Alberta government launches procurement process for new CCUS hub

Edmonton skyline

On May 12, 2021, Alberta Energy issued an information letter [PDF] in which it announced that the government of Alberta will issue carbon sequestration rights to a carbon capture utilization and storage (CCUS) hub operator through a competitive process set to launch in late spring 2021, who will provide carbon sequestration services to a number of industrial facilities. It is expected that proposals should identify approximate geographic and geologic locations for the injection operations and a system for transporting the captured carbon dioxide.

The competitive process will result in the selection of a “highly qualified proponent” who will be granted carbon sequestration rights to undertake the development and management of CCUS and who must adhere to existing legislative and requirement requirements and obtain necessary approvals from the Alberta Energy Regulator. It is intended that the operator will ensure open access to the hub, provide fair service rates and account for carbon offsets and future credits, details of which are expected to be worked out between the successful proponent and Alberta Energy.

CCUS hubs were chosen as the most appropriate path forward for carbon sequestration tenure to realize greater economies of scale and integrate sources of carbon emissions (industrial facilities) with sustained storage operations. They were also chosen to “preserve the integrity of Alberta’s pore space” by limiting perforations and development in storage zones.

The information letter states that the government of Alberta sees CCUS as an integral part of the province’s environmental and economic future, but that a “strong regulatory system” must exist to realize the environmental benefit of CCUS as a means to address greenhouse gas (GHG) emissions through “rigour that accounts for and demonstrates the permanent storage of every tonne of carbon dioxide.” The government of Alberta states that it will continue to enhance the framework to meet growing demand for CCUS and establish a consistent, transparent process for managing pore space. We have previously written on the regulatory frameworks applicable to blue hydrogen and CCUS operations in Western Canada, citing the need for further regulatory clarity, which appears to be on the horizon.

The announcement and express support for CCUS and hydrogen development in the province mark an important milestone for low carbon fuel production in Alberta and the province’s transition to a lower-carbon economy. The information letter states that the Government of Alberta may approve additional CCUS hubs in the future in response to market demand.