A new online auction house for buying and selling carbon dioxide could stimulate a lucrative CO2 industry in Alberta that boosts oil production and reduces greenhouse gases, says one of the site’s founders.
Called “the CO2 hub,” the website is a privately run, online auction designed to bring together the buyers and sellers of CO2, along with companies providing auxiliary services such as purifying industrial streams of the greenhouse gas and transporting it via pipelines.
“The whole goal of the founders of the CO2 hub is to foster the development of a CO2 industry here in Alberta,” says Michelle Heath, an energy consultant in Calgary and one of the website marketplace’s four founders.
Using CO2 instead of water or hydrocarbons to recover oil from underground reservoirs is a key component of the Alberta government’s long-term energy strategy, as well as a promising technology for reducing greenhouse gas emissions.
Carbon dioxide, produced in waste gas streams by the petrochemical, fertilizer, pulp and paper and other industries, would be captured, purified and pipelined to aging oilfields.
The CO2 would then be pumped underground to squeeze more oil out of the geological formations.
Some of the greenhouse gas would remain permanently sequestered, or stored, underground.
“In other words, you’re stripping off what you would have sent into the atmosphere and re-injecting it (underground),” Heath says.
There is enormous potential for recovering more of the oil in the Western Canadian Sedimentary Basin that underlies Alberta.
The Alberta Energy and Utilities Board (EUB) estimates the province’s potentially recoverable oil reserves to be 19.7 billion barrels.
The oil that can be economically produced using current technology is about 16.4 billion barrels, the EUB says. Of this, 14.7 billion barrels have already been produced.
That leaves a potential of at least five billion barrels of oil in the ground, Heath says. Even if CO2-enhanced recovery can bring only one or two billion barrels more to the surface, she says, it would add billions of dollars to the province’s economy.
All the CO2 exchanges done through the CO2 hub will be anonymous, Heath said. That’s because the Alberta industry is just beginning, so there’s no established or historical price for CO2 and no one knows what the supply and demand will be.
The CO2 hub – whose site features programs that automatically open auctions and links to CO2-related resources – will collect a facilitation fee for successful exchanges.
Heath, who has spent 20 years doing work in the oilpatch, says her research shows there’s a CO2 market waiting to be tapped.
“The whole idea behind this hub is for buyers to get on and find sellers that have a product at the price they need it.”
Under the Kyoto accord on climate change, Canada and other countries are setting up trading systems that will allow the private and public sectors to buy and sell credits for reducing greenhouse gas emissions. The Alberta government is also setting up a provincial trading system.
Heath says that all the volumes of CO2 exchanged through the CO2 hub will be tracked so buyers and sellers can claim these credits when the trading markets are eventually established.
Currently, Penn West Petroleum Ltd. has the only commercial CO2-enhanced oil recovery site in Alberta, a relatively small operation at Joffre northeast of Red Deer.
However, EnCana Corp. launched a $1.1-billion project in 2000 that is using waste CO2 pipelined across the border from a coal-gasification plant in North Dakota to recover more oil from an aging oilfield near Weyburn, Sask.
EnCana expects to recover at least 120 million barrels of oil over 25 years and keep about 14 million tonnes of CO2 out of the atmosphere.
To kick-start the industry here, the Alberta government in May announced a new program that offers a maximum $15 million for five years, to offset up to 30 per cent of companies’ approved costs in eligible CO2 projects.
Heath notes there is a well-established CO2 industry in the U.S, where companies are using the gas to recover at least 150,000 barrels of oil a day.
If the CO2 hub and its founders help establish a similar industry in Alberta, Heath says, “we’d be really satisfied.”
Web watch: www.theco2hub.com
