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The Energy and Global Warming Implications of Canadian Tar Sands Development

The Energy and Global Warming Implications of Canadian Tar Sands Development. Dan Woynillowicz Director, Strategy & External Relations August 26-27, 2008. About the Pembina Institute. One of Canada’s largest environmental NGOs Sole focus: sustainable energy

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The Energy and Global Warming Implications of Canadian Tar Sands Development

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  1. The Energy and Global Warming Implications of Canadian Tar Sands Development Dan Woynillowicz Director, Strategy & External Relations August 26-27, 2008

  2. 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

  3. 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.

  4. 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

  5. GHGs from Tar to Tank Source: NRDC, 2008

  6. 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

  7. Tar Sands & Global Warming:The Canadian Context • Canada’s climate contradiction: • 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.

  8. 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.

  9. 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.

  10. 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.

  11. Statoil’s Tar Sands Investment • Kai Kos Dehseh in situ extraction project • 220,000 barrels bitumen per day • 218 wellpads, 1,050 well pairs • ~ 40 year operation • Upgrader project • Input: 243,000 barrels bitumen per day • Output: 222,800 barrels synthetic crude oil per day

  12. 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

  13. In situ GHG Emissions Intensity

  14. 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.

  15. Upgrading Emissions Intensity

  16. 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.

  17. Statoil’s Tar Sands GHG Emissions

  18. 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

  19. 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

  20. 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

  21. 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

  22. Questions • Visit www.oilsandswatch.org • Dan Woynillowiczdanw@pembina.org 1-403-538-7782 • Simon Dyer simond@pembina.org 1-403-721-3937

  23. 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.”

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