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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

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
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
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
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
GHGs from Tar to Tank

Source: NRDC, 2008

tar sands global warming the big picture
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
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.
canadian climate policy
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
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
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
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
kai kos dehseh in situ project
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

upgrader project
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.
carbon capture storage ccs
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 projects global warming
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
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
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
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
Questions
  • Visit www.oilsandswatch.org
  • Dan Woynillowiczdanw@pembina.org

1-403-538-7782

  • Simon Dyer

simond@pembina.org

1-403-721-3937

norway statoil the tar sands
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.”