It seems to be the elephant in the room, especially for a resident of Alberta. We don’t discuss oil and gas; it’s a very political topic, designed to create division among Canadians. Lucy expected that there would be a cap on oil production announced by the Federal Government to help meet the targets of CO2 reductions for 2030 and 2050 with the survival of our planet at stake. That does not seem to be coming. The cap focuses only on emissions and not on oil and gas production. Because of the carbon tax imposed on companies, the focus for oil and gas companies is on reducing emissions and making the production of oil and gas much cleaner. Lucky for the oil and gas companies, the oil price of late has been high, as these efficiencies are expensive. As well the Feds are helping fund innovation. For example, the pricey ‘carbon capture’ seemed at one point to be unattainable, and now, within only a few yeas, is considered mainstream. Who knows, Canada may be well positioned to have the cleanest oil and gas by 2050, and this is good, since the world will want our oil and gas and a certain amount of it will always be needed. But, in line with recent CBC opinion polling, production limits should also be part of the equation, as every approach and tool and type of ingenuity will have to be part of the equation. We humans are continually behind in meeting every target that has been set to limit our planet from exceeding an increase of 1.5 degrees.
Options to cap and cut oil and gas sector greenhouse gas emissions to achieve 2030 goals and net-zero by 2050 suggested by the Government of Canada
Canada’s current target is to cut emissions by 2030 to 55 to 60 per cent of what they were in 2005. That will require cutting around 300 million tonnes a year from current levels. Canada plans to invest in alternative energies including biogas and hydrogen, smaller unit nuclear power and carbon capture, utilization and storage.
In the fall of 2022 the Federal government, with ‘Best-in-class draft guidance’ sought feedback on how to proceed in its two proposed options for capping oil and gas sector emissions.
Choice 1: Cap and Trade System that sets a regulated limit on emissions from the sector or
Choice 2:Modifying the pollution pricing benchmark requirements to create price-driven limits on emissions from the oil and gas sector.
(A decision is expected in 2023. The feedback sent to the Federal government from the Pembina Institute will be blogged at the end of this post.)
“Reaching Canada’s 2030 climate targets and achieving net-zero will require significant additional reductions, and there is no single or simple solution for transitioning Canada’s oil and gas sector towards net-zero by 2050. Given the unique features of each subsector, multiple pathways will be required. Solutions will also vary regionally, depending on access to infrastructure, carbon storage, energy grid mixes, and availability of clean electricity and other fuels.”
Key Decarbonization Options for the Oil and Gas Sector
“Electrification includes the deployment of co-generation, renewables, small nuclear reactors, or electrification of transport equipment, operational processes and low-temperature heat processes to reduce GHG emissions from the combustion of fossil fuels throughout the oil and gas sector.
Steam displacement refers to the use of solvents, such as diluent, propane, and natural gas that chemically dilute bitumen to reduce viscosity and allow it to flow at lower temperatures, reducing the need to generate and use steam by in-situ oil sands production, a major source of GHG emissions
Fuel switching opportunities include replacing petroleum coke boilers with natural gas equipment and the expanded use of low-carbon or renewable fuels for heat and energy, including clean hydrogen.
Energy efficiency and other process improvements include upgrades to equipment, use of advanced leak detection and repair technologies, digitization and automation of processes, among other solutions.
Methane Abatement options include continuous leak detection and repair, electrification of equipment such as compressors and pneumatic devices fueled by natural gas and limiting fugitive releases from tanks and wells. “
Carbon Capture, Utilization and Storage (CCUS) has potential to mitigate a significant share of GHG emissions from the oil and gas sector by 2050.
“About 88% of oil sands emissions come from burning fossil fuels to extract bitumen during mining or in-situ operations and to upgrade that bitumen into synthetic crude. Oil sands producers have been investigating ways to reduce the steam-oil ratio which would reduce the amount of natural gas required for bitumen extraction. The use of solvents to assist the steam extraction process can become cost-effective at higher crude prices. Advances in post-combustion capture could also help capture CO2 emissions from combustion equipment. For example, companies such as Svante and Fluor have been developing next generation absorbent and adsorbent technologies, and Shell Canada’s Cansolv technology has been deployed successfully to recover CO2 from the Boundary Dam coal-fired generating station in Saskatchewan.”
“Some emerging solutions, such as clean hydrogen blending to replace natural gas, the use of solvents for steam displacement, and methane capture and use, could be implemented in the coming years, while others such as small nuclear reactors could take more than a decade to implement.”
Investments Being Made By the Oil and Gas Sector
“The oil and gas sector is one of the leading investors in clean technology and innovation in Canada, making an estimated 58% of all energy research and development investments (averaging about $1B/year) over the decade to 2019. Oil and gas companies such as Shell Canada, Whitecap Resources, Wolf Midstream, Enhance Energy, and Northwest Redwater Partnership are leaders in carbon capture, utilization and storage (CCUS).“
“Other companies have announced investments and plans to decarbonize their operations in the coming decades. For example, Pembina Pipeline announced a $195 million project to fuel operations with wind power in 2021. Suncor Energy and ATCO are in the early stages of developing a clean hydrogen project that could reduce emissions at Suncor’s Edmonton oil refinery by 60 per cent and provide broader benefits for Alberta. Tidewater Midstream and Imperial Oil are advancing renewable diesel projects. These are just some recent examples of innovative projects for emissions reductions in the oil and gas sector.”
“Many Canadian oil and gas companies have already set net-zero-emissions targets and have developed decarbonization plans. This includes the Pathways Alliance, comprised of Canadian Natural Resources, Cenovus Conoco Phillips Canada, Imperial Oil, MEG Energy and Suncor Energy — which collectively account for 95% of Canada’s oil sands production. To achieve net-zero by 2050, this Initiative proposes a $75 billion investment to deploy a combination of clean electrification, operational efficiencies, emerging technologies such as low-emission hydrogen and carbon capture, small modular nuclear-image below), and offsets to eliminate 68 Mt from oil sands operations.”
“Central to these planned activities is the point-source capture of CO2 from oil sands facilities, which would travel by pipeline from Fort McMurray to be sequestered permanently underground. The Pathways Initiative, with a slogan “Let’s Clean the Air” envisions a phased GHG reduction over three 10-year segments to 2050, starting with 22 Mt of absolute emission reductions by 2030. The Pathways Alliance, representing Canada’s six largest oil sands companies, is (spending many billions of dollars) advancing early work necessary to build one of the world’s largest carbon capture and storage (CCS) facilities in the oil sands region of northern Alberta.”
“Canada’s oil and gas sector is poised to leverage its expertise to gain a competitive advantage in a range of emerging industries. Clean fuels such as hydrogen are expected to help Canada achieve its net-zero target while creating jobs and economic opportunity in Canada. Given the essential role hydrogen plays as a feedstock in refining, increasing the use of clean hydrogen presents an opportunity to drive down emissions from the sectorFootnote 20. Growth in production of value-added non-combustion products such as asphalt, petrochemicals, zero-carbon fuels or carbon fibres also presents major opportunities in a world transitioning to net-zero.”
What Does the Pembina Institute Think?
In September 2022, the Pembina Institute submitted comments to Environment and Climate Change Canada on its two proposed options for capping oil and gas sector emissions (as listed above).
This cap will be crucial in ensuring that Canada’s oil and gas sector contributes its fair share of greenhouse gas emissions reductions to Canada’s economy-wide targets (of a 45% reduction below 2005 levels by 2030, and net-zero by 2050). Oil and gas production remains Canada’s largest source of emissions, and unlike some other industrial sectors, its emissions have continued to grow in recent years — by 19% between 2005 and 2019. To do its fair share, Canada’s oil and gas sector must also reduce its emissions by 45% from 2005 levels by 2030.
“Environment and Climate Change Canada should finalize and announce a clear emissions cap target for 2026 and 2030. At a minimum, the cap for oil and gas sector emissions should be set at a 45% reduction from 2005 levels by 2030, with clear implementation timelines. Providing this level of certainty on the trajectory and ambition of the cap is critical to incentivize urgent investments in decarbonization. Recent opinion polling illustrates that most Canadians agree that it is time for a cap on emissions from oil and gas production, to ensure that this sector does its fair share in achieving Canada’s climate targets.”
“Both cap Options 1 and 2 are complex, and require careful design and implementation to ensure appropriate emissions reductions, while preparing Canadian industry for a net-zero global economy…… and with the urgency of reducing Canada’s rising oil and gas sector emissions, Option 1 (cap-and-trade) is preferred. It likely offers the earliest implementation date (in 2024 or early 2025) and could be designed to work with existing measures to further incentivize the oil and gas sector to do its fair share to meet Canada’s 2030 emission reduction targets.”
“If the Government of Canada does not believe Option 1 can implemented in these stated timelines, we propose a third option — a system of facility-level emissions limits similar to the federal coal-fired electricity facility limits. This interim option should be rapidly implemented to drive timely emission reductions at oil and gas facilities. Option 1 could still be developed in parallel and implemented when ready. At that time, the facility limits could be rescinded, if found to be redundant with cap-and-trade.“
We shall see what the Federal Government decides in 2023. The conservative government of Alberta believes that the Federal government can not mandate cuts in oil and gas production, an speculates that the aggressive emissions reduction targets for the oil and gas sector is only possible with cuts to production as well. Interesting! This is also what most environmentalists are saying.
The Government is committed to eliminating inefficient fossil fuel subsidies, and developing a plan to phase out public financing for the fossil fuel sector including by federal Crown corporations. It has also established the Emissions Reduction Fund (ERF) and the Energy Innovation Program (EIP).
Are CO2 Emissions Being Underestimated?
In an article by Nature.org titled” Measured Canadian Oil Sands CO2 Emissions Made Using internationally Recommended Methods” the abstract says:
CBC Survey “ Albertans Aren’t Afraid Of Transitioning Away From Oil”
November 16, 2022 random poll of 1200 people posted by Elise Avon Scheel for CBC News
So 62 % of Edmontonians and 64% of Calgarians and 50% of those in the rest of the province believe that transitioning Alberta’s economy away from fossil fuels could be a good thing. There is an attitude shift happening in Alberta! Maybe we can talk about oil after all!