project will pipe liquefied CO2 from Shell’s Scotford Upgrader facility to injection wells that will funnel it more than 2,000 meters underground.

Alberta’s oil sands, the world’s third largest proven crude reserves after Saudi Arabia and Venezuela, have been targeted by environmentalists because they release more carbon dioxide than conventional oil production.

Still, Canada has set a goal to reduce its greenhouse gas emissions by 17 percent between 2005 and 2020. Officials said the Quest CCS project will have an environmental effect equivalent to taking 175,000 cars off of North American roads annually.

“We are going to coninue developing this national asset and we will do it in an environmental way,” said Alberta Energy Minister Ken Hughes during the Quest announcement Wednesday.

Carbon capture and storage has been used to reduce emissions in various types of fossil fuel production and processing, including coal-fired power plants. But the technology has been slow to take off in the United States, largely because of its cost.

“This is a major step forward in CCS technology,” Oliver said. “We must continue to innovate, push the frontiers of knowledge, and find more efficient ways to extract and use our resources like the oil sands.”

Shell leaders said they hope the Quest project will help spur broader use of carbon capture technology to reduce emissions from industrial facilities worldwide.

“The knowledge it provides will help to enable much wider and more cost-effective application of CCS through the energy industry and other sectors in years to come,” said John Abbott, Shell’s executive vice president of heavy oil, in a written statement.