Net-Zero Emissions Will Cost Canada’s Oil Sands $60 Billion

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What is the Role of Oil and Gas Companies in the Energy Transition?

With the year 2050 looming as the target date of net-zero emissions, Canada’s Oil Sands contribution is expected to sticker at $60 billion, with the Canadian government having to fund approximately two-thirds of the cost. With Norway having to succumb to similar strategies, Canada is not alone.

Although carbon capture and storage are being steered to make up the 50% reduction of emissions, Cenovus Energy CEO, Alex Pourbaix, does not feel the oil and gas industry can effectively cover all of the required investments alone. 

“I don’t think any of us would ever be in a position to go at this on our own,” said Pourbaix. “It’s just too significant an undertaking.”

Net-Zero Collaboration Initiative

Identifying strengths and weaknesses, top companies of the oil sands announced a collective commitment and formed a net-zero collaborative initiative to meet the 2050 goal. Several industry moguls joined, including Canadian Natural Resources, Cenovus Energy, Imperial, MEG Energy and Suncor Energy.

A proactive strategy has been developed and will be utilized by participants in working collectively with the federal and Alberta governments to consider methods of reducing emissions from production, a crude oil-extraction process that yields significant carbon emissions numbers. The oil sands ranks number one globally on having the greatest carbon emissions footprint.

The initiative seeks goal achievement through a Carbon Capture, Utilization and Storage (CCUS) trunkline, which will be designed for multi-sector attachment projects. This will be made possible through connections to a carbon sequestration hub. The trunkline itself is being designed to connect Fort McMurray oil sands facilities and Cold Lake regions. The project has been identified as a major infrastructure corridor in Alberta.

Emission issues will also be tackled through other technological outlets such as clean hydrogen, process improvements, energy efficiency, fuel switching, and electrification. Producers will further evaluate the effectiveness of emission reduction methods, including direct air capture, next-generation recovery technologies, and smaller modular nuclear reactors.

“We are doing more than just talking about the need to play a role — we are taking bold action to address our emissions challenge and earn our spot as the supplier of choice to meet the world’s growing demand for energy,” said Pourbaix.

Canadian Crude

Despite the focus on emissions in addition to the pandemic-induced global oil price slump, Canada succeeded in increasing its contribution to world oil production numbers. According to the Alberta Department of Finance, crude oil production rose from 3.1% in 2019 to 3.3% in 2020.

“Canadian oil sands production recovered rapidly to exceed pre-pandemic levels by the end of 2020, and the outlook for longer-term growth remains substantial,” said Kevin Birn, Vice President and Head of Canadian oil market, IHS Markit.

While the IHS Markit speculates a rise of 3.6 million barrels per day (bpd) in 2030, the forecast is actually lower than previous projections, which included increased production numbers of 3.8 million bpd in the year 2030.

“[L]ingering impacts from the ‘COVID-19” Shock,’ delays to critical transportation infrastructure, and rising energy transition pressures have trimmed that growth outlook from previous estimates,” said Birn.

Nick Vaccaro is a freelance writer and photographer. Besides providing technical writing services, he is an HSE consultant in the oil and gas industry with eight years of experience. He also contributes to Louisiana Sportsman Magazine and follows and photographs American Kennel Club field and herding trials. Nick has a BA in Photojournalism from Loyola University and resides in the New Orleans area. 210-240-7188 [email protected]

 

 

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