CO2 Transportation Options PTAC Towards Clean Energy Production

Calgary Petroleum Club October 15, 2012 Calgary, Alberta, Canada

Richard Luhning Manager, Pathfinders Enbridge Inc. Phone 403 231-5909 richard.luhning@enbridge.com

Enbridge Overview
Enbridge is a leader in energy transportation and distribution in North America
Zama Fort St. John Fort McMurray Cheecham Edmonton Hardisty

Norman Wells

Worlds longest liquids pipeline system 2 MMB/D

Saint John Clearbrook Superior Montreal Ottawa Toronto Buffalo

Seattle Portland

Canadas largest natural gas distribution system 5 BCF/D Oil and Gas cavern storage Wind power projects, stationary fuel cells, CCS $24 billion in assets 6,000 employees

Casper Chicago Salt Lake City Patoka Cushing Wood River

Sarnia Toledo

Liquids Pipelines Gas Pipelines

Gas Distribution

Wind Farms
Sarnia Solar Farm

Houston

ASAP & Slurry projects

Carbon Dioxide Areas of Focus

CO2 Components Transportation Slurry transportation Sequestration
Fort St. John Fort McMurray Edmonton Hardisty

Montreal Superior Portland Toronto

Geography Alberta Saskatchewan

Chicago Salt Lake City Patoka Cushing

Economics Tariffs similar to hydrocarbon transportation

CO2 Areas of Focus

Enbridge Pipelines
Houston

Alberta CO2 Sources

Government of Alberta GHG Goals

Albertas 2008 Climate Change Strategy Government of Alberta

140 MT/yr from sequestration is equivalent to 2.4 MM Bbl/day

Economic Challenge for CO2 Pipelines

ICO2N

Useful Supply of CO2

Food product and commercial applications
carbonated beverages
refrigerants, fire extinguishers

Enhanced oil recovery

miscible flood reduces oil viscosity
fracture fluid Need long term continuous CO2 supply and continuous EOR

Slurry agent to transport solids via pipeline

Sequestration (Can have interruptible operations)

CO2 Slurry Pipeline Basics

A slurry pipeline uses flowing liquid (typically water) to carry entrained solids in the pipeline

CO2 at pressure in a pipeline flows as a liquid

Extensive research and flow loop experiments have shown that liquid CO2 is an efficient carrier fluid

CO2 Coal Slurry Research in Cambridge Mass. Laboratory via Arthur D Little
1977-1982 Research:

800 runs of CO2 coal slurry 800 foot, 2 inch closed loop pipeline

removal of coal via cyclone

1983: Project Aquitrain

IPL considered 3 million t/yr CO2 /coal slurry pipeline in USA Project did not proceed

Enbridge/Luscar Coal Water Slurry 2005 Courier Project Study

3 million t/yr coal from Camrose for SAGD in Cold Lake area Produce steam for 40,000 B/D bitumen 463 km of 1016 inch coal slurry pipeline plus water recycle line Capital $1.5 billion Evaluated possibility of CO2 for slurry but sufficient CO2 not available

Slurry Pipeline Concept

Fort McMurray Sulphur, Coke, and Limestone Production

Sulphur Syncrude
0.74 MM t/y

Coke Syncrude
2.5 MM t/y

Limestone Hammerstone
7.5 MM t/y

Logistical Difficulties
Products are stranded and continue to stockpile in Fort McMurray due to limited market access (about 10% of Canada sulphur) Increased production of Sulphur and Petcoke have risen with increased processing of heavy sour crude Currently product delivered costs to Vancouver are uneconomic
Delivered costs to Vancouver are $100/tonne from Fort McMurray (~ $60/tonne from Edmonton)

Global Sulphur Demand

Fertilizer & Industrial Chemicals represent 68% of global demand Increased global growth will continue to drive demand Canada Worlds Largest Exporter of Sulphur

Other Industrial 32%

Fertilizer 49%

Industrial Chemicals 19%

Based on Raymont, M.E.D., Sulphur Sources and Uses Past, Present and Future, presented at the Canadian Institute of Mining and Metallurgy 74th Annual General Meeting, Ottawa, Canada

World Sulphur Trade

2000 Global Sulphur Trade United States Geological Survey

Recent Sulphur Pricing

Sulphur peak price: over $800/tonne ; (2008 fob Vancouver)

250

fob Vancouver fob Middle East

200

Sulphur current price ~$130+/tonne

Price ($US/tonne)

cfr India

150

100

Average price over last 5 years: ~$145/tonne

50

Sept 2009

Oct 2009

Nov 2009

Dec 2009

Jan 2010

Feb 2010

Feretcon, Sulphur 327, March-April 2010

Vancouver Sulphur Export Destinations (2009/10)

Chinese demand growing World demand for fertilizer growing Economic recovery driving strong demand
Fertecon, Sulphur 327, March-April 2010

Exporting Western Canada Sulphur

ICO2N CO2 Pipeline Route

Slurry Line Potential

The pipeline northern section of the route can connect railroad system
Rail service south of Swan Hills Other pipeline routes can also mesh with current rail infrastructure

Slurry Sulphur Pipeline To Rail

CO2 Swan Hills & Pembina Oil Fields

Other Valuable Products

Limestone
Potential supply for the Southern Alberta construction market (i.e. concrete ) Additional applications include use in desulphurization of flu gas

Petroleum Coke
Industrial fuel in Asian markets Additional applications include use for industrial feedstock Potential gasification application for SAGD (Steam Assisted Gravity Drainage)

Petcoke Market Development

1. Deliver Petcock for gasification for SAGD operations ; displace natural gas for steam operations 2. Petcoke to Ft. Saskatchewan to provide feedstock for refineries and upgraders

3. Deliver Petcoke to coal burning power plants

Economics
Capital Cost for three distinct segments
1. Slurrying facility 2. Pipeline transportation 3. De-Slurry facility

Unique Operating Costs

Energy requirements Maintenance requirements

Enbridge Pipelines

Slurry Facility Processing Sulphur

Products must be in a pelletized form for pipe or rail transportation Existing sulphur blocks must be melted and pelletized Slurrying facilities must be able to mix multiple products at high pressures, due to liquid CO2 (i.e. 1200 psi)
Solid Sulphur Block Flickr.
GX Granules Enersull

Pipeline Considerations
Pumping facilities:
unique costs for pumping capability and potential higher energy inputs for pumping

Pipeline maintenance:
potentially increased inspection and material costs due to increased pipeline wear
Start Up Blog

De-Slurry Facility Processing

Separating solids from the liquid CO2 at high pressure Rail loading capability CO2 re-injected into the return circulation line for reuse
CO2 supply available for EOR or sequestration
Sulphur Train - FOLC

Three Phase Plan - CO2 Slurry Line

Phase 1: Design, feasibility and economics

One year - $1 million System design, product markets and economics

Phase 2: Test design and construct pipeline

Three years Construct CO2 pipeline with provision to add slurry capability after proving slurry design
Phase 3: Full system integration

Commercial operation and market integration

CO2 Slurry Research

Syncrude
One of largest slurry pipeline users in world

Saskatchewan Research Council

World leaders in slurry technology (including for Syncrude)

Engineering Expertise via Participants and Contractors

Design and cost slurry pipeline system & facilities

University of Alberta - NSERC Chair Transport Processes

Developing new slurry technology

Alberta Sulphur Research Limited

Leaders in sulphur technology and markets

University of Calgary - Schulich School of Engineering

Coke utilization

Enbridge - Project Operator

Prior experience in slurry pipeline project design

Leadership, Capacity and Capability CO2 Slurry Consortium (19 Participants)

Members

Summary
A CO2 Slurry Pipeline is a innovative solution that allows CO2 to perform some value added work as a transportation medium:
Future production of Sulphur and Petcoke increase with oil sands activity Global demand for these products continues to grow Albertas supplies of captured CO2 expected to rise

The CO2 Slurry line could provide both a economic and environmental benefit to the oil sands future

Closing Thought CO2 Sulphur Slurry From Oil Sands

Fuel for World:
- Upgraded Bitumen & Enhanced Oil Recovery

Fertilizer (Feed) for World: - Sulphur Based

Reduced CO2 Emissions (Save World):
Carbon Capture Storage & EOR

Questions
For additional questions or information please contact:
Richard Luhning Phone No: 403.231.5909 Email: richard.luhning@enbridge.com