June 30, 2020
Minimizing risk to investors vital to carbon capture and storage
Alberta’s comprehensive legal framework for CO2 can help Mexico reduce its greenhouse gas emissions as it moves toward a lower-carbon economy, says a University of Calgary researcher.
“It’s a natural connection for Alberta to share its experience with developing and regulating carbon capture and storage sites with Mexico,” says Allan Ingelson, a professor cross-appointed in the Faculty of Law and the Haskayne School of Business.
The legal issues facing both jurisdictions are outlined in an article by Ingelson that was recently published in the U.K. in Environmental Liability: Law, Policy and Practice. The paper was spurred by a memorandum of agreement in 2017 between Mexico and the university’s Global Research Initiative (GRI) to share the university’s expertise in environmental solutions for oil and gas development.
Project largest in the world
Alberta has decades of experience with carbon capture, use and storage (CCUS), which involves injecting CO2 into depleted oil reservoirs to extend oilfield production, says Ingelson. This injection process can be applied to carbon capture and storage (CCS) projects, which are solely designed to permanently store CO2 in deep subsurface reservoirs, he says.
“Mexico’s laws are not as advanced in terms of CCS,” says Ingelson. “They haven’t yet developed the legal framework that Alberta has.”
As part of a CCUS system, the world’s largest capacity pipeline for CO2 from human activity recently began operations in Alberta. The $1.2-billion Alberta Carbon Trunk Line project involves the capture of about 70 per cent of emissions from the Sturgeon oil refinery and the Redwater fertilizer plant.
Emissions are transported via pipeline 240 kilometres for injection and storage into a depleted oil reservoir near Red Deer, with the system expected to capture and store at least 1.8 megatonnes of CO2 per year — the equivalent of the emissions from 339,000 cars. It could potentially be expanded to 14.6 megatonnes per year, or more than 2.6 million cars.
But there is a potential tort — a wrongful act or infringement of a right leading to civil liability — and statutory liability arising from such projects, says Ingelson. If more private investment is to occur, particularly for CCS projects in both Mexico and Alberta, it is vital to clearly minimize the risk through careful site planning prompted by comprehensive and certain regulatory frameworks, he says.
Storage will be 'forever and ever'
“A key issue the Alberta government has addressed is, ‘What if there is a leak of CO2?’ on the basis that we are planning on storing this gas basically forever and ever,” he says.
The risk of CO2 leaks from deep reservoirs causing health and property damage is regarded as low. Although University of Calgary scientists are currently studying CCS at a site near Brooks, Alta., CCS has been in use since the 1960s and is considered to be safe.
But CO2 leaks totalling as little as one per cent could potentially thwart the response to global warming, and the gas in high concentrations can asphyxiate nearby animals and people if it escapes, even if the chance of such things happening is low. Other potential problems could include induced earthquakes.
The polluter pays is a general principle in Alberta, as outlined in the Alberta Environmental Protection and Enhancement Act, says Ingelson. “If you develop and operate an industrial facility, you must pay for damage that your facility causes,” he says.
Although a certain legal framework has been created to encourage the development of more CCS projects in Alberta by boosting investor confidence, the much smaller number of such projects compared to CCUS will likely continue in the province, he says.
Enhanced oil recovery from CCUS provides additional revenues via oil production, making them more attractive to private investors, says Ingelson. Due to lower world oil prices in the near term, there is likely to be more interest in CCUS in Mexico as well, he says.