7 Fernandez CCS and EOR - MF December 5 2011

Alberta – Regulating Carbon Capture and Storage : 

Alberta – Regulating Carbon Capture and Storage December 5, 2011 Mike Fernandez Director, CCS Policy and RFA CCS Development Alberta Energy

PowerPoint Presentation: 

Alberta covers 661,190 km 2 (255,285 miles 2 ), an area which is about the same size as Texas & slightly larger than France Alberta Anchorage 2,277 km ( 1415 miles) Vancouver 817 km ( 507 miles) Mexico City 3,973 km ( 2,469 miles) New York City 3,270 km ( 2,032 miles) Ottawa 2,847km (1,769 miles) • • • • • United States Canada Mexico

Energy Resources in Alberta: 

Energy Resources in Alberta

CO2 is a significant challenge: 

CO 2 is a significant challenge

Alberta CCS Projects: 

Edmonton Calgary WELLHEAD SHALE SEALS TARGET FORMATION SALT SEALS Intermediate Casing Main Injection Casing Cement Surface Casing Tubing Packer Assembly Perforations allow CO 2 to penetrate the formation Shell Quest Alberta CCS Projects

Regulating CCS: 

Regulating CCS CCS Statutes Amendment Act, 2010 Passed December 2010 Key aspects: Pore Space Ownership Long-term liability Post -closure Stewardship Fund Tenure Agreements

Regulating CCS: 

Regulating CCS CSA -“Geological Storage of Carbon Dioxide” Led by CSA but built jointly with ANSI Closure, site selection, risk assessment Out for public review ISO Canada and China will co-chair the development an international CCS standard

Regulating CCS – Next Steps: 

Regulating CCS – Next Steps Regulatory Framework Assessment Essentially a giant audit of our system Uses international expertise Recommendations in late 2012 Site selection Site closure Fund rates

PowerPoint Presentation: 

Thank you Mike.Fernandez@gov.ab.ca

EOR in the RFA: 

EOR in the RFA While EOR is not in the scope of our review we are talking a great deal about how to transition from EOR to CCS. Different credit protocols Would we assume liability? Would they pay into the fund?

Long-term Liability: 

Long-term Liability After issuance of a closure certificate: Alberta becomes owner of CO 2 Alberta assumes obligations under environmental legislation Indemnifies lessee against damages

Carbon Sequestration Tenure Regulation: 

Carbon Sequestration Tenure Regulation Passed April 2011 Allows the Minister to enter into agreements under Part 9 of the Mines and Minerals Act . Creates two separate agreements: -Evaluation Permit -Carbon Sequestration Lease

Post-closure Stewardship Fund (PCSF): 

Post-closure Stewardship Fund (PCSF) Funded by a levy applied per tonne of CO 2 injected. Money will be applied toward MMV and other post closure obligations assumed by Alberta. Rates are yet to be determined, currently building the methodology.

CO2 management is a significant challenge: 

CO 2 management is a significant challenge 450 Mt CO 2 capacity for EOR 1.4 billion incremental barrels Estimated worth $105 billion $11-25 billion in additional royalties and taxes Howevrm it si CCS that will allow