Shell Quest Carbon Capture and Storage Project. Shell Canada Limited

SCREENING SCOPING DOCUMENT For the proposed Shell Quest Carbon Capture and Storage Project Shell Canada Limited Prepared by: Canadian Environmental Assessment Agency Natural Resources Canada Fisheries and Oceans Canada Transport Canada Canadian Transportation Agency CEA Registry Reference Number: 10-01-55916 August 4, 2010 TABLE OF CONTENTS Version: July 8, 2010 1

1.0 INTRODUCTION AND PURPOSE OF THE SCOPING DOCUMENT...3 2.0 OVERVIEW OF THE DEVELOPMENT PROPOSAL...3 3.0 ENVIRONMENTAL ASSESSMENT PROCESS... 4 3.1 REQUIREMENT FOR A FEDERAL ENVIRONMENTAL ASSESSMENT... 4 3.2 OVERVIEW OF THE SCREENING ENVIRONMENTAL ASSESSMENT PROCESS...5 3.3 ROLE OF THE CANADIAN ENVIRONMENTAL ASSESSMENT AGENCY...6 3.4 ROLE OF RESPONSIBLE AND FEDERAL AUTHORITIES...6 3.5 CANADA-ALBERTA AGREEMENT FOR ENVIRONMENTAL ASSESSMENT COOPERATION...6 4.0 PROPOSED SCOPE OF THE ENVIRONMENTAL ASSESSMENT...6 4.1 PROPOSED SCOPE OF THE PROJECT...7 4.2 FACTORS PROPOSED TO BE CONSIDERED IN THE SCREENING...7 4.3 PROPOSED SCOPE OF THE FACTORS TO BE CONSIDERED...8 5.0 PUBLIC PARTICIPATION...11 5.1 OPPORTUNITIES FOR PUBLIC INVOLVEMENT...11 5.2 CANADIAN ENVIRONMENTAL ASSESSMENT REGISTRY...11 Version: July 8, 2010 2

1.0 INTRODUCTION AND PURPOSE OF THE SCOPING DOCUMENT The responsible authorities, Natural Resources Canada, Fisheries and Oceans Canada, Transport Canada and the Canadian Transportation Agency, have determined that a screening-level environmental assessment (EA) is required in relation to the Shell Quest Carbon Capture and Storage project. As an early step in the EA process, the responsible authorities are required to determine the scope of the screening (i.e. what should be included in the screening). The purpose of this screening scoping document is to provide information to the public, Aboriginal Groups and the proponent on the federal environmental assessment process. The following sections of this document provide an overview of the Shell Quest Carbon Capture and Storage project as proposed by Shell Canada Limited, a description of the federal environmental assessment process, a presentation of the scope of the environmental assessment proposed by the responsible authorities, and information on the public consultation opportunities. 2.0 OVERVIEW OF THE DEVELOPMENT PROPOSAL Shell Canada Limited proposes to develop a fully integrated carbon capture and storage project located in central Alberta. The project will involve the capture, transport, injection and storage of carbon dioxide (CO 2 ). Up to 1.2 million tonnes of CO 2 per year will be captured from three hydrogen manufacturing units (HMUs) at the Shell Scotford Upgrader facility. Capture Infrastructure CO 2 will be captured from three hydrogen manufacturing units (HMUs). The HMUs manufacture hydrogen to upgrade oil sands bitumen at the Scotford Upgrader. The infrastructure will capture CO 2 using an activated amine process (Shell s ADIP-X technology). The captured CO 2 stream will be greater than 98% CO 2. The remaining 2% will be comprised of hydrogen, methane and trace levels of hydrogen sulphide (H 2 S) at concentrations below consumer quality natural gas. The raw synthetic gas from the HMUs will flow through the amine absorber, where approximately 80% of the CO 2 in the raw synthetic gas stream will be absorbed into the amine stream to form a rich amine. From there, the rich amine from all three HMUs will be commingled into a common line and sent to a stripping section where a CO 2 stream and a lean amine stream will be produced. The CO 2 product will be compressed before entering the pipeline. Pipeline Compressed CO 2 will be transported via a new pipeline from the Scotford Upgrader to a selected storage area located within 100 km north of the capture infrastructure. The pipeline will be 406 mm (16 inches) in diameter, and will transport a dense-phase CO 2 stream. Block valves will be spaced at distances of 15 km along the route and near selected locations, such as watercourse crossings. Of the 100km pipeline, more than 35 km will be adjacent to existing pipeline right-of-ways. Version: July 8, 2010 3

The pipeline will require an 18 m right of way and an additional 7 m of temporary workspace during construction. The majority of the pipeline route will be on agricultural land. The pipeline will cross a number of permanent and ephemeral water bodies, the largest being the North Saskatchewan River. The preferred method for this river crossing has not yet been determined, and will be dependent on the results of geotechnical investigations. The pipeline will also cross numerous small wetlands. Once the storage well location(s) have been determined, a route selection study will be conducted to connect the Scotford Upgrader and the storage area. Storage Storage wells will be designed to inject CO 2 into the Basal Cambrian Sands (BCS deep saline aquifer formation), at a depth of approximately 2 km below surface, and will include a measurement, monitoring and verification (MMV) program. CO 2 monitoring wells will also be drilled as part of the MMV program. An exploration appraisal well program by the proponent is currently underway and aims to determine the final locations of the injection wells for permanent CO 2 storage. Confirmation of both the number of wells and their location will be made following the review of the results from the summer 2010 appraisal program. 3.0 ENVIRONMENTAL ASSESSMENT PROCESS 3.1 Requirement for a Federal Environmental Assessment The Canadian Environmental Assessment Act applies to federal authorities when they contemplate certain actions or decisions in relation to a project that would enable it to proceed in whole or in part. Under section 5 of the Act, a federal environmental assessment may be required when a federal authority: is the proponent; provides financial assistance to a proponent; sells, leases or otherwise disposes of land; or issues a permit, licence, or any other approval as prescribed in the Law List Regulations under the Act. A federal authority that proposes to undertake one of the above actions and is required to ensure that an environmental assessment is conducted under the Act is referred to as a responsible authority. A federal environmental assessment is required for the proposed Shell Quest Carbon Capture and Storage project because Natural Resources Canada, Fisheries and Oceans Canada, Transport Canada and the Canadian Transportation Agency, have determined that they have a potential trigger as per section 5 of the Act that would require an authorization that would enable the project to be carried out in whole or in part. Specifically, Natural Resources Canada has indicated that it may consider issuing funds to the proponent under the Clean Energy Fund Program. Version: July 8, 2010 4

Fisheries and Oceans Canada has indicated that it may issue an authorization pursuant to subsection 35(2) of the Fisheries Act for the harmful alteration, disruption or destruction of fish habitat relating to the water crossings which may be required for the transportation component of the project. Transport Canada has indicated that it may issue an approval pursuant to section 5 of the Navigable Waters Protection Act for the crossing of a navigable water way which may be associated with the transportation component of the project. The Canadian Transportation Agency has indicated that it may issue an authorization pursuant to subsection 101(3) of the Canada Transportation Act for a utility crossing of a federally regulated railway line which may be required for the transportation component of the project. 3.2 Overview of the Screening Level Environmental Assessment Process As stated in Section 1.0, the purpose of this scoping document is to provide information to the public, Aboriginal groups, and the proponent on the federal environmental assessment process. The responsible authorities are of the opinion that public and Aboriginal participation in the screening of the project is appropriate. The responsible authorities will provide the public and Aboriginal Groups with a description of the scope of the project, the factors to be taken into consideration in the screening and the scope of those factors. During the conduct of the screening, the adverse environmental effects of the project as scoped for the purposes of the screening will be assessed and the effectiveness of proposed mitigation measures will be evaluated. The responsible authorities will ensure that there is an opportunity for public and Aboriginal participation during the conduct of the screening. A screening report will be prepared, which summarizes the key findings of the EA process, will be prepares by the responsible authorities. Since public and Aboriginal Group participation has been initiated, the responsible authorities will offer them an opportunity to examine and comment on the screening report prior to taking a course of action decision with respect to the EA. Responsible authorities may request that the Minister refer the project to a mediator or review panel at any time throughout the screening process. A referral to mediator or review panel may be requested where a project may cause significant adverse environmental effects or where public concern warrants such a referral. If the Minister refers the project to a mediator or review panel, the project will no longer be subject to a screening under the Act. If the project is referred to a mediator, the mediation process must be agreed to by the proponent and key agencies and be focussed on resolving specific issues. If the project is referred to a review panel, the Canadian Environmental Assessment Agency (the Agency) recommends draft terms of reference for the Minister, negotiates joint panel agreements on behalf of the Minister, and identifies, interviews and recommends to the Minister candidates for panel members. Both the terms of reference and the subsequent Environmental Impact Statement will be made available for public and Aboriginal groups to comment. The public and Version: July 8, 2010 5

Aboriginal Groups are also invited to attend hearings where they can provide further comment. The panel will then prepare and submit a report with recommendations to the Minister and to the responsible authorities for their consideration and response. 3.3 Role of the Canadian Environmental Assessment Agency For all multi-jurisdictional screenings, the Agency is the federal environmental assessment coordinator (FEAC). In accordance with sections 12.1 12.4 of the Act, the Agency ensures that the responsible and federal authorities are identified, coordinates their participation in the EA process, ensures federal authorities fulfill their obligations under the Act in a timely manner, and to the extent possible will facilitate the coordination of the federal environmental assessment process with the requirements of the province. In addition to its FEAC role, as this project is subject to the Initiative for Improving the Performance of the Regulatory System for Major Resource Projects, the Agency is the Environmental Assessment Manager and Crown Consultation Coordinator for this EA. 3.4 Role of Responsible and Federal Authorities Natural Resources Canada, Fisheries and Oceans Canada, Transport Canada and the Canadian Transportation Agency are responsible under the Act for ensuring that a screening is conducted and a screening report is prepared. The responsible authorities are also responsible for providing specialist or expert knowledge or information with respect to the proposed project and for reviewing and approving documents. Environment Canada, Health Canada and the Parks Canada Agency have indicated that they will participate in the environmental assessment as expert federal authorities with specialist or expert knowledge or information. 3.5 Canada-Alberta Agreement for Environmental Assessment Cooperation The Shell Quest Carbon Capture and Storage project is subject to a provincial environmental assessment in accordance with the Environmental Protection and Enhancement Act. The federal EA will be coordinated to the extent possible with the provincial environmental assessment, as per the Canada-Alberta Agreement for Environmental Assessment Cooperation. However, the federal and provincial governments will each make decisions based on matters within their own legislative authorities. 4.0 PROPOSED SCOPE OF THE ENVIRONMENTAL ASSESSMENT Scoping establishes the boundaries of the federal environmental assessment in order to focus the assessment on relevant issues and concerns. The scope identifies which elements of the development proposal are to be considered in the screening, which factors will be considered under section 16 of the Act, and which environmental components are likely to be affected. Version: July 8, 2010 6

The proposed scope of the assessment includes the proposed scope of the project as outlined in section 4.1 below, the factors proposed to be considered under section 16 of the Canadian Environmental Assessment Act and the proposed scope of those factors. The responsible authorities together are proposing to scope the assessment as described in this section. The proposed scope of assessment will encompass the construction, operation, maintenance and decommissioning/abandonment of works associated to all project components as proposed by the proponent. These components include: the capture infrastructure located within the development area of the Scotford Upgrader; the construction of a CO 2 pipeline, extending approximately 100 km in distance from the Scotford Upgrader, north across the North Saskatchewan River; and the storage wells and ancillary infrastructure situated within an area defined by the subsurface study area (to be defined). The scope of assessment proposed under the Canadian Environmental Assessment Act differs from the scope proposed by the Province of Alberta. The environmental assessment required under the Environmental Protection and Enhancement Act will include the works associated with the storage component of the proposed project. 4.1 Proposed Scope of the Project for the Purposes of the Environmental Assessment The proposed scope of the project includes the various components of the proposed development that are considered to be part of the scope of the project for the purpose of the environmental assessment. The responsible authorities present the following proposed scope of the project for the purposes of the environmental assessment in relation to the Shell Quest Carbon Capture and Storage Project: the construction, operation, maintenance and decommissioning/abandonment of the capture infrastructure and associated works; the construction, operation, maintenance and decommissioning/abandonment of the CO 2 pipeline, and associated works including temporary workspaces and access roads; and the construction, operation, maintenance and decommissioning/abandonment of the injection wells, associated access roads and lateral pipelines for the storage component. 4.2 Proposed Factors to be Considered This section defines the proposed factors under consideration in the environmental assessment and the proposed scope of those factors. The responsible authorities must consider the following factors in the screening pursuant to section 16 of the Act: the environmental effects of the project, including the environmental effects of malfunctions or accidents that may occur in connection with the project and any cumulative environmental effects that are likely to result from the project in combination with other projects or activities that have been or will be carried out; the significance of the effects referred to in the previous paragraph; Version: July 8, 2010 7

comments from the public that are received in accordance with the Act and its regulations; and measures that are technically and economically feasible and that would mitigate any significant adverse environmental effects of the project; The responsible authorities will also consider the following additional factors, under subsection 16(2), for this screening: the purpose of the project; alternative means of carrying out the project that are technically and economically feasible and the environmental effects of any such alternative means; the need for, and the requirements of, any follow-up program in respect of the project; and the capacity of renewable resources that are likely to be significantly affected by the project to meet the needs of the present and those of the future, In accordance with paragraph 16(1)(e) of the Act, the screening will also include a consideration of the need for the project and alternatives to the project, and any other matter that the responsible authorities may request to be considered, including: a pipeline route selection study that considers environmental, social and engineering constraints; a conservation and reclamation plan for the pipeline; transportation of project-related materials and personnel in the study area; a measurement, monitoring and verification plan for CO 2 storage; and a demonstration of how issues and concerns raised by Aboriginal groups have been addressed. As defined under the Act, environmental effect means, in respect of a project: a) any change that the project may cause in the environment, including any change it may cause to a listed wildlife species, its critical habitat or the residences of individuals of that species, as those terms are defined in subsection 2(1) of the Species at Risk Act b) any effect of any change referred to in paragraph (a) on i) health and socio-economic conditions ii) physical and cultural heritage iii) the current use of lands and resources for traditional purposes by aboriginal persons, or iv) any structure, site or thing that is of historical, archaeological, paleontological or architectural significance, c) any change to the project that may be caused by the environment whether any such change or effect occurs within or outside Canada. 4.3 Proposed Scope of the Factors to be Considered The responsible authorities propose that the following scope of factors be considered in the screening. Selection of these factors is based on the anticipated potential for the works, undertakings and activities that are included in the proposed scope of project for the environmental assessment to cause adverse environmental effects. Version: July 8, 2010 8

Biophysical Environment water quality and quantity; erosion and sedimentation; soils, soil productivity and terrain; geology (deep/subsurface geological formations); fragmentation and habitat loss; vegetation and plant communities; loss of wetland functions; migratory bird species and their habitat; species at risk; aquatic life ( i.e. fish species, productivity and fish habitat, fish passage); wildlife species and wildlife habitat; waste management; noise; groundwater and hydrogeology (aquifer and aquitard delineation); and climate and air quality (including odours). Socio-Economic and Cultural Environments (considered in relation to a change in the environment) current use of lands and resources for traditional purposes by Aboriginal persons; other land and resource use, such as; - recreational use (fishing, hunting, snowmobiling, etc.) - agriculture use - private property effects on navigation; worker health and safety; public health and safety; and heritage and historical cultural resources. Valued Ecosystem Components The assessment will examine the potential effects of the project may have on the environmental and other aspects that are considered to be Valued Ecosystem Components (VECs). VECs will be chosen through consultation with responsible authorities, federal authorities (e.g. Environment Canada), provincial agencies and potentially affected communities, incorporating traditional knowledge and land use. A rationale will be provided by the proponent to demonstrate why a particular VEC was or was not chosen for the assessment. All SARA and COSEWIC listed species should be represented as a VEC. Spatial and Temporal Boundaries (with adjustments specific to project) Version: July 8, 2010 9

The spatial boundary will be determined specific to each factor in order to effectively assess the potential environmental effects of the project. The proponent shall clearly define (in text and maps) the rationale for the spatial boundaries that are used in the environmental assessment. The study area shall include those local areas directly impacted by the works associated with the project and also zones within which there may be environmental effects that are regional or global in nature. The temporal boundaries will encompass the entire lifespan of the project and will include the construction, operations (including any maintenance and/or modifications) and decommissioning, closure and reclamation. Alternative Means of Carrying out the Project The assessment will include an analysis of the alternative means of carrying out the project that are technically and economically feasible and the environmental effects of any such alternative means. A rationale for the preferred alternative will be included. Effects of the Environment on the Project In addition to evaluating the effects of the project on the environment, including cumulative environmental effects, changes to the project that may arise as a result of the environment will also be considered. This analysis will include consideration of natural hazards such as extreme weather events. Proposed mitigation, including design strategies, will be considered in the evaluation of the effects of the environment on the project and the determination of their significance. Sustainability of Renewable Resources This will include a consideration of the capacity of renewable resources that are likely to be significantly affected by the project to meet the needs of the present and those of the future. Accidents and Malfunctions The assessment will include consideration of the potential accidents and malfunctions that could occur in any phase of the project, the likelihood and circumstances under which these events could occur, and the environmental effects that may result from such events if contingency plans are not fully effective. Cumulative Environmental Effects Cumulative environmental effects will be considered that are likely to result from the project in combination with other projects or activities that have been or will be carried out. The evaluation of potential cumulative environmental effects will include the residual environmental effects associated with the project, as identified in the screening, in combination with the environmental effects of other past, present or future projects or activities on those environmental components, (including climate change). The proponent shall clearly identify the projects to be included in the cumulative effects assessment. Version: July 8, 2010 10

Follow-up and Monitoring The assessment will include consideration of the need for and the requirements of any follow-up program in respect to the project. 5.0 PUBLIC PARTICIPATION 5.1 Opportunities for Public and Aboriginal Involvement The responsible authorities are of the opinion that public and Aboriginal Group participation in the screening of a project is appropriate. The public and Aboriginal Groups will be provided an opportunity to examine and comment on the screening report. The responsible authorities may provide an additional opportunity for public and Aboriginal Group participation throughout the screening process. The public and Aboriginal Groups will also have opportunities to participate in the assessment should the project be referred to a mediator or a review panel. Aboriginal engagement and consultation activities will be carried out as outlined in the Aboriginal Consultation framework. 5.2 Canadian Environmental Assessment Registry Pursuant to subsection 55(1) of the Act, the Canadian Environmental Assessment Registry (the Registry) has been established to provide timely notice of the environmental assessment and to facilitate public access to records related to the environmental assessment. The Registry consists of a project file and an Internet Site. The Internet Site contains the following key records about the environmental assessment: Notice of Commencement Notice of Termination (if applicable) Agreement regarding the Federal Environmental Assessment Coordinator (if applicable) Summary description of the project, including the scope of the project Description of factors and scope of those factors (i.e. scoping document) Notices to request public input or other opportunities for public participation in the screening Screening report, or a contact to access the report Responsible authorities course of action decisions Any other information considered appropriate The Internet Site of the Registry can be accessed at the following address: http:/www.ceaa-acee.gc.ca/050/index_e.cfm (Search using the Registry Reference Number: 10-01-55916). Anyone wishing to obtain copies or view records on the Registry project file may contact: Version: July 8, 2010 11

Canadian Environmental Assessment Agency Alberta/Northwest Territories Regional Office 61 Airport Road Edmonton, Alberta T5G 0W6 Telephone: (780) 495-2037 Email: CEAA.Alberta@ceaa-acee.gc.ca If you have general questions in relation to the Act, you can access the Agency website at: http://www.ceaa-acee.gc.ca/ or contact: Erin Groulx Canadian Environmental Assessment Agency Alberta/Northwest Territories Regional Office Telephone: 780-495-2629 E-mail: Erin.Groulx@ceaa-acee.gc.ca Version: July 8, 2010 12