Energy Ink

China’s next gambit: carbon capture and storage

Alberta seems like a logical place to pursue partnerships

September 26, 2011

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Much has been written about Asian, and particularly Chinese, investment in oily and gassy Canadian assets over the past two years. But does the Middle Kingdom have its eye on something other than bitumen in Wild Rose Country?

I’m wondering about that as this story run by the state-run Xinhua news service (a hat tip to Steve LeVine’s Oil and The Glory blog for alerting me to the piece) states that China is “willing” to work with other countries in developing carbon capture storage technology (CCS). The motivation is simple: self-preservation. The Communist Party is worried the citizenry is getting restless about rampant pollution in China. It sees CCS as one way to prove to its people that the party is taking action on this issue.

Half a world away, this news item should be of interest to the oil and gas industry and the Alberta government. CCS is viewed as a critical technology in reducing rising carbon emissions in Alberta. The growth in greenhouse gas emissions in the province is occurring mainly due to oil sands development. And with oil sands production expected to almost double in the next 20 years, emissions are poised to go way up at a time when Canada is facing international pressure to reduce emissions.

One solution to this problem would be to eliminate the oil sands sector. Obviously, that is not going to happen, so Alberta has become a hotbed for CCS activity, with the Alberta government committing $2 billion to advance four projects in the province.

But the fly in this ointment has always been cost. Carbon dioxide can be used for enhanced oil recovery, but even when revenue can be brought in that way, CCS is horrendously expensive for companies to pursue, as Shell Canada’s Quest project illustrates. There are experts – like University of Manitoba energy guru Professor Vaclav Smil – who doubt that even if CCS technology proves to be effective in storing carbon underground, that the industry will spend the money required to get enough projects up and running.

But what if the Chinese throw their enormous financial clout around and invest in Alberta CCS projects? Could that spur the development of enough CCS projects to drastically cut GHG emissions and allow oil sands development to grow at its forecasted rates? If China is looking to gain technical expertise in CCS, Alberta is a logical place to go looking for partnerships. The Alberta government and the oil sands sector might want to start working the phones and calling Beijing.

 

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