Download Document

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.”