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Canada focuses on emissions to push back against dirty oil sands reputation

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Canada focuses on emissions to push back against dirty oil sands reputation

Highlights

Suncor cites need to reduce emissions, invest in CO2 storage

Enbridge, Capital Power evaluating new carbon capture project

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  • Jordan Blum
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  • Jeff Mower
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Canadian oil production is back on the rise from the pandemic and efforts are ongoing to invest more in emissions reduction, carbon capture and more in order to make the industry better mesh with the ongoing energy transition and undo the longstanding reputation of the dirty oil sands.

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Suncor Energy CEO Mark Little acknowledged the Alberta oil sands account for about 10% of Canada's overall greenhouse gas emissions and that more must be done. That is why there are stricter methane and flaring regulations and a big push to develop more carbon storage hubs in Alberta and beyond where the geography is favorable.

Speaking Dec. 7 at the 23rd World Petroleum Congress in Houston, Little highlighted the building collaborative efforts since companies formed the Canadian Oil Sands Innovation Alliance to share intellectual property and technology.

"This is the great thing about being Canadian, eh. I do think we're a little more collaborative," Little said. "This is transformative. This is a massive sharing."

The reality is crude oil demand will remain a massive part of the energy mix for many decades to come, he said, and Canada has to provide it more cleanly than other countries.

S&P Global Platts Analytics expects Western Canadian crude output to climb from roughly 5 million b/d in November to 5.3 million b/d in December 2022.

In June, Suncor, Canadian Natural Resources, Cenovus Energy, ExxonMobil-led Imperial Oil and MEG Energy announced the Oil Sands Pathways to Net Zero initiative. The goal is to achieve net-zero greenhouse gas emissions from the oil sands operations by 2050 to help Canada meet its climate goals.

The key is a core Alberta infrastructure corridor linking oil sands facilities in the Fort McMurray and Cold Lake regions to a carbon storage hub near Cold Lake via a CO2 trunkline.

"We need to be low risk, low cost and low carbon," said Sonya Savage, Alberta energy minister. "We're not moving off of oil and gas anytime soon."

Savage highlighted that oil sands emissions per barrel are down 36% since 2000, and the goal is to reduce methane emissions 45% by 2025 -- relative to 2014 levels.

Bronwyn Eyre, Saskatchewan energy minister, even noted that Canada just started sourcing lithium from old oil wells.

"It's beautiful irony that lithium from oilwell brine will fuel electric vehicles for years to come," Eyre said.

Midstream roles

A big reason Canada can ramp up oil sands production volumes is the new and upcoming pipeline access to the US and other export markets.

With the capacity to ship 3.2 million b/d across 8,600 miles, Mainline is by far Canada's largest crude transporter and exporter, moving supplies from the Alberta oil sands to the Ontario and US Midwest refining markets -- and farther to the Cushing, Oklahoma storage and pricing hub, and to the US Gulf Coast through additional pipelines.

Enbridge just upped the volumes on Mainline with the Oct. 1 startup of ita Line 3 replacement project, increasing capacity on a key Mainline crude artery from 390,000 b/d to 760,000 b/d, and essentially ending the pipeline bottleneck into the US.

Next up is the expansion of the east-to-west Trans Mountain system in Canada that will hike crude capacity from more than 300,000 b/d to 890,000 b/d. The project is slated for completion by the end of 2022, although it could lag into 2023.

Savage said she just visited Enbridge's Seaway terminal near Houston that connects to the Mainline network via the Flanagan South Pipeline.

"The Line 3 expansion was critical to Alberta. We need more access to the US Gulf Coast," Savage said. "The refineries in Houston are looking for a heavier blend, which comes from the oil sands."

To aid in the energy transition, big Canadian midstream players Enbridge and TC Energy also are investing more in carbon capture, hydrogen and more.

Early in December, Enbridge and Capital Power agreed to jointly evaluate and advance a carbon capture and storage project. The proposed project would serve Capital Power's Genesee Generating Station near Warburg, Alberta. Enbridge's Open Access Carbon Hub also would serve other industries. The project could be in service as early as late 2026, Enbridge said.

Likewise, TC Energy and Pembina Pipeline partnered earlier this year to develop a large carbon storage hub called the Alberta Carbon Grid.

More recently, TC Energy and electric vehicle manufacturer Nikola Corp. said they will collaborate to develop large-scale hydrogen production hubs in the US and Canada. The goal is to utilize TC Energy's pipeline and storage assets to build hydrogen facilities in order to help manufacture Nikola's hydrogen fuel cell electric vehicles, including pickup trucks and commercial vehicles.