Jim Letourneau's Blog

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Alberta's Carbon Confusion

In Alberta, taxpayers have generously forked over $2 billion for a carbon capture and storage fund. This money is being used to subsidize enhanced oil recovery (EOR) projects.

There will be no shortage of supporters, especially those who are on the receiving end of this massively generous taxpayer gift. The political benefits are obvious, as it lets the government maintain the appearance of "doing something" to appease those who still believe in global warming.

For example, Dr. Stefan Bachu of the Alberta Research Council, was recently quoted in the Edmonton Journal:

My biggest challenge is to convince the public, politicians and green NGOs (non-governmental organizations) that carbon capture and storage (CCS) is not a ploy by the oil industry -- seen as the villains -- to extend the life of fossil fuels.

Dr. Bachu will fail at his biggest challenge if taxpayers take the time to follow the money. All 4 of the major projects listed on this Alberta Energy website have significant enhanced oil recovery (EOR) components. Enhanced oil recovery is used to extend the lifespan of old oilfields. Enhance Energy, one of the beneficiaries of the fund says that their project will "revitalize the EOR industry in Canada."

For comparison, in the United States there are 3,500 miles of high-pressure CO2 pipeline according to a 2007 report by the American Petroleum Institute (API). The vast majority of US EOR projects were built before there was a "value added" carbon capture and storage component. A recent EOR success story is Denbury Resources (DNR). They specialize in controlling  natural CO2 sources giving them a strategic advantage over the areas they have CO2 infrastructure. Denbury's success did not require a carbon capture and storage subsidy.

The investment in CCS infrastructure may be a sound one, Alberta's older oil fields could be given a reprieve from abandonment and the government might be able to collect more royalties. I'm confused by two things:

  1. Why deny that the logical beneficiaries of CCS are oil companies?

  2. Why is the Alberta government subsidizing the associated CCS (aka EOR) infrastructure that will ultimately benefit the oil industry?

    I don't have a government-speak decoder ring but perhaps the Alberta government is actually looking at the big picture and trying looking to jump-start an EOR industry. In that case this is as good as it gets for oil companies with old oilfields in Alberta.