Canada backs Alberta CO2 pipeline plan

CALGARY, Alberta Tue Nov 24, 2009 5:29pm EST

CALGARY, Alberta (Reuters) - The Canadian and Alberta governments said on Tuesday they will invest as much as C$558 million ($525 million) in a pipeline project to carry carbon-dioxide from an industrial region near Edmonton, Alberta, to aging oil fields.

The pair are backing the project by closely held Enhance Energy Inc and North West Upgrading as part of a scheme to cut emissions of the gas, blamed as the chief cause of global warming.

The Alberta Carbon Trunk Line will be capable of carrying up to 40,000 tonnes of compressed carbon dioxide per day but will initially take 5,100 tonnes of gas daily produced by North West's planned oil sands upgrader to be built near Fort Saskatchewan, Alberta, where a number of other refineries, upgraders and chemical plants are also located.

It will carry the gas to aging oil field in the central part of the province, where pumping it into the reservoirs will remove the it from the atmosphere and help increase oil production.

"This new pipeline will significantly advance Alberta's capacity for future carbon capture and storage projects ," Alberta Premier Ed Stelmach said in a statement. "The Alberta Carbon Trunk Line will be the backbone of CO2 transportation for Alberta."

Alberta will provide C$495 million over 15 years for the line, with the cash coming from a C$2 billion fund set aside to spur carbon capture projects.

The project is the third in Alberta to get funding from the province and from the Canadian government's C$1 billion Clean Energy Fund, set up to develop technology to help cut greenhouse gas emissions.

The federal government is providing C$63 million, with C$30 million coming from the clean energy fund and an additional C$33 million from a separate technology fund.

Ottawa has said it seeks to cut greenhouse gas emissions by 20 percent from 2006 levels by 2020.

Last month the two governments also agreed to fund some of the costs of carbon-capture and storage projects at an Alberta coal-fired generating station and an oil sands upgrader.

Some environmentalists have criticized the strategy, saying public money is being funneled into projects proposed by large polluters with uncertain results when it could be invested in alternative energy sources and conservation.

Natural Resources Canada said in a release posted on its website it expects the planned 240-kilometer (149-mile) line to carry and store up to 14.6 megatonnes of carbon-dioxide annually produced by power plants, petrochemical producers and refineries.

Construction of the pipeline is expected to start in 2011 with shipments slated to begin in late 2012.

($1=$1.06 Canadian)

(Reporting by Scott Haggett; editing by Peter Galloway)

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