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CALGARY, Alberta (Reuters) - Enhance Energy Inc aims to spend $300 million building Alberta's first major carbon dioxide pipeline to ship the greenhouse gas to old oil fields, where it can boost output, the privately held company said on Thursday.
The pipeline will be located in central Alberta, where it will capture carbon dioxide emissions from an oil sands upgrader planned by North West Upgrading Inc and a nitrogen plant operated by fertilizer maker Agrium Inc (AGU.TO) northeast of Edmonton, Enhance said.
It will carry the gas 240 km south to mature oil fields near the central Alberta city of Red Deer.
The announcement comes two days after Alberta Premier Ed Stelmach announced $2 billion in funding for carbon capture and storage projects, a move lauded by companies and industry organizations planning to develop ways to cut emissions amid booming industrial activity.
Enhance President Susan Cole said she believes the project will be a good candidate for the government funds.
"What we have is a real project. It's an immediate project," Cole said in an interview. "It's something that we've been working on for three years now. The timing is working out to be very fortunate."
Amid heavy investment in its oil sands resources, Alberta has been criticized by some environmental groups for putting economic development ahead of environmental protection.
The Stelmach government and oil industry have recently mounted communications campaigns to combat that perception.
Cole said she believed the government was seeking viable solutions to the problem of greenhouse gas emissions.
Enhance's system will have capacity of 25,000 tonnes per day with initial volumes of 5,000 tonnes per day, it said.
When completed, it will have the effect of taking 1.6 million cars off the road, the company said.
Cole stressed it is not a test project, but a "world-scale" commercial proposal that will employ proven technology.
Before starting Enhance, she worked for PanCanadian Energy, a predecessor of EnCana Corp (ECA.TO), where she managed Canada's first major CO2 injection project at Weyburn, Saskatchewan.
Regulatory applications are planned for the spring of 2009 and project startup is targeted for 2011.
"We need to dehydrate and compress the CO2, but we don't need to remove any contaminants, so we don't require very complex pieces of equipment to get started and make this project proceed at a fairly rapid rate," Cole said.
The company awarded design and project management contract to Sunstone Projects Ltd.
Reporting by Jeffrey Jones; editing by Rob Wilson