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B.C. looks to carbon capture to balance clean-air targets with energy revenues

VICTORIA, B.C. - Economic realities and environmental promises are creating an explosive mixture for the recession-fighting B.C. government as it juggles expansion in its oil and gas industry with the need to cut greenhouse gases.

Massive untapped gas fields in northeastern British Columbia hold billions in potential revenues, but environmentalists are watching to see if Premier Gordon Campbell will stick to his promise to fight global warming by cutting emissions by one-third by 2020.

So far environmentalists are not completely impressed with what they see.

Two huge natural gas projects proposed for the Horn River Basin area, about 1,600 kilometres north of Vancouver, are testing the option of storing greenhouse gases underground.

But carbon capture is an unproven technology on large-scale projects, say industry experts. And it's expensive.

The government should not allow the projects to move ahead without solid greenhouse gas reduction plans in place, says Matt Horne, an environmental specialist with the Pembina Institute.

"They could basically shoot themselves in the foot by not being able to meet their greenhouse gas reduction targets."

Spectra Energy and EnCana are the two companies poking around in the Horn River Basin, a remote stretch of wilderness in the shadows of the northern Rockies.

Spectra recently sunk test holes into a potential carbon capture site about 2.5 kilometres underground. It drilled into what is believed to be a dried-up underwater sea covered by an impervious layer of shale.

Gary Weilinger, Spectra's vice-president of strategic development, believes carbon capture will work, but it's a concept where economic realities and environmental dreams collide head on.

"The question is, if I were to make this big investment, who's going to pay me to do that so I can generate a return for my shareholders? Weilinger asks. "

"Right now, there's nothing that compels Spectra to actually do anything. It's just too big a risk for us to make an investment like that right now in the hope that maybe it'll be valued sometime down the road. We're not a research and development company. We're a service provider."

EnCana hasn't yet signed up either.

The company has said it will consider using carbon capture to reduce greenhouse gases, but isn't prepared to make a commitment because the area may not be geologically suited for the process.

B.C. Energy Minister Blair Lekstrom, a former mayor of Dawson Creek, a community in the northeast's gas country, says the government considers carbon capture a vital part of its environmental agenda. But it is too early to jump in with both feet.

"We have to partner with industry," he says. "At the end of the day our commitment is to reduce greenhouse gas emissions, and carbon capture and storage is a big part of how we're going to achieve that goal."

Horne agrees there is no business case for oil and gas companies to justify carbon capture projects to shareholders, but says industry needs to support greenhouse gas reductions.

"To expect government to be paying for all these projects in British Columbia, Alberta and wherever else they pop up isn't realistic in my mind."

Still, the provincial government loves the revenue the oil and gas sector provides.

Last year, British Columbia took in $2.6 billion from land lease sales to oil and gas companies and $1 billion in royalties from the industry. In this May's election, in which the Liberals won a third straight mandate, Campbell frequently cited the 34,000 jobs the industry has created in the province since 2001.

Lekstrom is aware of the concerns of environmentalists and the gas industry.

"Right now, we're at the preliminary stages to try to ensure we can secure the technology and make sure it's economically viable to achieve that."


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