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Sustainable Energy Solutions The Energy and Global Warming Implications of Canadian Tar Sands Development Dan Woynillowicz Director, Strategy & External Relations August 26-27, 2008 © 2006 Pembina Institute www.pembina.org About the Pembina Institute One of Canada’s largest environmental NGOs Sole focus: sustainable energy Research, education, consulting, advocacy Canada’s leading NGO on oil sands and climate policy: www.oilsandswatch.org climate.pembina.org Overview Tar Sands: A new fossil fuel frontier. Canada’s climate change contradiction. Trends & policy. Statoil’s proposed tar sands investment. Project & lifecycle GHG emissions. A New Fossil Fuel Frontier Tar sands represent a radically different form of fossil fuel production Bitumen extracted from tar sands & upgraded to produce “synthetic” crude oil (SCO) Significant energy requirements: In situ extraction + upgarding requires ~ 1500 cf of natural gas per barrel of SCO Tar sands production is 3-5 times more GHG intensive than conventional oil On a full cycle basis the tar sands are 10-30% more GHG intensive than conventional oil GHGs from Tar to Tank 12% 4% 3% 0% 11% 0% Bitumen Extraction Bitumen Upgrading Transportation to U.S. Refineries Storage Fuel Production/Refining Fuel T&D Fuel Storage Tank to Wheel Emissions 0% 70% Source: NRDC, 2008 Tar Sands & Global Warming: The Big Picture Proven reserves: 174 billion barrels 2006 direct GHG emissions from oil sands (1.1 million bpd): 29 Mt Direct emissions are only ~15 % of full cycle emissions Norway’s 2007 GHG emissions: 55 Mt Tar Sands & Global Warming: The Canadian Context Kyoto commitment is 6% below 1990 by 2012. Tar sands production is predicted to triple to 3.8 million bpd by 2020. Tar sands emissions represent up to half Canada’s BAU emissions growth to 2020. 4% Megatonnes CO2 equivalent / year Canada’s climate contradiction: 1000 900 800 700 600 Canada's emissions 500 400 300 200 100 12% 4% 0 2006 oil sands 2020 Canadian Climate Policy Abandoned Kyoto commitment to 6% below 1990 by 2012. Government of Canada’s new target is 2% above 1990 by 2020 (8% above 2012 Kyoto commitment). Government of Canada’s current plan for industrial emissions: Uses 2006 as a baseline (rather than 1990). Sets intensity-based target (not absolute reductions). Does not take effect until 2010. Fraught with loopholes. Climate Policy & Tar Sands The federal government’s plan will allow GHG emissions from tar sands to increase from 29 Mt (2006) to 80 Mt (2017) before dropping to 49 Mt (2020). Facilities starting in 2012 or later will face emission intensity targets based on CCS: But not starting until 2018. CCS target has not been set. No details on compliance options. A Climate Change Laggard Canada has backed away from any leadership on climate change: Have adopted a very weak target. Blocking progress at international climate change negotiations. Government policy is too weak to meet this weak target Too complex, too far from cap-and-trade or carbon tax. The bulk of reductions are delayed for a decade. Carbon price likely too low to incent CCS, even in 2018. Statoil’s Tar Sands Investment 1. Kai Kos Dehseh in situ extraction project 220,000 barrels bitumen per day 218 wellpads, 1,050 well pairs ~ 40 year operation 2. Upgrader project Input: 243,000 barrels bitumen per day Output: 222,800 barrels synthetic crude oil per day Kai Kos Dehseh in situ Project Technology: Steam Assisted Gravity Drainage (SAGD) Production: 220,000 barrels per day (bpd) bitumen Steam to Oil Ratio (SOR) = 3:1 Bitumen recovery: 46% Average GHG Emission Intensity: 60 kg CO2e/barrel Best in Class GHG Emission Intensity: 34 kg CO2e/barrel In situ GHG Emissions Intensity 0.2000 0.1800 0.1600 StatOil CO2e t/barrel bitumen "Best in Class" CO2e t/barrel bitumen 0.1200 0.1000 0.0800 0.0600 0.0400 0.0200 Year 50 48 20 46 20 44 20 42 20 40 20 38 20 36 20 34 20 32 20 30 20 28 20 26 20 24 20 22 20 20 20 18 20 16 20 14 20 12 20 20 10 0.0000 20 CO2e/barrel 0.1400 Upgrader Project In: 243,000 bpd bitumen Out: 222,800 bpd synthetic crude oil Average GHG emission intensity: 99.8 kg CO2e/barrel (33.4 with CCS) “Best in Class” GHG emission intensity (without CCS): 14 kg CO2e/barrel Competitors achieving similar GHG intensity without CCS. BA En H th W es t la nd pg ra d er 3 1 20.00 U pg ra de r U 2/ Ph Ph eo n ur g ur ge on ea rt St St Ba se Ex p 2 CS 60.90 N or gy er ro -C an ad a C or d + d ot fo r Sc Ba se Sc ot f ou t CC S 32.90 Pe t ro -C an ad a an ad a ot fo rd Sc w ith w ith 33.40 Pe t lC an ad a -- -- Sh el l pg ra de r 100.00 Sh el lC U pg ra de r 40.00 Sh el il U Intensity (kgCO2e/barrel of bitumen) St at O il St at O Upgrading Emissions Intensity 120.00 99.58 92.80 80.00 62.60 60.00 40.60 33.60 14.00 0.00 Carbon Capture & Storage (CCS) Statoil not considering CCS for Kai Kos Dehseh in situ project. Statoil considering CCS for upgrader but: “..dependent on a suitable outlet for the CO2, the existence of an appropriate fiscal and regulatory regime, and availability of adequate infrastructure to transport and store the CO2.” Alberta does not currently have: GHG reduction targets that would compel CCS. A sufficiently high price on carbon to compel CCS ($15/tonne penalty). Any carbon transport or injection infrastructure. Statoil’s Tar Sands GHG Emissions 450 In situ CO2e Emissions (Mt) 400 In situ + upgrading with CCS CO2e emissions (Mt) In situ + upgrading without CCS CO2e emissions (Mt) 350 300 250 Cumulative GHG Emissions (MT) 200 150 100 50 Year 48 20 45 42 20 20 39 36 20 20 33 30 20 20 27 24 20 20 21 18 20 20 15 12 20 20 09 20 20 06 0 Statoil’s Tar Sands Projects & Global Warming Statoil’s estimated tar sands reserves: 2.37 billion barrels Estimated life cycle GHG emissions per barrel: ~1.03 t/barrel without CCS Life cycle GHG emissions from Statoil’s tar sands projects: 2,448 Mt Greenwashing the Tar Sands? The UK Advertising Standards Authority found that Shell’s description of the oil sands as “sustainable” breached standards for: Substantiation, truthfulness, environmental claims How is Statoil describing its oil sands development? “I am confident that we will surpass our goals of sustainable development in the oil sands.” - Geir JØsang, President and CEO “About Statoil…Goal is to create value for our owners through profitable and safe operations and sustainable business development without causing harm to people or the environment.” (emphasis added) Source: Environment Report – 2007 Annual Report, North American Oil Sands Corporation/Statoil Norway’s Climate Change Commitments 10% below 1990 by 2012 30% below 1990 by 2020 Carbon neutral by 2050 Annual GHG emissions ~55 MT in 2007 Statoil’s peak annual emissions from tar sands (2021 = 13 Mt) are equivalent to 24% of Norway’s 2007 national emissions Markets Shifting to Lower Carbon Fuels Growing U.S. concern about climate change Next administration likely to impose cap & trade California’s “Low Carbon Fuel Standard” being adopted throughout U.S./Canada - possibility of federal LCFS Section 526 of the federal Energy Independence & Security Act (2007) U.S. Conference of Mayor’s resolution Questions Visit www.oilsandswatch.org Dan Woynillowicz [email protected] 1-403-538-7782 Simon Dyer [email protected] 1-403-721-3937 Norway, Statoil & the Tar Sands Norway’s leadership on climate creates high expectations for StatoilHydro Does Norway’s carbon neutral target cover all state-owned operations? Does government ownership create extra capacity and flexibility for leadership? Shell is currently the leader: Initial operation: absolute GHG target 50% below BAU “Shell Canada remains committed to setting an emissions reduction target or goal for new facilities (on a full cycle basis) that is better than the "most likely commercial supply alternative at start-up". For the MRM Expansion 1 Project, we plan to set out a GHG commitment and management plan in 2007, which will achieve a meaningful reduction of GHG’s below business as usual.”