November 5, 2015 / 9:05 PM / 2 years ago

Shell Canada carbon capture likely last to get Alberta subsidies

CALGARY, Alberta, Nov 5 (Reuters) - Royal Dutch Shell's launch on Friday of Canada's first oil sands project to capture and bury carbon emissions - assisted by generous public subsidies - will likely be the last to get such funding, the Alberta government said this week.

The left-leaning New Democratic government of the energy-rich Western Canadian province, home to the country's controversial oil sands, said it no longer plans to fund future efforts using the technology.

"We intend to evaluate all options for reducing greenhouse gases - like transit, energy efficiency ... with an eye to the greatest return on investment," Energy Minister Marg McCuaig-Boyd said in an email on Tuesday.

The New Democrats had pledged to improve the province's climate change record after winning an election in May that ended 44 years of Conservative rule.

Shell Canada said it completed the C$1.3 billion ($987.92 million) Quest project at its Scotford upgrader under budget and can now capture about a third of its carbon dioxide emissions, comparable to the annual emissions from 250,000 cars.

The project, located northeast of the provincial capital of Edmonton, was built in partnership with Chevron Corp.

The upgrader, which converts bitumen from two oil sands mines into synthetic crude oil, will now pipe the CO2 through a 65-km (40-mile) route before burying it in saline aquifers more than 2 km underground.

Environmental groups often criticize the oil sands - natural deposits of heavy oil - noting the industry is Canada's fasting growing source of greenhouse gas emissions.

Alberta invested C$745 million in Quest and the Canadian government put in C$120 million.

Quest project manager Tim Wiwchar said early testing succeeded at capturing more than 100,000 tonnes of CO2 emissions, and the experience could support another proposal at Shell's Peterhead power station in Scotland which, if approved, would store carbon emissions below the North Sea.

"Some people may say it's still not enough, but it's a start," Wiwchar said.

The launch comes three years after another public and private partnership canceled similar plans to retrofit a coal-fired power plant in Alberta, citing the absence of carbon pricing policies.

Duncan Kenyon, a director at the Pembina Institute, an environmental group that Shell paid for advice about Quest, said the government should strengthen existing carbon pricing to encourage carbon capture.

$1 = 1.3159 Canadian dollars Editing by Paul Simao

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