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Alberta's Best Hope

 

Alberta's Best Hope  

Tom Markowitz - Sunday, May 06, 2012

Welcome to Enerhope
 

 

Alberta’s Best Hope

© Enerhope.com 2012

This article will be published on the web sites www.Enerhope.com  and www.cogencanada.org   in May, 2012.

The battle lines are drawn! The Canadian Province of Alberta is locked in battle with environmental protesters over Alberta’s fabulous Oil Sands. Movie celebrities are shuttling back and forth between Hollywood and Washington, complaining to their congressional representatives that the USA is buying “dirty” oil from the “Tar” Sands to fuel their white stretch limousines and private jet aircraft. In the USA and Europe, leaders are now considering various new regulations, to prevent or seriously impair any imports of Canadian Oil Sands products into those countries. Despite its fabulous energy and economic potential, the development of the Oil Sands may be prevented by opposition to greenhouse gas emissions.

 

On the other side, Alberta narrowly avoided electing a belligerent climate change denier government in the provincial general election on April 23rd.

According to the Canadian Energy Research Institute, in 2011, the Oil Sands produced 1.6 million barrels per day of bitumen (heavy oil) (1 Barrel = 159 litres) and emitted 53 megatonnes of CO2 equivalent into the atmosphere. With unchecked growth and no reductions in greenhouse gas emissions, the industry will produce between 4.0 and 6.0 million barrels per day in 2030, and emit between 127 and 174 megatonnes per year of greenhouse gases.

http://www.ceri.ca/index.php?option=com_content&view=article&id=97:ceri-study-128&catid=1:latest-news

 

 

Can the industry sustain growth in production, while reducing its greenhouse gas emissions?

 

The Alberta Government acknowledges the importance of reducing Alberta’s greenhouse gas emissions. Alberta’s Climate Change Strategy (2008) states,

“Alberta has both a responsibility and an opportunity to take decisive action to reduce greenhouse gas emissions.”

http://environment.gov.ab.ca/info/library/7894.pdf

According to the Strategy, Alberta will reduce its greenhouse gas emissions, even with massive growth in the oil and gas industry. Alberta’s target for total emissions in 2050 is only 157 megatonnes, which is much less than the 226 megatonnes emitted in 2010.

According to the Strategy, the major activity for emission reductions will be Carbon Capture and Storage (“CCS”), wherein carbon dioxide is separated from the exhaust streams of fossil fuel combustion, compressed to high pressure, piped to specific locations, and pumped into permanent storage in the ground at great depth. Demonstration projects have proven CCS to be a technical success, especially where the pressure of the injected carbon dioxide forces petroleum to the surface.

However, the economics of CCS have been disappointing. On April 27th, the Edmonton Journal reported that three major energy companies have abandoned their plan to build the $1.4 billion(Canadian) Pioneer CCS plant beside the Keephills 3 coal-fired electricity generating station. The project was expected to capture one megatonne of carbon dioxide every year for the next 10 years.

http://www.edmontonjournal.com/business/TransAlta+partners+bail+carbon+capture+project/6523712/story.html

Although Pioneer will not go ahead, three other demonstrations in Alberta are still proceeding.

The financial incentive for greenhouse gas emission reductions does not appear to justify the cost of building and operating a CCS plant.

Alberta’s emissions trading system, the Specified Gas Emitters Regulation, allows large direct emitters to pay for their excess emissions by contributing $15.00 per tonne of excess CO2 to the Alberta Climate Change and Emissions Management Fund.

In contrast, the cost of disposing of CO2 by CCS is quoted at from $70.00 to more than $150.00 per tonne, according to the Final Report (2009) of the Alberta Carbon Capture and Storage Development Council.

http://www.energy.gov.ab.ca/Org/pdfs/CCS_Implementation.pdf

At this point, Carbon Capture and Storage, the central activity of Alberta’s Climate Change Strategy, appears to be doubtful for major reductions in greenhouse gas emissions.

Without Carbon Capture and Storage, how can Alberta reduce greenhouse gas emissions from its growing Oil Sands industry?

Cogeneration, and Emissions Trading

What is cogeneration? Please see Enerhope’s January, 2011 article, Cogeneration and Emissions Trading

http://enerhope.advancedwebsites.ca/_blog/January_2011_-_Cogeneration_and_Emissions_Trading

Currently, in the Oil Sands, natural gas boilers produce large quantities of steam, which is used to separate the bitumen from the sand, or to recover bitumen from underground. These steam boilers are a large source of greenhouse gases.

Another fact:  In Alberta, most electrical energy is generated by coal-fired generators, with high greenhouse gas emissions.

If 50% of the existing natural gas boilers in the Oil Sands were replaced by natural gas-fired cogeneration units, and the generated electricity were sold to the Alberta grid, replacing coal-generated electricity. Alberta’s greenhouse gas emissions would drop by 23 megatonnes per year, or 10% of Alberta’s 2010 total. The total generated power would be about 5100 megawatts, which is less than Alberta’s minimum base load of about 7000 MW. (calculations available on request) The total greenhouse gas emissions per barrel of fuel product would actually be lower than the emissions for fuel from conventional petroleum sources. This calculation is based on 2010 data. Future savings would be even more impressive.

This cogeneration opportunity in the Oil Sands was identified in Life Cycle Assessment Comparison of North American and Imported Crudes, a report to the Alberta Energy Research Institute, in 2009.

http://www.albertainnovates.ca/media/15753/life%20cycle%20analysis%20jacobs%20final%20report.pdf

The opportunities for cogeneration in the Oil Sands were also identified by Dr. Eddy Isaacs, of Energy and Environment Solutions, in The Oil Sands in a Low Carbon Fuel Economy, a presentation at the University of Alberta in 2010. Isaacs identified the opportunity for cogeneration to reduce greenhouse gas emissions, but admitted, “The methodology for cogen credits is uncertain.”

http://www.ai-ees.ca/media/15656/isaacs%20-%20uofa%20chem%20eng%20lecture%20oil%20sands%20in%20low%20carbon%20fuel%20economy-%20jan.%202010.pdf

The Oil Sands industry itself is aware of the possibilities of cogeneration. The Oil Sands Developers Group, Cogeneration and Power Infrastructure Group has surveyed the industry on the current extent of cogeneration and the prospects for future expansion. Here is the URL of the 2011 Report of this group:

http://www.oilsandsdevelopers.ca/wp-content/uploads/2011/06/OSDG-2011-Co-gen-Report-June-16-2011.pdf

According to the 2011 Report, Oil Sands developers in 2010 and earlier were planning to build only sufficient cogenerating capacity to supply their own on-site power needs. The industry currently has installed about 1,800 megawatts of cogeneration capacity. The industry appears to be cautious about future cogeneration. Industry members reported some concerns about the cost of paying for standby capacity from the Alberta Grid. Another concern is that any surplus power that a cogenerator might want to sell to the Alberta Grid would be at disappointing low price. A strong financial incentive for cogeneration does not appear to be in place. The Report predicts that by 2020, installed cogeneration capacity will be between 3,100 and 3,800 MW, which is small, considering the forecast of total bitumen production in 2020. Clearly, a price mechanism to reward cogeneration is needed, in order to promote wide-scale use of cogeneration in the Oil Sands industry. (Remember that this report was compiled in late 2010, when natural gas prices were higher than today.)

The opportunities for cogeneration in the Oil Sands are now greater than in the past, because:

1)         Alberta is under great pressure to reduce greenhouse gas emissions.

2)         Natural gas prices have fallen, and show no sign of increasing.

3)         The competing technology for emission reductions, carbon capture and storage, appears to be economically unfeasible.

In order to facilitate a transformation from base load coal to base load  cogeneration, Alberta needs:

1)         A new, high-voltage transmission line between the Oil Sands area and southern Alberta. (currently planned)

2)         An emissions trading system, that would discourage high-emission electricity, reward low-emission electricity, and allow credit for cogenerated steam. (Alberta’s current Specified Gas Emitters Regulation will expire in 2014, and should be replaced by a well-designed cap-and-trade system.) See Enerhope’s September, 2011 article, Alberta’s Baseline and Credit Emissions Trading System.

http://www.enerhope.com/_blog/Alberta's_Baseline_and_Credit_Emissions_Trading_System_-_September,_2011

3)         The necessary infrastructure for electricity, natural gas and steam within the Oil Sands area. (an opportunity for government – utilities - industry collaboration)

4)         A cooperative agreement among cogenerators, to insure individual cogenerators against the extra costs of power outages.

5)         A positive regulatory attitude toward environmentally beneficial cogeneration projects.


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