By Nia Williams
CALGARY, Alberta, Aug 27 (Reuters) - Shell Canada has fitted the final module at the first carbon capture andstorage project in Alberta's oil sands, the company said onWednesday, putting start-up on track for 2015.
The Quest CCS project, now 70 percent complete, is beingbuilt with funding from the Alberta and Canadian federalgovernment to help mitigate greenhouse gas emissions from theoil sands.
It will capture more than 1 million tonnes of carbon dioxideeach year from Shell's Scotford upgrader north of Edmonton andinject it 2 km under the Alberta prairies into impermeablelayers of rock for permanent storage.
The upgrader converts mined bitumen from Shell's Athabascaoil sands project, a joint venture with Chevron Corp andMarathon Petroleum Corp, into refinery-ready crude. TheCCS project will capture 35 percent of direct emissions from theScotford facility.
Extracting and processing raw bitumen requires vast amountsof fossil fuels to be burned, making oil sands crude around 17percent more "greenhouse gas intensive" than average oil used inthe United States, a State Department report said last year.
Oil sands producers have come under heavy pressure fromenvironmentalists to reduce the carbon footprint of theirprojects and environmental concerns are one of the chief reasonsfor a six-year delay in getting U.S. presidential approval forthe Keystone XL pipeline.
Shell Canada president Lorraine Mitchelmore said the CCSproject would be cost neutral for the company and there was apotential future market for carbon, although Shell was notlooking at that right now.
"It's very early stage technology. We are thinking aboutwhat's happening in the future and where could policy evolve to.We are in the risk management business, that's how we look atlong term projects," Mitchelmore said.
Shell declined to give a cost estimate for Quest but in 2009the government provided an estimate of $1.35 billion and theproject is on budget.
Of that $865 million is funding from the federal andprovincial governments on the understanding Shell will shareknowledge to bring down costs on any future CCS projects. (Editing by Cynthia Osterman)