The Canadian and Alberta governments said Tuesday they will provide a total of C$558 million (US$528.1 million) in funding for a carbon-emissions pipeline near Edmonton, Alberta, that will transport carbon dioxide emissions for use in enhanced oil recovery in the province.

The 240-kilometer Alberta Carbon Trunk Line project will be the largest carbon-capture project in the world when it is complete, Alberta Premier Ed Stelmach said in a conference call Tuesday. Construction is scheduled to begin in 2011 and for the line to be in operation in 2012.

"This new pipeline will significantly advance Alberta's capacity for future carbon capture and storage projects," Stelmach said. "The Alberta Carbon Trunk Line will be the backbone of CO2 transportation for Alberta. It will be built with long-term capacity in mind, so as more companies capture CO2, they will be able connect to the line."

The pipeline will transport carbon-dioxide emissions captured during the process of upgrading heavy oil produced in western Canada to lighter petroleum products. The emissions will then be pumped underground at declining oil fields for the dual purpose of helping to extracting more oil from them and for keeping the emissions, seen as a key contributor to global warming, from entering the atmosphere.

The pipeline will be able to transport up to 14.6 million tons of carbon dioxide emissions per year, the equivalent emissions created annually by 2.6 million cars, Stelmach said.

The project will be operated in a partnership between Enhance Energy Inc., a carbon-capture technology company, and North West Upgrading Inc., an oil upgrading company, according to a release by Canada's Natural Resources department. Both companies are privately owned and based in Calgary. The project will capture carbon from North West's facilities near Edmonton and transport it south for enhanced oil recovery in fields near Red Deer, Alberta, according to a spokesman for the Alberta government.

Government funding for the project will be disbursed over 15 years, with C$495 million in funding coming from Alberta and C$63 million from the federal government.

The Carbon Trunk Line is the third major carbon-capture initiative announced in Alberta, which has set aside C$2 billion in funds for carbon capture and storage projects in the province. Last month, the Canadian and Alberta governments announced their intent to award C$865 million in funding for a carbon-capture system at a Royal Dutch Shell PLC (RDSA, RDSB) refinery near Edmonton and C$774 million in funding for a similar system at a power-generation plant owned by TransAlta Corp (TAC).

Alberta is also the main source of Canada's oil-sands industry, which has been criticized by environmentalists for its relatively high levels of carbon emissions.

-By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@dowjones.com
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