Pacific Carbon Trust invests in 84,000 tonnes of carbon offsets

(3BL Media / theCSRfeed) VICTORIA - May 5, 2011 - Pacific Carbon Trust investments in carbon offsets have helped develop innovative technology in natural gas drilling that has reduced greenhouse gas emissions by 85 per cent from an energy development project in northeastern British Columbia.

The project, located in the Jean Marie formation near Fort Nelson, involves using an existing innovative technique known as “underbalanced drilling” and improves on the process by using natural gas as a drilling lubricant instead of nitrogen. The natural gas used to facilitate drilling is conserved through on-site recovery and captured, then streamed directly into a pipeline, eliminating the need for routine flaring.

As part of the project, Pacific Carbon Trust has purchased 84,000 tonnes of greenhouse gas emission offsets from the natural gas developer Encana Corporation – a reduction equivalent to taking about 22,050 cars off the road for one year.  Under the carbon offset agreement, the Crown corporation will also purchase up to 30,000 additional tonnes in 2011 and 2012.

“As B.C. puts a clear price on carbon, Encana has implemented an innovative technology that can help B.C. as it works towards becoming a global leader in environmentally responsible energy extraction,” said Pacific Carbon Trust CEO Scott MacDonald.

This is the first use of this technology and application in Canada and is believed to be the first commercial-scale program of its type in the world.  Using this method can reduce greenhouse gas emissions by about 1,000 tonnes of carbon dioxide equivalent per well drilled.

“Encana’s corporate culture mandates that we challenge ourselves to be environmentally sensitive in our day-to-day operations. When we looked at this specific reservoir we saw a great opportunity to reduce our environmental footprint and recover larger volumes of gas from our producing assets. This project, which Encana also partially funded through its Environmental Innovation Fund, has made some great strides in advancing the technical understanding of how to reduce greenhouse gas emissions in some drilling operations,” said Richard Dunn, Vice-President, Regulatory & Government Relations, for Encana’s Canadian Division.

“This kind of industry leadership to reduce emissions demonstrates the growing positive relationship between the economy and the environment,” said Environment Minister Terry Lake. “B.C. has provided the incentive for companies to shift to lower-carbon technologies and is building the offset market to make emissions reductions more affordable. In the end, we’ll have more clean technology jobs and a stronger, greener economy.”

Flaring is the burning of natural gas in an open flame, much like the flame in a furnace used for home heating, but on a larger scale. Flaring is used to burn off surplus combustible gases from a well, either as a means of disposal or as a safety measure to relieve well pressure.

 “Since the BC Energy Plan was released, B.C. has made substantial progress in eliminating routine flaring activities,” said Energy and Mines Minister Rich Coleman. “I applaud Encana for its innovation, and for its commitment to helping our province create a cleaner, more responsible oil and gas sector.”

The BC Energy Plan calls for the elimination of all routine flaring at oil and gas producing wells and production facilities by 2016, with an interim goal to reduce flaring by half by the end of this year.

Offsets purchased by Pacific Carbon Trust must be generated by B.C.-based activities that demonstrate real GHG reductions or removal that would not have occurred without the revenues associated with the purchase of offsets. Every offset project includes independent third-party verification of its emission reductions, consistent with the ISO 14064-3 standard and the B.C. emission offsets regulation.

Photos and graphics of underbalanced drilling project are available here.

Pacific Carbon Trust is a Crown corporation established in 2008 to deliver B.C.-based greenhouse gas offsets, to help clients meet their carbon reduction goals and to support the growth of B.C.’s low-carbon economy. For more information or to subscribe to our industry interest list, please visit www.pacificcarbontrust.com.

Encana is a leading North American natural gas producer that is focused on growing its strong portfolio of natural gas resource plays in key basins from northeast British Columbia to Texas and Louisiana. By partnering with employees, community organizations and other businesses, Encana contributes to the strength and sustainability of the communities where it operates. For more information on Encana Corporation, visit www.encana.com.

BACKGROUNDER

Underbalanced Drilling

About Underbalanced Drilling

Underbalanced drilling, or UBD, is a procedure used to drill oil and gas wells where the pressure in the wellbore, or borehole, is kept lower than the pressure in the formation (the reservoir) being drilled.  This induces an inflow from the reservoir while drilling and reduces any formation damage. It also increases the drilling penetration rate.  In conventional overbalanced drilling operations, the pressure exerted by the drilling fluid exceeds the reservoir pressure and effectively does not allow the formation to produce while drilling.

About flaring

Flaring is a disposal method for combustible gases associated with petroleum and natural gas production, processing and transportation. It may occur at a well site during underbalanced drilling, as well as well testing and completion operations. This may be an operational or safety requirement and may be unavoidable if there are no production facilities on site.

      Total Flared Volumes (millions of cubic meters) for UBD in British Columbia:

• 2002 – 38.9

• 2003 – 87.3

• 2004 – 94.1

• 2005 – 71.5

• 2006 – 55.6

• 2007 – 59.2

• 2008 – 47.4

• 2009 – 7

• 2010 – 15.9

• % Change - 85% from 2008 to 2009

About the BC Energy Plan

The BC Energy Plan sets out a strategy for reducing greenhouse gas emissions and commits to investments in alternative technology.

The plan outlines the steps that industry, environmental agencies, communities and citizens must take to reach goals for conservation, energy efficiency and clean energy to reduce greenhouse gases and decrease human impacts to the climate.

It also calls for supporting the development of new oil and gas technologies to help British Columbia become an internationally recognized centre for technological advancements and commercialization in environmental management, flaring, carbon sequestration and hydrogeology.

The BC Energy Plan calls for elimination of all routine flaring at oil and gas producing wells and production facilities by 2016 with an interim goal to reduce flaring by half (50 per cent) by the end of this year.

About Offsets

Offsets represent a reduction or removal of greenhouse gas emissions from the atmosphere and are measured as a tonne of CO2 equivalent.  Offsets are generated from specific activities that usually fall into three categories: fuel switching, energy efficiency, and carbon sequestration.

The emission reductions or GHG removals are carefully quantified and may be sold to organizations seeking to counteract or offset their own emissions.

ENCANA13643