Pipes run through Shell's new Quest Carbon Capture and Storage (CCS) facility in Fort Saskatchewan, Alta. on Oct. 7, 2021.TODD KOROL/Reuters
A massive carbon capture project to help bring production in Alberta’s oil sands to net-zero emissions is on track to begin operating in 2030, as a new report warns that Canadian crude producers will soon be competing with lower-cost, less-carbon-intensive suppliers in a shrinking global market.
Global greenhouse emissions created by fossil fuels have come into sharp focus ahead of COP28, the United Nations climate conference due to begin in Dubai on Thursday. Last week, for example, an International Energy Agency (IEA) report warned that oil and gas producers must choose between contributing to a deepening climate crisis or becoming part of the solution by embracing the shift to clean energy.
Kendall Dilling, president of the Pathways Alliance, a coalition of Canada’s largest oil sands producers, agrees that the fossil-fuel sector needs to do more to reduce its emissions. That’s why his members have spent around $1.8-billion on various technologies and pilot projects to bring production emissions to net zero by 2050, he said in an interview Monday.
That number also includes engineering, geotechnical and field work to support the foundational carbon capture and sequestration (CCS) project at the heart of the Pathways net-zero plan.
Mr. Dilling said the regulatory application for the project is imminent, but acknowledged that 2030 is a tight timeline with “zero wiggle room,” which will require efficient approvals, securing a work force and avoiding major supply chain delays.
“Those are all risks to the schedule, but we do have line of sight to 2030 right now,” he said.
Whether it’s worth future-proofing the oil sands is a point of contention in a report released Tuesday by the Pembina Institute, a think tank. In a world of declining demand where lower-emission oil secures the lion’s share of the global market, the report warns, the oil sands will be at a disadvantage owing to higher carbon intensity and more expensive emission reduction costs compared with conventional assets.
Mr. Dilling countered that the region’s emissions intensity has dropped by 23 per cent over the past 15 or so years. “That’s a moot point anyway, because we’re on a path to net zero and fully committed to redress the balance of those emissions,” he added.
The Pembina report also noted that investors will need to account more strategically for carbon competitiveness in assessing investment risks now and for the future, though Mr. Dilling said corporate boards and shareholders already consider those risks.
“We started on this net-zero plan years before there was any talk of a regulatory requirement to do so, because we know that in the long term, we have to compete on both cost and carbon,” he said. “And these projects do take a long time to develop, so you’ve got to start early.”
Canada planning $20-billion in subsidies for carbon capture, clean tech: source
Alberta to unveil new carbon capture program ahead of COP28
That’s particularly true for CCS projects such as the plan for the oil sands, which Mr. Dilling said will be helped significantly by recent federal and provincial supports. That includes the federal government’s planned tax credit for CCS projects, which will cover up to half of capital costs, and Alberta’s new CCS grant program, details of which will be announced Tuesday.
“The reality is we’re seeing more and more of these pieces that have been talked about at a theoretical level actually becoming concrete and bankable, and that gives us great confidence that we can keep moving the project forward,” he said.
The recent IEA report found that the oil and gas sector currently accounts for just 1 per cent of clean-energy investment globally, and 60 per cent of that comes from just four companies.
Director Fatih Birol said last week the industry “needs to commit to genuinely helping the world meet its energy needs and climate goals,” and let go of the illusion that an implausibly large amount of CCS is the solution.
Mr. Dilling acknowledged that CCS will likely play a fairly small part of the oil and gas sector’s overall decarbonization, but said it’s an important tool in the oil sands, where producers are in close proximity to one another and to the geology required to store captured carbon deep underground.
“It remains a critically important tool and very relevant for us in a Western Canadian context.”