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Oil Companies' Carbon Capture Project

Brian Hicks

Written By Brian Hicks

Posted September 7, 2012

Canada’s Athabasca Oil Sands project just got a whole lot greener, thanks to a joint effort by Royal Dutch Shell (NYSE: RDS.A), Marathon Oil (NYSE: MRO), and Chevron (NYSE: CVX).

The three companies announced that they will integrate a carbon capture and storage system into the project, which produces almost 225,000 barrels each day. When the system is completed in 2015, it will capture about 1 million metric tons of carbon dioxide per year and inject it a mile underground.

Oil sands are prime targets for environmentalist criticism since they are more carbon-intensive than other sources of oil. This is mostly because the raw sludge needs to be upgraded and made lighter before it can be sent through pipelines, and that upgrading process calls for a lot of heat. Hence, a lot of carbon dioxide is generated.

The project, called Quest CCS, will capture the carbon dioxide emanating from the Scotford Upgrader, located near Edmonton, Alberta. Then, it’ll be piped 50 miles north and forced deep underground between impermeable layers of rock.

Overall, there should be a reduction in CO2 production by about 35 percent. The project’s estimated costs are around $1.4 billion, and half of that will be funded by the Albertan government. The government has a reserve of $2 billion specifically for carbon reduction projects.

This won’t be Chevron’s first brush with carbon capture systems. At the Barrow Island LNG project in Australia, Chevron is building a fairly similar system which will inject 3.4 million tons of CO2 each year deep into the earth. The CO2 comes after separation from natural gas produced from the Gorgon Fields.

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