Identifier
Created
Classification
Origin
05CALGARY622
2005-10-18 17:38:00
UNCLASSIFIED
Consulate Calgary
Cable title:  

WEYBURN C02 PROJECT A WIN/WIN FOR PRODUCERS AND

Tags:  ENRG EPET ETRD PGOV CA 
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UNCLAS SECTION 01 OF 02 CALGARY 000622 

SIPDIS

STATE FOR WHA/CAN, EB/ESC/ISC, EB/EPPD

USDOE FOR IA (DEVITO, PUMPHREY, DEUTSCH)

E.O. 12958: N/A
TAGS: ENRG EPET ETRD PGOV CA
SUBJECT: WEYBURN C02 PROJECT A WIN/WIN FOR PRODUCERS AND
ENVIRONMENTALISTS

UNCLAS SECTION 01 OF 02 CALGARY 000622

SIPDIS

STATE FOR WHA/CAN, EB/ESC/ISC, EB/EPPD

USDOE FOR IA (DEVITO, PUMPHREY, DEUTSCH)

E.O. 12958: N/A
TAGS: ENRG EPET ETRD PGOV CA
SUBJECT: WEYBURN C02 PROJECT A WIN/WIN FOR PRODUCERS AND
ENVIRONMENTALISTS


1. Summary: During an October visit to Regina, CG and Econ
Assistant toured the Weyburn C02 Monitoring and Storage Project
in southern Saskatchewan. The technology, introduced in 2000 by
Calgary-based EnCana and the Petroleum Technology Research
Centre in Regina, injects C02 into depleted oil reservoirs to
revive and increase production. The technology, which reduces
greenhouse gas emissions in the process, is gaining attention as
demonstrated by Apache Canada, which is preparing to open a
similar plant in southern Saskatchewan later this month. The
project represents a win/win for both producers and
environmentalists. Of the 35 billion barrels of oil deposits in
Saskatchewan, only about 15% is recoverable through conventional
means. Enhanced oil recovery through C02 injection should
increase this rate substantially. Environmentally, enough C02
will be stored to offset emissions produced by one third of all
the vehicles in Saskatchewan and all the homes in Regina. End
summary.


2. CG and Econ Assistant toured the Weyburn C02 Monitoring and
Storage Project on October 12 as part of an official visit to
the province of Saskatchewan. The C$1.1 billion project, more
commonly known as the carbon sequestration project, is located
approximately 75 miles south of Regina. Using technology that
involves injecting and storing carbon dioxide (C02) underground
into depleted oil and gas reservoirs (more than 50 years old) in
order to revive production, the project was first launched in
2000 by the Petroleum Technology Research Centre (PTRC) in
Regina, and Calgary-based EnCana Corporation, North America's
largest independent natural gas producer and gas storage
operator. While EnCana owns 62% of the project, it is also
funded by fifteen sponsors including Natural Resources Canada,
the U.S. Department of Energy, Alberta Energy Research, the
European Commission and ten industrial sponsors in Canada, the
U.S. and Japan and has the support of the International Energy
Agency (IEA) Greenhouse Gas R&D.

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Weyburn Field Suited to C02 Flooding
-------------- --------------


3. Dave Craigen, Maintenance Coordinator for the EnCana Oil and

Gas Partnership, provided a briefing of the Weyburn Unit, which
he noted is located on a 180-square kilometer (70 square mile)
oil field discovered in 1954, and part of the large Williston
sedimentary basin, which straddles Canada and the U.S. Craigen
said Phase 1A of the 20-year, C02 enhanced oil recovery (EOR)
scheme began in September 2000 and noted that the Weyburn field,
which contains approximately 1.4 billion barrels of oil, is an
ideal candidate for C02 flooding for a variety of reasons, among
them being the fact that the reservoir is continuous and the
geological sequences promote gravity segregation. In addition,
the Weyburn crude swells with the addition of C02 and has a
large viscosity reduction factor, and reduced spacing created by
the existence of horizontal wells will make the C02 process
efficient.

-------------- --------------
--------------
One Plant's By-Product is Another Plant's Fuel - North Dakota
Serves EnCana
-------------- --------------
--------------


4. Craigen explained that the project receives its C02 supply
from a coal gasification plant in North Dakota. In 1997, EnCana
and its partners signed a 20-year carbon dioxide supply
agreement with Dakota Gasification Company (DGC) to acquire
approximately 105 million cubic feet of C02 per day. DGC is a
wholly owned subsidiary of Basin Electric and Power Co-Operative
of Bismarck, North Dakota and owns and operates the Great Plains
Synfuels Plant located in Beulah, North Dakota. That plant
produces 160 million cubic feet of natural gas from coal
gasification, of which C02 is a byproduct. The C02,
approximately 95% pure, is transported in dense phase from
Beulah to Weyburn via a 323-kilometer pipeline, owned and
operated by DGC. The 105 million cubic feet of the 240 million
cubic feet of C02 available daily, which was previously vented
into the atmosphere, is now injected into the Weyburn reservoir.
A total of approximately 20 million tonnes of C02 will be
injected into the reservoir over the 20-year life of the
project. Craigen stated that the cost to acquire the 105
million cubic feet of C02 from DGC is approximately $30 million
per year. He expects C02 volumes/injections to increase by some
30 million cubic feet to 130 million cubic feet per day in 2006.


5. By improving overall recovery of oil in the area from 30%
achieved with conventional water flood or water injection since
production at the Weyburn field began in the mid-1950's, to some
46% with a C02 flood, an incremental 130 million barrels of oil
will be produced over the life of the project. Craigen stated
that, since the first C02 injection in 2000, production in Phase
1A had increased by 5000 barrels of oil per day compared to the
baseline waterflood projection. It is anticipated production
will reach 30,000 barrels of oil per day by 2008 compared to
10,000 barrels of oil per day if the C02 flood had not
proceeded. Craigen, who said tests show that the C02 will
remain safely underground for thousands of years, said the
application of C02 storage technology would have the same effect
as removing some three million cars from the road - or eliminate
between one third and one half of global emissions from the
atmosphere over the next 100 years. Saskatchewan Premier
Calvert has stated that, on an annual basis, the project traps
the amount of C02 produced by one third of all the vehicles in
Saskatchewan.

-------------- --------------
--------------
Apache Canada C02 Project "Taps Into" DGC Supplies
-------------- --------------
--------------


6. Craigen noted that Apache Canada (based in Calgary) plans to
officially open in October its own C02 project at Midale, also
located in southern Saskatchewan. Apache's project, which will
be built in phases from 2005 to 2010 at a cost of some C$95
million, will be Canada's second largest C02 project. Craigen
noted that Apache will tap into the same DGC pipeline currently
serving the Weyburn facility, and would average 25-26 million
cubic feet per day of C02. Craigen did not necessarily
characterize Apache's facility as competition, given that it
will be a smaller plant and there appears to be plenty of C02
for both projects. (The Midale field was discovered by Shell
Canada in 1953 and originally contained 515 million barrels of
oil in place. Up to the end of 2004, about 130 million barrels
had been recovered, both through primary production and
waterflood. The planned C02 flood will still leave some 60% of
the original oil in the ground, but technology improvements in
the coming decades are expected to reduce that number. Over the
40-year life of the Midale project, the volume of emissions that
would have gone into the atmosphere will be reduced by 8.75
million tonnes.) The Apache project is expected to enable
recovery of an additional 45 million barrels of oil from the
Midale field and 8.75 million tonnes of C02 stored, which
represents on a daily basis enough C02 sequestration to offset
all the emissions from all of the houses in Regina that same day.

--------------
Comment
--------------


7. The Weyburn project appears to be a win/win for both
producers and environmentalists - if the technology proves to be
efficient over the long run. While Craigen, who stated that the
technology would result in the same effect as removing millions
of cars from the road, said it is too soon to tell whether
injecting C02 into the ground will be as cost effective as
backers of the project would like it to be. Craigen emphasized
that production continues to be closely monitored. An important
issue that is certain to be addressed and negotiated in the
future is who will be awarded emissions credits for their good
deeds - DGC for transporting C02 away from their plant, or
EnCana for injecting it into the ground "for thousands of
years".



AHMED