Shell gives go-ahead to 2 carbon capture and storage projects in Alberta

Shell Canada has announced it will forge ahead with a pair of carbon capture projects in Alberta, after recent setbacks for other proposed projects in the sector have cast doubt on the technology.

The Calgary-based operator said Wednesday it has made a final investment decision for its Polaris carbon capture project at its Scotford refinery and chemicals complex near Fort Saskatchewan.

Shell has also given the green light to proceed with the Atlas Carbon Storage Hub, in 50/50 partnership with Atco EnPower. The first phase of Atlas will permanently store carbon dioxide captured by the Polaris project, which was first proposed in 2021.

Wednesday's announcement comes amid uncertainty about the financial viability of carbon capture and storage (CCS) technology, which traps carbon emissions at their source and funnels them deep underground.

The technology is expected to play a key role in Canada's climate plan, but implementing it has proved tricky.

Other CCS projects across the country have been shelved, cancelled or continue to fall short of operational targets, despite significant investment from Ottawa and provincial governments.

The Polaris project is designed to capture about 650,000 tonnes of carbon dioxide annually from the Scotford complex.

A future phase of the Atlas hub, which could potentially store carbon for Shell, Atco and other companies, remains subject to a future investment decision.

Polaris and the first phase of Atlas are expected to begin operations toward the end of 2028 and will aid Canada meet its emission targets, company officials said.

Shell Canada president Susannah Pierce said the company has the experience and the financial backing necessary to make the projects successful, even as other companies give up on their carbon capture proposals.

She said the recent approval of the federal carbon capture sequestration tax credit — meant to help jump-start carbon capture projects — was also key in their decision to proceed.

"It is now a place in time where we feel like we have the right fiscal incentives," Pierce said in an interview Wednesday.

"We have greater certainty about the project. We've done additional design and engineering. And we're quite excited to move forward with it because we see it as a critical technology to help us to decarbonize our own Scotford facility.

"And we certainly believe that it's a critical technology that's necessary to meet Paris commitments."

Pierce said the projects will build on the success of its Quest CCS operation at Scotford. Shell developed the $1.35-billion Quest project with the help of $745 million from the Alberta government and $120 million from Ottawa.

Emissions captured by Polaris will be sent to the Atlas Hub via a 22-kilometre pipeline to two storage wells.

CO2 will be stored there approximately two kilometres underground in the Basal Cambrian Sands, the same formation of underground sandstone used to store CO2 from the Quest CCS facility.

Key to climate change targets

Carbon capture, utilization and storage has become a key plank of the Canadian oil and gas sector's decarbonization goals.

The climate plan estimates carbon capture will account for up to 16 million tonnes of emissions reductions by 2030, or about five per cent of the additional emissions reductions needed to meet the next target in 2030.

Critics, however, have repeatedly cautioned that Canada's targets should not hinge on a technology that continues to face serious setbacks.

Edmonton-based Capital Power Corp. recently pulled the plug on its plans to build a $2.4-billion CCS project at its Genesee natural gas-fired power plant southwest of Edmonton, announcing the project was no longer financially feasible.

A CCS project at Sask Power's Boundary Dam has continued to miss its emission targets.  An independent report recently declared the operation an "underperforming failure" after nine years in operation and $1 billion spent on the technology. "

Shell's Quest project has stored nine million tonnes of CO2 at a lower-than-anticipated cost since it became operational in 2015. But its capture rate of 77 per cent remains below the 90 per cent originally announced.

A recent report from the International Energy Agency said oil and gas companies need to start "letting go of the illusion" that "implausibly large" amounts of carbon capture are the solution to the global climate crisis.