Vehicles drive past the Syncrude oil sands mining facility near Fort McKay, Alta. on Sept. 6, 2022.ED JONES/Getty Images
A consortium of Canada’s largest oil sands companies has reached out to pipe manufacturers, setting the stage for movement on a massive $16.5-billion carbon capture project that is expected to reduce emissions by 22 megatonnes a year.
C-suite leaders have voiced optimism they will soon reach an agreement with a federal financing body on terms to fund the plan.
Scott Stauth, president of Canadian Natural Resources Ltd. CNQ-T, and Brad Corson, president and chief executive of Imperial Oil Ltd. IMO-T, said during their separate company earnings calls this week that discussions with governments are ticking along, though there is still much to nail down when it comes to a final financing framework for the project.
The $16.5-billion project is spearheaded by the Pathways Alliance, which has pledged to bring greenhouse gas emissions created during oil sands production to net zero by 2050. The group’s six members – Cenovus Energy Inc. CVE-T, Suncor Energy Inc. SU-T, Imperial, CNRL, MEG Energy Corp. MEG-T and ConocoPhillips Canada COP-N – collectively represent approximately 95 per cent of oil sands production.
At the heart of the plan is a 400-kilometre-long pipeline that would transport carbon captured at oil sands facilities to an underground hub near Cold Lake, Alta., reducing emissions by 22 megatonnes a year.
Although engineering and regulatory work are in the early stages, Mr. Corson told a conference call Friday that each Pathways company is already working on carbon capture projects for its sites. And the group this past quarter approached pipeline suppliers for proposals on cost and timing to ensure they’re ready to go once the project’s economic framework is settled, he said.
“We want to move this forward as much as we can, but there comes a point that it will be time to order the pipe and make a large investment, and we need to have the right fiscal framework certainty for our companies and for our investors at reasonable economic returns before we can make those big investments,” Mr. Corson said.
“I’m optimistic that we’ll get those terms and we’ll keep it on track, but there’s still a lot of work to do.”
Mr. Stauth said in an interview Thursday that he’s hopeful discussions with the Canada Growth Fund and the Alberta and federal governments will result in a fiscal policy that can bring the carbon capture project to fruition.
The Canada Growth Fund (CGF) is a $15-billion entity created last year by Ottawa to support carbon capture, storage and utilization, along with other forms of clean technology, but its previous discussions with Pathways fizzled out before anything substantive was put on paper.
Pathways members are “eagerly working together towards trying to get this done,” Mr. Stauth said. But he added that the complex nature of the discussions means there is no firm timeline on when the project will move forward.
But various environmental and Indigenous groups have raised the alarm that the Alberta Energy Regulator (AER) this week denied a request to order an environmental impact assessment for the project.
The request was made in May by Ecojustice on behalf of the Athabasca Chipewyan First Nation and several environmental and community organizations. They said they were concerned that the environmental, economic, social and health effects of the project as a whole were not being assessed; rather, each part of the project would be examined separately.
Taking such a piecemeal approach would impair the regulator’s ability to adequately identify and assess all project-specific, direct, indirect and cumulative impacts, Ecojustice said.
Matt Hulse, a lawyer with Ecojustice, said in a statement that an environmental assessment would test whether Pathways’ claims are actually true – not just about its ability to reduce emissions and help address climate change, but to do so safely and cost-effectively, particularly given the taxpayer money it plans to spend.
“With Alberta unwilling to assess this project, we hope that the federal government will step up,” he said.
But that seems unlikely. The Impact Assessment Agency of Canada said in an e-mail that it has not received any information to indicate that the Pathways proposal would be subject to an assessment by the federal body.
The AER said in an e-mail that the carbon capture project as it stands does not require a mandatory impact assessment report under Alberta’s Environmental Protection and Enhancement Act, but said that could change should new information become available.
The project will require a ream of different applications for pipelines, facilities and wells, which fall under a wide range of acts that govern energy resource development in Alberta. The AER said that the environmental effects of the project will be considered throughout the application process, and added that a carbon sequestration agreement from the Government of Alberta would also be required.
The AER said that having different applications for various components of the project would allow “focused insight” and increase regulatory oversight by reviewing the details of each activity.
