Calgary, Alberta-based Enbridge (NYSE: ENB), an oil and gas transporter, announced plans to lead a group of 19 energy companies in a Canadian carbon capture and storage project.

The company released the news just days after the U.S. government-backed $1.8 billion FutureGen project was put out of commission due to rising costs (see FutureGen goes FutureBust).

The U.S. decided to spread its funding over a number of projects instead of just one major demonstration plant.

Enbridge's announcement also comes on the heels of a report from a Canadian government-backed carbon capture and storage project that recommends the country spend Cdn $2 billion to encourage the technology.

Jennifer Varey, a spokeswoman for Enbridge, said the U.S. and Canadian government news did not affect the timing of Enbridge's announcement, which had been in the works for about a year.

"We showed a fairly major presentation a couple of months ago to the Petroleum Technology Alliance of Canada where we presented the project idea and looked for support from the industry," she said.

Enbridge's plans call for much more modest numbers than the government project, with an eventual commercial-scale operation pegged at over $200 million.

The Enbridge-led plan, called the Alberta Saline Aquifer Project, or ASAP, includes a couple of crossover companies that are on both Canadian projects.

Houston-based ConocoPhillips (NYSE: COP) and Edmonton, Alberta-owned Epcor Utilities are participating in ASAP, as well as in the government-backed Integrated CO2 Network, or Ico2n.

Ico2n, which has 15 participating companies, is chaired by Steve Snyder, CEO of Calgary's TransAlta (NYSE: TAC).

"We really see this as a complementary project," said Varey. "Our focus is going to be on sequestration in deep saline aquifers."

The government-backed Ico2n project includes the use the use of enhanced oil recovery, or EOR, where carbon dioxide is injected into existing oil reservoirs to extract more resource.

The ASAP project won't include an enhanced oil recovery system.

"What we're seeing is that the anticipated demand for EOR is going to be well below the anticipated levels of carbon that would be available to capture and sequester," she said.

ASAP would likely grab the CO2 at what are called large final emitters, including coal or natural gas fired power plants, and oil and natural gas processing facilities.

Alberta is the largest producer of oil and natural gas in Canada, producing an average of 1.8 million barrels of oil daily, and pumping out a total of 5.081 trillion cubic feet of natural gas in 2006.

"There's a range of factors that we would consider in terms of choosing suitable sites. Geology would be one," said Varey.

"We'd also be looking at being in fairly close proximity to a source of CO2."

Enbridge said it expects to spend $750,000 to narrow the search down to two or three suitable sites by the end of this year.

In 2009, the group plans to start work on a single pilot project where a storage site would be designed to receive injected carbon dioxide.

The construction is expected to take about a year, with the cost for the pilot plant projected to be $30 million to $50 million.

"We would operate a pilot project for probably two to three years to make sure that we can monitor and measure and make sure that it's behaving as we anticipate," said Varey.

A large-scale, long-term, commercial storage operation would likely cost over $200 million.

There's at least one startup on the roster of ASAP — Cambridge, Mass.-based GreatPoint Energy, which just received an influx of cash from St. Louis, Mo.-based Peabody Energy (NYSE: BTU), the world's largest coal producer (see Peabody takes stake in GreatPoint Energy).

GreatPoint is developing a single-stage catalytic gasification process to create natural gas that is 99.5 percent pure methane and can be transported using the existing natural gas pipeline infrastructure.

Some of the other participants in ASAP include ATCO Power, BP Canada Energy, Chevron Canada Resources, EnCana (NYSE: ECA), TransCanada (NYSE: TRP), Opti Canada, and Penn West Energy Trust (NYSE: PWE).