April 6, 2022
By Brad Kramer
North American Energy Pipelines
As decarbonization has become a major topic throughout the energy industry, carbon capture projects have become increasingly popular as a solution to reduce emissions. One such project in central Alberta that came online in June 2020 has shown the viability of carbon capture, use and storage (CCUS) initiatives.
The Alberta Carbon Trunk Line (ACTL) is a 240-km pipeline that currently gathers 1.6 million tonnes of carbon dioxide (CO2) per year, with an expandable capacity of up to 14.6 million tonnes per year, which is equivalent to approximately 20 percent of all current oil sands emissions.
Calgary-based pipeline operator Wolf Midstream built, owns and operates the ACTL system, which currently captures carbon emissions from two facilities near Edmonton, the North West Redwater (NWR) Sturgeon Refinery and the Nutrien Redwater Fertilizer plant.
The ACTL system was ahead of the curve when it comes to CCUS and other carbon capture initiatives being discussed today. The success of the project serves as an example for other asset owners, says Jeff Pearson, president of Wolf Midstream’s carbon business.
“From our perspective, it has really demonstrated that decarbonization through CCUS is real,” Pearson says. “The unique aspect of our pipeline is that there are systems in the United States doing the same thing, but they drill for naturally occurring CO2 and use it to produce oil, whereas our system is designed to handle manmade CO2, and it’s the largest system in the world doing that. We’re showing that it works.”
The ACTL was first proposed by Enhance Energy in the late 2000s to capture emissions from the newly built NWR refinery for use in enhanced oil recovery (EOR), a process that uses CO2 to extract oil left in place in older reservoirs. CO2 is injected into the reservoir, mixing with the oil that was previously unrecoverable, producing a mix of oil and CO2 at the well site. The CO2 is then reinjected into the well for sequestration.
The ACTL project received funding in 2009-2011, with a large portion coming from the Government of Alberta, Pearson says. Wolf Midstream became a partner in the project in 2018 to build and operate the compression and pipeline infrastructure at a capital cost of $490 million. The project also included the construction of three compressor stations, one each on or near the NWR and Nutrien sites for initial compression, and a third station offsite for final compression.
The pipeline consists of a short 12-in. diameter line that carries CO2 from the NWR and Nutrien facilities, which are located about two miles from each other in Redwater, Alberta, to an offsite compressor station and a longer 16-in. diameter line that terminates near Lacombe, Alberta, at a project site operated by Enhance Energy, where the CO2 is used for EOR before being permanently stored underground.
As an operator of traditional oil and gas pipelines, Wolf Midstream has robust experience in designing and building pipelines. However, Pearson says that the ACTL system required some additional precautions to safely carry CO2.
“From a construction perspective, the ACTL was designed to operate up to 2,600 psi, a higher pressure than typical hydrocarbon systems,” Pearson says. “There were a lot of considerations in the design of the pipeline and operations. For instance, water and CO2 creates carbonic acid, which is very corrosive to carbon steel pipe and is to be avoided.”
To ensure the safe operation of the pipeline, Wolf Midstream placed valve sites every 10 miles to manage pressure. In the event of a pipe failure, the valve sites close automatically.
“One of the unique aspects of CO2 is that, in the event of a leak, the gas blows away very fast,” Pearson adds, “and unlike hydrocarbons, it’s not explosive.”
With such a robust carbon capture infrastructure already in place, Alberta is attracting other companies interested in lowering emissions, says Lisa Tebbutt, director of business development at Wolf Midstream.
For example, industrial gas supplier Air Products and its subsidiary Air Products Canada Ltd., in conjunction with the Government of Canada and the Province of Alberta, announced in June 2021 the development of a $1.3 billion net-zero hydrogen energy complex in Alberta. The facility is expected to deliver net-zero emissions and be capable of capturing more than 95 percent of the carbon dioxide generated by the complex and permanently sequester it safely underground. Hydrogen-fueled electricity will offset the remaining 5 percent of emissions.
“The ACTL system provides Alberta with an advantage to becoming a net-zero emissions center,” Tebbutt says. “We already have a system in the ground to transport carbon. We’ve received public support from Air Products, stating that ACTL was a factor in their decision to bring their hydrogen energy facility to Alberta. Our system is an enabler to move these types of projects forward.”
The ACTL is a multi-party, open access pipeline designed to connect emitters with different end-use opportunities. With approximately 13 million tonnes of capacity available, Wolf Midstream is actively pursuing additional partners to expand volume on the system.
“We intend to grow volumes onto the ACTL system to move more CO2 from emitters in Alberta,” Tebbutt says. “We started operations in 2020, but that was only the beginning. The NWR Sturgeon Refinery and the Nutrien plant form the core of an expandable network.”
One such expansion was announced Feb. 23, with Wolf Midstream partnering with Whitecap Resources, the First Nation Capital Investment Partnership and Heart Lake First Nation to submit a bid in the Alberta Government competitive process to jointly develop a saline aquifer sequestration hub near Fort Saskatchewan, Alberta.
If successful, the sequestration hub will serve large facilities in Alberta’s industrial heartland that are seeking a carbon sequestration solution. Wolf Midstream is working with several parties that have offered support of the sequestration proposal, including Air Products. Initial CO2 volumes delivered to the hub are expected to be between 2 and 3 million tonnes per annum (MTPA) with ultimate hub volumes that could exceed 6 MTPA. The project is expected to be in service by the end of 2024.
“We are incredibly optimistic about the partnership we’ve formed,” Pearson says in a company statement announcing the project. “This hub will support key net-zero projects currently in development and further propel Alberta towards a lower carbon economy.”
With the success of the ACTL system and the “broader energy transition mandate in the U.S.,” Wolf Midstream began pursuing CCUS projects in the United States, says Nick Noppinger, head of Wolf Carbon Solutions US, a company that began as a subsidiary of Wolf Midstream but was spun out as a separate company in late 2021.
The new company’s first move was announcing the Midwest Carbon Capture Project, a joint project with global agricultural company ADM to capture CO2 from ethanol production facilities in Iowa and transport it to a sequestration site in Illinois.
Announced on Jan. 12, the proposed project includes the construction of a 350-mile pipeline capable of transporting 12 million tonnes of carbon dioxide per year that will be developed, owned and operated by Wolf Carbon Solutions US. The pipeline, along with a commercial agreement, will allow for the capture, compression and transportation of carbon dioxide produced at ADM’s facilities in Clinton and Cedar Rapids, Iowa, to be stored permanently underground at ADM’s fully permitted and already-operational sequestration site in Decatur, Illinois. The pipeline would have spare capacity to serve other third-party customers across the Midwest and Ohio River Valley.
While the success of the ACTL system paved the way for Wolf Carbon Solutions US, developing projects south of the Canadian border has involved “quite a learning curve,” says Noppinger, who has been busy speaking with politicians in Iowa and Illinois to gain approval for the project.
“The United States is in the early stages of adopting carbon capture, and it’s very complex to develop these kinds of projects,” Noppinger says. “There are a lot of hurdles that we have to meet that we don’t see in acquiring permitting for other commodities.”
That means working with the U.S. Environmental Protection Agency for permits to operate CO2 sequestration wells. Additionally, the proposed pipeline would travel through some of most important agricultural land in the United States.
“There are a lot of delicate discussions to be had, and we are just in the first couple innings yet,” Noppinger says. “It will take three-and-a-half to four years to fully develop the project and bring it on line. We’re approaching various emitters to bring them onto system along with ADM, and we’re talking with stakeholders, landowners and politicians to get them acquainted with Wolf, so we can get the pore space and kick off the Class VI permitting process.”
Noppinger says the future of carbon capture projects in the United States is driven by two factors.
“One is customer driven, as companies start to plan out the next 20 to 30 years with energy transition and decarbonization of energy production in mind,” he says. “The other is economics-based. Right now, carbon capture projects in the U.S. are for pure CO2 emissions, such as from ethanol and fertilizer plants, but we really need to expand to refineries, petrochemicals and power plants.”
The economics of CCUS projects in the United States are currently driven by the 45Q Tax Credit, Noppinger says. The credit was included as part of the Bipartisan Budget Act in 2018, which increases the credit value incrementally over 10 years from $10 to $35 per metric ton of CO2 stored geologically through enhanced oil recovery and from $20 to $50 per ton for saline and other forms of geologic storage. The 45Q program allows companies to claim the credit for carbon capture projects that begin construction within 7 years of enactment of the law, and projects meeting that timeframe can claim the credit for 12 years after being placed in service.
Noppinger argues that the United States needs to expand the 45Q program to help spur future development of CCUS projects. In the meantime, Wolf is planning ahead.
“One of the things that distinguishes Wolf from other companies is that we take a long-term investment view for developing projects,” Noppinger says. “We plan out for the life of the asset, and as a result we’re excited for what the future holds in the next 20 to 30 years in decarbonization activities with this Midwest system we’re looking to build. Under the current 45Q program, it’s only economical to capture pure CO2, but we’re planning to engage with large industrial complexes to decarbonize when the time is right.”