Alberta issues request for CCUS full project proposals
On December 2, 2021 the Alberta government issued a request for full project proposals (RFPP) from companies interested in developing and operating a carbon sequestration hub in Alberta. The RFPP process was informed by responses received to its request for expressions of interest (REOI) process launched on September 9, 2021, and has raised significant industry enthusiasm, with some of the province’s largest players indicating their intention to participate in the process.
To manage the significant interest in the RFPP, the government will conduct the RFPP process in phases based on geographic regions within the province. The first phase will focus on the heartland region northeast of Edmonton, as depicted in figure 1, below. The next phase will be issued in the spring of 2022, with the selection of successful proponents for the first phase targeted for the end of March 2022.
Each carbon sequestration hub will be an area of pore space (a Location) overseen by a private company that effectively plans, enables and undertakes sequestration of captured carbon dioxide from various emissions sources as a service to industrial clients.
Proponents who best meet the RFPP criteria will first be invited to enter into an agreement with the province to further evaluate the identified area of interest (i.e., through an evaluation permit, as supported by a Monitoring, Measurement and Verification Plan). Then the province will enter into a carbon sequestration agreement (an Agreement) with the successful proponent(s) to establish the boundaries of the Location and to facilitate the position of hub manager. However, the province may select more than one proposal and establish more than one carbon sequestration hub to service each selected region.
As noted above, the Guidelines indicate that proponents will be asked to enter into an initial agreement with the government for the evaluation of the pore space at a Location. An evaluation permit issued to a proponent prior to entering into an Agreement is intended to afford a proponent the right to conduct evaluations in order to determine a Location’s suitability for the sequestration of captured carbon dioxide. However, the issuance of a permit alone does not guarantee that a proponent will be granted an Agreement. The Guidelines also require a level of evaluation information to be included in a RFPP, which may pose challenges for proponents who have not conducted any evaluation work to date and plan to conduct such work under an evaluation permit. It remains to be seen how the government will assess RFPPs for which no evaluation work has been done to date and where project viability is consequently less certain. This aspect of the Guidelines may give an advantage to proponents who have already conducted preliminary evaluation work prior to the RFPP process.
Further details regarding the RFPP and the Agreement and its terms can be found in the RFPP guidelines [PDF] (Guidelines).
The Guidelines set out eligibility and exclusion criteria for participating in the process, which include the following:
- The process is open to proposals that will sequester carbon dioxide emissions from multiple facilities.
- The process is only intended to provide access to pore space owned by the Alberta government, in order to undertake and enable carbon sequestration activities (as defined in the applicable regulations).
- Carbon dioxide must be captured from facilities located within Alberta.
- Projects that inject carbon dioxide as part of enhanced oil recovery (EOR) or formation acid gas injection are not eligible to participate in the RFPP process.
- Participation in the REOI issued in the fall is not a prerequisite for participation in the RFPP process.
Submission of full project proposals
Full project proposals must be submitted electronically in accordance with the requirements of the Guidelines and will be accepted from January 4, 2022, until 11:59 MST on February 1, 2022.
Full project proposals must be in the form prescribed by the Guidelines, which require details of a proposed project’s business model, configuration and execution, the proposed project location and the proponent’s operational capacity.
To date, the REOI and RFPP processes have highlighted policy decisions of the government that may signal how it will proceed with similar programs in the future. Carbon capture, utilization and storage “hubs” were chosen by the government as the preferred path for a carbon sequestration tenure as they allow for economies of scale and integrate sources of carbon emissions (e.g., industrial facilities) with sequestration operations. Hubs may also provide a more efficient and effective system for managing pore space and promote stronger risk management practices.
Further, the clear exclusion of EOR operators from the RFPP process is an indication of the government’s confidence in the existing EOR regulatory framework and its desire to set up a separate framework for circumstances where multiple facilities can be integrated into a hub model.