Canada’s major oil producers expect to make a final investment decision between the end of 2027 and the beginning of 2028. Pathways project of carbon capture and storage the initiative proposes an initial emissions reduction capacity of 6 million tons.
Kendall Dilling, president of the Oil Sands Alliance, identified that window as the period envisioned for deciding the future of an infrastructure valued at billions of dollars. However, the timeline will depend on regulatory approvals and on industry and government finalizing the necessary conditions.
The alliance represents Canadian Natural Resources, Imperial Oil, Suncor Energy, Cenovus Energy y ConocoPhillips Canada, some of the companies with the largest presence in the Canadian oil sands.
Pathways depends on agreements between oil companies and governments
For now, one of the key steps will be finalizing the tax terms between the companies, the Alberta government, and the federal government. Dilling expects the final agreements to be reached by mid-November.
The agreement must address issues such as carbon pricing, financial support, and the permits required to develop Pathways. The companies and both governments reached an agreement in July that establishes conditions for moving forward with the project, although several regulatory changes still need to be enacted into final legislation.
Cost also remains a major concern for the industry, Jon McKenzie, CEO of Cenovus Energy, noted in June that Pathways could require up to 30 billion Canadian dollars.
CO2 pipeline will connect tar sands and storage
The Pathways project includes a network to transport CO2 and a storage center intended to manage emissions from oil sands operations.
This infrastructure of carbon capture and storage it is part of plans to reduce the emissions intensity of the sector as Canada seeks to expand its oil production.
Currently, the agreed scheme aims to reduce emissions by 6 million tons by the middle of the 2030, subsequently, the industry plans to incorporate another 10 million tons of reduction by 2045.
The plan is considerably smaller than the initial proposal, which sought to achieve a reduction of 22 million tons by 2030. Environmental organizations have questioned this reduction in scale.
Dilling argues that the new timetable offers a more manageable middle ground in the face of the technical and economic difficulties involved in implementing the previous plan.
Pathways also influences Canada’s oil plans
On the other hand, carbon capture projects have gained importance within Canadian energy policy, Alberta and the federal government reached a non-binding agreement to work together on expanding carbon capture oil production while they seek to control emissions from the sector.
Premier Mark Carney has also endorsed Alberta’s proposal to develop a new export pipeline to the Pacific coast with a capacity of 1 million barrels per day. His support is contingent upon progress on the Pathways project.
Thus, the decision on CO2 capture infrastructure is linked to a broader debate on oil expansion, producer competitiveness, and Canada’s climate commitments.
The industry maintains its commitment to carbon capture
Meanwhile, companies must figure out how to spread the costs of large-scale infrastructure within a sector subject to federal policies on carbon emissions.
Concerns about competitiveness led some oil executives to publicly question whether a new pipeline should be contingent on the development of Pathways.
Despite these differences, Dilling maintains that the industry has not abandoned the project, the goal is to maintain a long-term strategy in the face of the possibility that the emissions associated with each barrel will once again have greater weight in international markets.
Therefore, the period until the end of 2027 will be crucial, before committing billions of dollars to Pathways, oil companies will need greater certainty regarding regulation, financial support, carbon pricing, and permits.
Source: Boe Report
Photo: Shutterstock
