Canada's crude-rich Alberta province is poised to make its first investment, a small but important $100 million, in four projects meant to prove that carbon dioxide can be injected underground.

The cash, available next month, marks the beginning of a $2 billion provincial effort to establish carbon capture and sequestration as the key to its plans to simultaneously expand oil production while reducing greenhouse gas emissions.

The province needs the plan to work. Alberta is sitting on a vast reserve of sandy crude that today provides about 1.5 million barrels daily, most of which comes into the United States to be refined into gasoline. Within 20 years, the province expects to more than double that production.

At the same time, it plans to reduce greenhouse gas emissions 14 percent by 2050. That plan could fail if the province can't shoot its growing amount of carbon into underground aquifers and other geologic formations.

"We expect our emission profile, notwithstanding CCS, to increase substantially," Sandra Locke, who runs Alberta's carbon capture and storage development effort, said yesterday.

Alberta's climate program aims to stop emissions from increasing in 2020. They would slowly begin to drop as a result of energy efficiency initiatives, carbon intensity reductions, and carbon capture and sequestration, which accounts for nearly 75 percent of the reduction.

Billion-dollar experiment

The four projects will receive $500 million from Alberta over the next three years, plus about that much from the Canadian federal government by 2015.

The projects use different technologies to snare carbon in the post-combustion phase. It will be employed at different types of facilities that will be retrofitted or built new with the capture technologies beginning in 2012. Each project is supposed to be cutting carbon output by 2015.

It is a vastly expensive experiment.

A Shell-operated upgrader, similar to a refinery, will be fitted with carbon capture equipment and a pipeline that shuttles the greenhouse gas north to an injection site. The project will catch 1.2 million tons of carbon dioxide annually at a cost of $1.35 billion over 10 years. Alberta will provide $745 million of that, with Canada chipping in $120 million.

"This project is going to have a substantial impact on the carbon emission footprint of our oil sands industry," Locke told a group of consultants, government officials and others at an event hosted by the U.S. Energy Association.

Another project, Swan Hills, will suck the carbon from an in situ coal gasification facility and pump it into the ground to push oil toward the surface. The coal-derived gas, meanwhile, will be used to generate 300 megawatts of electricity. About 1.3 million tons of carbon will be taken from that high-emission gas and sunk underground every year.

Emissions so small they're 'lost in the rounding'

The third project will tackle emissions from a 450-megawatt coal-fired power plant now under construction. The $1.3 billion effort will strip about one-third of the carbon, or 1 million tons a year, from the TransAlta plant. Alberta will pay $436 million into the effort, while Canada provides $343 million.

The last project will create a pipeline backbone for Alberta's future carbon capture effort. The Enhance Carbon Trunk Line will stretch 150 miles from existing fertilizer plants and a proposed oil sands upgrader to existing oil wells, where it will be injected to force crude to the surface. The $1.1 billion project will transport 5.5 million tons of CO2 annually, and could be expanded to carry 14 million tons in the future.

Alberta is providing $495 million for effort, and Canada is paying $63 million.

The investments together represent a major effort in Canada to maintain its ability to sell crude to the United States while reducing emissions. California and other states are threatening to block oil sands crude from entering their markets unless its carbon intensity is reduced. CCS can do that.

Canadian officials, however, emphasize that the criticism around the oil sands has been overblown. Locke noted that Alberta's bitumen production accounts for 5 percent of the nation's emissions. With Canada being responsible for 2 percent of the world's greenhouse gases, that means the oil sands contributes "less than one-tenth of 1 percent" of global emissions, she added.

"If we solved the emissions issue with the oil sands, we're not going to have much of an impact globally in reducing greenhouse gases," Locke said. "It would probably get lost in the rounding, actually. But we recognize that we do have improvements to make."