Abu Dhabi--There is a strong business case scenario for carbon capture, even without carbon taxes and cap and trade. And that could be a good thing or a bad one, depending on your perspective.

The key is how you feel about the tar sands in Alberta, Canada. If you took 450 million tons of carbon dioxide from power plants and sold it to oil producers for enhanced oil recovery, you could double the existing, economically recoverable oil reserves in the region from 1.4 billion barrels to 2.8 billion barrels, estimated Jim Carter, chair of the Alberta Carbon Capture & Storage Development Council, during a presentation at the World Future Energy Summit that took place this week in Abu Dhabi. (Correction: we initially referred to Carter at  Jim Allen.)

If oil sold for $50 a barrel (low by the current price), the additional reserves would result in $70 billion in extra revenue, or more than the cost of capturing the carbon. Canada’s government, he added, would garner billions in royalties too.

Even if you took out the value of the recovered oil, the economic outlook for carbon capture continues to increase, he added. It takes around $150 to capture and sequester a ton of carbon dioxide. The oil industry will pay almost $110 a ton for carbon dioxide at the well head. That means carbon would cost $40 a ton to sequester. However, the capital and operational costs of sequestration should go down. The cost of sequestering acid rain is half of what it cost back in the late 80s. If the same sort of math applies, carbon should then generate revenue of $35 a ton.

Exploiting captured carbon dioxide in this manner, however, would lead to more carbon being injected into atmosphere. Proponents assert that fossil fuels will remain a staple of the energy market for decades, so using carbon dioxide in this manner is necessary to meet the world’s voracious and growing demand for energy.  Critics, though, argue that coming up with ways to get more oil out of the ground will diminish investment in biofuels.

Alberta, he added, is serious about carbon capture. The province will dedicate $2 billion to carbon capture, or more than the national Canadian government. It has already chosen four projects to fund—two at the oil sands and two for retrofitting coal plants—and will likely select another. The goal is to have three to five projects implemented by 2015. Alberta produces 200 million tons of carbon dioxide now and the figure, without preventative measures, will rise to 400 million by 2050.

“We want to take 200 million tons (of carbon dioxide) out of the province and 139 million tons will come from CCS,” he said.

He also added some factoids about the tar sands. The tar sands produce 1.5 million barrels a day, a figure that will rise to 3 million barrels by 2030. In all, the productive area of the sands occupies 530 square kilometers. “That’s about 2/3rds the size of Los Angeles,” he said. Approximately 4,800 square kilometers are mineable. However, the sands are in boreal forest that covers 361,000 square kilometers.

Canada produces two percent of the world’s carbon dioxide and the sands account for only 4.5 percent of that total. By contrast, U.S. coal plants account for 9 percent of the world’s carbon dioxide. Oil sands producers recycle 85 percent of their water and reuse it 19 times. The energy required to extract oil has reduced by 40 percent since 1990. So there.

Expect to hear a lot more about carbon capture in the coming two years. People and experts generally agree on the need for some type of carbon capture. The International Energy Agency has estimated that carbon capture will have to account for 20 percent of the total carbon dioxide reductions by 2050 just to keep the level of carbon in the atmosphere at 450 parts per million level, considered by many the maximum level humanity can endure.

By 2030, the world, ideally, will have 850 CCS plants storing 2,000 gigatons a year. By 2050, the number of CCS plants should grow to 3,400 projects said Nick Otter, who heads up the Global Carbon Capture and Storage Institute, a think tank supported by $200 million from the Australian government.

“We’re talking about 20 percent of the CO2 reduction coming from carbon capture and sequestration,” he said.

Unfortunately, carbon capture technology largely exists in theory right now. Although the Institute has identified 62 major projects that are underway or will likely get done, only a few token demo plants exist now. Only 18 might be complete by 2015. And even getting those 18 constructed remains a challenge.

“2010 is the crucial year. If we don’t have the demonstration plants, we won’t be able to have the commercial plants in 2020,” said Graeme Sweeney, the executive in charge of carbon dioxide at Shell.

 Debates continue over which technology might work best. Sweeney said that post-combustion technologies—where carbon gets captured after coal is burned—is the easiest to deploy. Capture equipment can be added to existing power plants.

Gardiner Hill, special advisor to BP on CCS and Alternative Energy, disagrees. Pre-combustion technologies—where coal is converted to natural gas and carbon dioxide is captured before the gas is burned—is far less technologically complex. Pre-combustion technologies for natural gas are also being experimented with. BP and Abu Dhabi hope to set up a plant by 2014 that will take natural gas, convert it into hydrogen and carbon dioxide, and then run the hydrogen through a turbine.

 

 

Tags: abu dhabi, alberta, bp, carbon capture. tar sands, coal, natural gas, oil, post cobustion, pre combustion, shell, world future energy summit.