Companies behind carbon capture project seek tax breaks

Companies propose to use CO2 to recover more oil from legacy oilfield in Clive area

File photo by ADVOCATE news services A 240-kilometre pipeline will capture CO2 from industrial sites north of Edmonton and transport it to a legacy oilfield in the Clive area, northeast of Red Deer.

A company that wants to inject carbon dioxide into the ground to recover untapped oil reserves went to Lacombe County asking for tax breaks to help boost the project Thursday.

Calgary-based Enhance Energy Inc. is a partner with a number of other companies in the Alberta Carbon Trunkline Project, which aims to use CO2 in mature oilfields to extract untapped oil reserves.

A 240-kilometre pipeline will capture CO2 from industrial sites north of Edmonton and transport it to a legacy oilfield in the Clive area, northeast of Red Deer.

Enhance Energy’s manager of corporate development, Chris Kupchenko, said often, about half of the oil in a reservoir remains in the ground even after decades of traditional drilling.

Much of that oil can be recovered when CO2 is injected, which acts like a solvent, reducing the viscosity of the oil, allowing it to be pumped to the surface, he said.

Oil produced from the process known as enhanced oil recovery is 60 per cent less carbon intensive than conventionally produced oil.

“Really, the future of energy is de-carbonized energy, and that’s what this is,” he told county council.

The project, which has been in the works for a decade, is unsustainable in the current economic climate, where oil has plummeted to less than $20 a barrel.

To make the finances work, the company is pulling all the “levers” it can, and that includes seeking financial concessions from the county, he said.

The company has asked the county to waive drilling taxes for the next five years and provide a three-year tax holiday for any new infrastructure built as part of the project. Relaxations in paving requirements at oilfield sites was also requested.

The company would continue to pay the $300,000 in drilling and property taxes it is already paying.

Lacombe County stands to collect as much as $500,000 in annual taxes if the project is able to go into full production, the company estimated. Over 50 years, it could generate another $20 million in taxes alone.

The next several years will be “pivotable” for the project’s viability, said the company.

Reeve Paula Law said the company already benefits from working in the county, where taxes are considerably lower than in other municipalities.

”I’m actually a little perturbed by this request.”

Law asked if other municipalities had been approached with similar tax relief requests. The company said not yet, but others could be approached as the project develops.

Coun. Ken Wigmore said if the county helps one company, others will likely come forward.

“I’m sure if we give you the drilling relief, everyone else will want the drilling relief, and how do we deal with that?”

County council, as is custom, referred the financial request to administration to bring back a report before a decision is made.

energy sector

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