Avoid using taxpayer dollars for Alberta CO(2) pipeline; project currently uneconomic and not needed

    CALGARY, May 31 /CNW/ - Building a backbone pipeline to carry carbon
dioxide (CO(2)) from the Fort McMurray region to central Alberta for use in
enhanced oil recovery currently doesn't make economic sense and public funds
should not be used on the project, according to a new report from The Fraser
Institute, an independent research organization with offices across Canada.
    "Demand for CO(2) to enhance oil recovery is limited and local supplies
can meet that requirement," said Gerry Angevine, senior economist with The
Fraser Institute's Centre for Energy Policy Studies and co-author with Dara
Hrytzak-Lieffers of the report, The Business Case for a Backbone CO(2)
Pipeline in Alberta.
    "From a business perspective, the major beneficiaries of a CO(2) pipeline
would be enhanced oil recovery operators and, to a lesser extent, the large
emitters in the oil sands region around Fort McMurray. There is no case for
subsidizing a pipeline to benefit these private companies."
    Injecting CO(2) into an oil field with declining production can extend
the life of the field. The technique has been utilized with some success in
Texas and elsewhere but has been constrained in Alberta by the availability of
relatively cheap hydrocarbons (such as ethane) for use in the injection
process, and the absence of readily available low-cost supplies of CO(2).
    The idea of using CO(2) to enhance recovery of oil from older reservoirs
where production rates have declined has grown in popularity, especially with
industry looking for ways to reduce and/or capture CO(2) emissions in the face
of oncoming Alberta government regulations calling for reductions in
greenhouse gas emissions. Additionally, environmentalists are supportive of
the pipeline concept because it could transport CO(2) to depleted petroleum
reservoirs for storage, thereby decreasing the amount of CO(2) released into
the atmosphere.
    In March this year, the Alberta and federal governments announced an
interest in identifying the challenges associated with a large-scale carbon
dioxide capture and storage system to capture and transport CO(2) for use in
enhanced oil recovery or for underground capture and storage.
    The Business Case for a Backbone CO(2) Pipeline in Alberta examines the
possibility of a CO(2) pipeline being constructed from the Fort McMurray area
and addresses the likely growth in demand for CO(2) for enhanced oil recovery
injection as well as the outlook for CO(2) supply sources in the province and
their associated costs.
    "Currently, demand for CO(2) for enhanced oil recovery in Alberta is very
limited with only one small, commercial operation and there's a great deal of
uncertainty as to how quickly and to what extent the demand for CO(2) to boost
oil production will grow," Angevine said.
    According to the study, a relatively large supply of low-cost CO(2) is
likely to become available at existing and new bitumen upgraders in the
Edmonton/Fort Saskatchewan area, a region geographically closer to the oil
fields where enhanced oil recovery operations utilizing CO(2) could become
commercially feasible.
    "This supply from Edmonton/Fort Saskatchewan, an area often referred to
as the Alberta industrial heartland, is more than sufficient to meet the needs
of enhanced oil recovery operations for years to come," Angevine said.
    "Consequently, I don't see how anyone can justify the cost of building an
extensive backbone pipeline from Fort McMurray. And given the outlook for
CO(2) supply and demand in the province without such a pipeline, one certainly
can't justify the use of taxpayer funds for the project."

    The Fraser Institute is an independent research and educational
organization based in Canada. Its mission is to measure, study, and
communicate the impact of competitive markets and government intervention on
the welfare of individuals. To protect the Institute's independence, it does
not accept grants from governments or contracts for research. Visit
www.fraserinstitute.ca.

For further information: Gerry Angevine, Senior Economist, The Fraser
Institute, Centre for Energy Policy Studies, Tel. (403) 216-7175, ext. 224,
Email: gerrya@fraserinstitute.ca; Dean Pelkey, Associate Director of
Communications, The Fraser Institute, Tel: (604) 714-4582, Email
deanp@fraserinstitute.ca