Slower production growth and declining GHG intensity limited oil sands absolute emissions growth in 2023

Getting your Trinity Audio player ready...

The greenhouse gas intensity of the Canadian oil sands continued to decline in 2023. Since 2009, S&P Global Energy estimates that the annual average GHG intensity of the Canadian oil sands declined 28%, or nearly 23 kgCO2e/b of marketable product (synthetic crude oil [SCO] or diluted bitumen [dilbit]).

In 2023, the average GHG intensity of oil sands product was 58 kgCO2e/b, but in a system of over 30 facilities, performance was not consistent. Production of steam-assisted gravity drainage dilbit saw a modest increase in GHG intensity, which was more than offset by rising output from less GHG intensive mining operations.

The slower pace of absolute emissions continued in 2023, rising by less than 1 million MtCO2e, to just over 82 million MtCO2e. This was the third consecutive year of modest absolute emissions gains. Since 2020, absolute emissions growth from oil sands has slowed to average about 1% per year compared with 5% in the preceding decade. Slower production growth has been a factor but is not the entire story. Compared with 2019, absolute emissions were just short of 3 million MtCO2e (3%) higher in 2023 while production was over 250,000 b/d greater (9%). This indicates that the production additions that have occurred have come at much lower emissions intensity.

Last year we wrote that the lower pace of absolute emission growth may indicate emissions could peak sooner and at a lower level than previously expected. Based on 2023 operations, evidence continues to suggest this could be the case. The slower pace of emission additions could make achieving the proposed federal oil and gas emissions limit more achievable. Our current projections, however, continue to suggest anticipated production additions will outstrip near-term intensity reductions, pushing absolute emissions materially higher. Should this occur, greater decarbonization efforts from the sector will be required to meet the proposed federal oil and gas emissions limit by 2030. In this regard, time is not on the industry’s side, with carbon capture and storage (CCS) taking over a half decade or more to be brought online. As we move closer to 2030, the likelihood of bringing online sufficient CCS capacity becomes more challenging.

Defining GHG intensity

Compared with prior oil sands GHG intensity updates by Energy, the system boundaries, or the definition of GHG intensity, has changed. Prior GHG intensity estimates included both emissions associated with diluent production, and share in blended bitumen, but also upstream natural gas extraction emissions. To align with comparisons from other basins, the emissions associated with upstream production of natural gas used in oil sands operations were not included in this most recent estimate.

For comparison, if those emissions are also included the GHG intensity of Canadian oil sands in 2023, they would be 66 kgCO2e/boe, 2% lower than 2022. Compared with 2009, the GHG intensity would have declined 26%. Absolute emissions system boundaries are not impacted as they consider only direct scope 1 emissions.

It is important to note that the S&P Global oil sands absolute GHG estimate is still from Canada’s National Inventory Report by facilities included. Energy understands the NIR includes the emissions of both the Cenovus Energy Bi-Provincial Upgrader as well as the Northwest Redwater Refinery. BPU is not included our analysis because it is not dedicated to upgrading oil sands bitumen, and it also processes non-oil-sands-derived heavy oil. The NWR facility is not included because it is designed to market refined product.

Report disclaimer

The names "S&P Global Energy", "Energy" and "Platts" and the logo are trademarks of S&P Global Inc. Permission for any commercial use of the SPGCI logo must be granted in writing by S&P Global Inc.

You may view or otherwise use the information, prices, indices, assessments and other related information, graphs, tables and images ("Data") in this report only for your personal use or, if you or your company has a license for the Data from S&P Global Energy ("SPGCI") and you are an authorized user, for your company’s internal business use only.  You may not publish, reproduce, extract, distribute, retransmit, resell, create any derivative work from and/or otherwise provide access to the Data or any portion thereof to any person (either within or outside your company, including as part of or via any internal electronic system or intranet), firm or entity, including any subsidiary, parent or other entity that is affiliated with your company, without SPGCI’s prior written consent or as otherwise authorized under license from SPGCI.  Any use or distribution of the Data beyond the express uses authorized in this paragraph above is subject to the payment of additional fees to SPGCI.

SPGCI, its affiliates and all of their third-party licensors disclaim any and all warranties, express or implied, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use as to the Data, or the results obtained by its use or as to the performance thereof.  Data in this SPGCI product or report includes independent and verifiable data collected from actual market participants. Any user of the Data should not rely on any information and/or assessment contained therein in making any investment, trading, risk management or other decision. SPGCI, its affiliates and their third-party licensors do not guarantee the adequacy, accuracy, timeliness and/or completeness of the Data or any component thereof or any communications (whether written, oral, electronic or in other format), and shall not be subject to any damages or liability, including but not limited to any indirect, special, incidental, punitive or consequential damages (including but not limited to, loss of profits, trading losses and loss of goodwill). The inclusion of a link to an external website by SPGCI should not be understood to be an endorsement of that website or the site’s owners (or their products/services).  SPGCI is not responsible for either the content or output of external websites. 

ICE index data and NYMEX futures data used herein are provided under SPGCI’s commercial licensing agreements with ICE and with NYMEX.  You acknowledge that the ICE index data and NYMEX futures data herein are confidential and are proprietary trade secrets and data of ICE and NYMEX or its licensors/suppliers, and you shall use best efforts to prevent the unauthorized publication, disclosure or copying of the ICE index data and/or NYMEX futures data.

The Data in this report contains the results of SPGCI’s independent research and analysis and is intended for general informational purposes only. The Data is not intended, and may not be used, to promote, directly or indirectly, the supply or use of any product or business interest, including, but not limited to, the benefits of any product, business, or business activity for protecting or restoring the environment or mitigating the causes or effects of climate change. No Data or opinions contained herein constitute a representation to the public with respect to the benefits of any product, business or business activity, and should not be relied on as a recommendation for any specific action to be taken.

Permission is granted for those registered with the Copyright Clearance Center (CCC) to copy material herein for internal reference or personal use only, provided that appropriate payment is made to the CCC, 222 Rosewood Drive, Danvers, MA 01923, phone (978) 750-8400. Reproduction in any other form, or for any other purpose, is forbidden without the express prior permission of S&P Global Inc. For article reprints contact: The YGS Group, phone +1-717-505-9701 x105 (800-501-9571 from the U.S.).

When materials are provided by Herold -

IHS Herold Inc. ("IHS Herold"), a wholly-owned subsidiary of SPGCI, provides data and analysis on the strategy, performance, and valuation of companies in the global energy industry, as well as energy transactions and trends. IHS Herold serves a subscription client base consisting of energy companies, financial institutions, investment managers, and advisory firms. IHS Herold is not affiliated with any broker, dealer, bank, or investment bank. Companies mentioned in this report may be or may have been subscribers to IHS Herold data and research in the past year on terms consistent with all other clients of IHS Herold or clients of any member of the S&P Global group. IHS Herold does not inform any company in advance of the nature or conclusions of its research reports. Analysts do not receive any compensation from the companies on which they report or from any other industry source. Copyright © 2023S&P Global. All rights reserved. The Company Viewpoint report is published by IHS Herold, 383 Main Avenue, 7th Floor, Norwalk, CT 06851, USA for the exclusive use of SPGCI clients. Reproduction of this report, even for internal distribution, is strictly prohibited. The information contained herein has been obtained from sources believed to be reliable, but neither SPGCI nor any of its affiliates guarantees their accuracy or completeness. No information or opinions contained herein constitutes a representation or solicitation for the purchase of any securities of the companies mentioned herein. From time to time, IHS Herold and/or its officers and employees may have long or short positions in the securities mentioned herein or during the past year may have transacted in securities of the companies mentioned. The research analysts who prepared this report certify that the views expressed herein accurately reflect their professional opinions, are consistent with established IHS Herold methodologies and standards, and that no part of their compensation was, is, or will be directly or indirectly related to specific views contained in this report.

For all other queries or requests pursuant to this notice, please contact SPGCI via email at support.energy@spglobal.com.

The names "S&P Global Energy", "Energy" and "Platts" and the logo are trademarks of S&P Global Inc. Any commercial use of the SPGCI logo must be granted in writing by S&P Global Inc.

You may view or otherwise use the information, prices, indices, assessments and other related information, graphs, tables and images ("Data") in this blog only for your personal use. You may not publish, reproduce, extract, distribute, retransmit, resell, create any derivative work from and/or otherwise provide access to the Data or any portion thereof to any person (either within or outside your company, including as part of or via any internal electronic system or intranet), firm or entity, including any subsidiary, parent, or other entity that is affiliated with your company, without prior written consent.

The views and opinions of any author, contributor or third party speaker are his/her own and may not necessarily represent the views or opinions of SPGCI or any of its affiliates. SPGCI does not guarantee the adequacy, accuracy, timeliness and/or completeness of the information and shall not be subject to any damages or liability for the contents herein. The views and opinions contained herein should not be relied on in making any investment, trading, risk management or other decision. The Data in this blog contains the results of SPGCI’s independent research and analysis and is intended for general informational purposes only. The Data is not intended, and may not be used, to promote, directly or indirectly, the supply or use of any product or business interest, including, but not limited to, the benefits of any product, business, or business activity for protecting or restoring the environment or mitigating the causes or effects of climate change. No Data or opinions contained herein constitute a representation to the public with respect to the benefits of any product, business or business activity, and should not be relied on as a recommendation for any specific action to be taken.

Any queries or requests pursuant to this notice should be addressed to SPGCI via email at support.energy@spglobal.com.

Theme

Crude Oil Refined Products

Kevin Birn

Editor:

Barbara Caluag

Slower production growth and declining GHG intensity limited oil sands absolute emissions growth in 2023

Defining GHG intensity

US-Israeli Conflict with Iran