NEW ENHANCED OIL RECOVERY PROJECT UNVEILED IN WESTERN CANADA

Tamar Hallerman
GHG Monitor
05/25/12

Oil and gas company Husky Energy unveiled a new enhanced oil recovery project on the Alberta-Saskatchewan border town of Lloydminster at a ribbon-cutting ceremony late last week. The project, which began operating in mid-March, is capturing 250 tons of CO2 per day from one of the company’s ethanol plants and converting the gas into a high-pressure liquid, which is then transported via tanker trucks to Husky’s nearby heavy oil reservoirs for enhanced oil recovery operations, according to the company. “The CO2 Capture and Liquefaction project represents how we are capturing full value from our facilities, and how we’re using technology to improve our performance,” Husky Energy CEO Asim Ghosh said in a company statement. A Husky Energy representative declined to provide more information on the project.

No cost estimates for the project were released. However, Husky Energy—western Canada’s largest ethanol producer that also owns substantial oil and gas assets in the region—received $14.5 million in federal and $9 million in provincial funding for the project. Natural Resources Minister Joe Oliver said that the project will help Canada “further solidify its position as a leader in clean energy technologies.” “Because of this project and others like it, Canada is in an excellent position to lead the world in the development, implementation and deployment of carbon capture and storage,” he said in a statement.

Project Moves Forward in Wake of Project Pioneer Cancellation

The ethanol capture project is the first CO2-EOR project to move forward since TransAlta announced late last month that it was folding its Project Pioneer because it could not secure suitable EOR contracts for its captured CO2 (see related story). However, circumstances differ significantly given that Husky—which is majority-owned by Hong Kong billionaire Li Ka-Shing—is in control of the full project value chain from source to sink. Transport costs are also diminished given that trucks are cheaper, albeit less environmentally friendly, than installing CO2 pipelines that can often run $1 million to $2 million per mile.

The project is the second ethanol-based capture venture to begin operations over the last six months. Injection of CO2 captured from food processing company Archer Daniels Midland’s ethanol plant in Decatur, Ill., began last November in the Mount Simon geologic formation. The Department of Energy, through its Midwest Geological Sequestration Consortium, has been overseeing the CO2 injection and storage onsite, and to date hundreds of thousands of tons of CO2 have been injected into the formation.