Pathways Alliance to seek regulator approval for carbon capture project

A consortium of Canada’s largest tar sands companies will submit an application before the end of the week for approval of its proposed $16.5 billion carbon capture pipeline project.

The application from industry group Pathways Alliance, which a spokesperson said will be submitted before the end of Friday to the Alberta Energy Regulator, is a major milestone for what could become one of the largest carbon capture and storage projects in the world. world if built.

The oil sands group, whose members are Suncor Energy Inc., Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., MEG Energy Corp. and ConocoPhillips Canada, has previously stated that it cannot make a final investment decision for its flagship project until it has regulatory approval in hand.

Once underway, the regulatory process is expected to take at least a year.

But in an interview Thursday, Pathways President Kendall Dilling said the filing should be interpreted as a sign of the companies’ commitment to the project.

“Anyone who understands what it takes to prepare and submit a regulatory application like this, I think will understand that it is an important milestone and a reflection of serious commitments and investments,” Dilling said.

“It has taken a couple of years and a $100 million investment to get to this stage where an application can be submitted. Yes, that is not (a final investment decision), but it is also by no means trivial.” “.

This week’s development is highly anticipated; It comes nearly three years after Canada’s largest oil sands companies announced they would join together in a joint effort to reduce greenhouse gas emissions from oil sands production.

The companies propose building a 400-kilometre line that would ultimately transport carbon dioxide emissions from 20 different oil sands production facilities in northern Alberta and safely integrate them into an underground storage hub.

A consortium of Canada’s largest oil sands companies, #PathwaysAlliance, will submit an application before the end of the week for approval of its proposed $16.5 billion carbon capture pipeline project.

Pathways has said the project could help its member companies achieve a 32 percent reduction from 2019 emissions levels by 2030.

It is the centerpiece of the tar sands industry’s commitment to achieving net-zero greenhouse gas emissions by 2050, something the industry must do if Canada is to meet its international climate commitments.

But Pathways has been criticized for its apparent slowness in putting shovels in the ground. The consortium has spent much of the last three years lobbying for federal and provincial support for its project.

While the federal government has promised an investment tax credit for carbon capture and storage projects, as well as a mechanism to support carbon pricing to provide certainty to companies considering investing in emissions reduction technology , the details of both are not yet known. to be elaborated.

“A lot of tools have been put on the table as part of the overall solution, but it has taken time (and, frankly, a frustratingly long time, from the perspective of all parties) to translate the idea into something resembling a term sheet. “That’s the kind of thing you need to make a final investment decision,” Dilling said.

“I think when you hear the industry say there’s still a gap, or we’re not there yet, what they’re saying is, ‘We can’t take these things to the bank yet.'”

As recently as this month, oil sands executives have publicly stated that the level of government support announced so far for carbon capture in Canada is not enough to make the Pathways project competitive.

At Cenovus’ recent investor day, the company’s chief sustainability officer, Rhona DelFrari, said Canada is at risk of being left behind due to a lack of competitive tax incentives.

“With what we know today…government funding partnerships in Canada are not enough for large-scale (carbon capture) to happen in the oil sands,” DelFrari said at the company’s recent investor day. company.

The Pathways project also faces a degree of uncertainty in the form of the federal government’s proposed cap on emissions from the oil and gas sector, which industry leaders have warned could lead to companies having to shut down production.

Oil sands companies also face pushback from some indigenous groups along the pipeline route. At least seven Alberta First Nations have expressed concerns about the project and have formed a working group seeking answers about how the project will affect safety and the environment.

But Dilling said he is still hopeful that a final investment decision will be made before the end of 2025, and that construction will begin in 2026.

“2026 is realistically the earliest I would expect us to be moving dirt, and I know that’s a long way off. I mean, we all wish we could start putting shovels in the dirt tomorrow,” he said.

“But there are all kinds of steps that cannot be shortcut, or things go very wrong.”

In late February, federal Natural Resources Minister Jonathan Wilkinson met with Pathways Alliance executives and urged them to work quickly to show progress on their decarbonization efforts.

In an emailed statement Thursday, Wilkinson’s press secretary, Carolyn Svonkin, acknowledged that the regulatory application is a “step forward.” She noted that Pathways had previously stated its intention to file its regulatory filing in the fall of 2023.

“Minister Wilkinson expects and expects Pathways to take other necessary steps to move quickly to complete its flagship project, including achieving its stated goal of placing the first pipeline purchase orders in early 2024,” Svonkin said.

Dilling said the Pathways project is so critical to Canada’s climate goals and the oil sands industry that it will be built, one way or another.

But he acknowledged that to achieve the group’s originally stated goal of reducing 22 million tons of tar sands emissions by 2030, time is running out.

“It’s still absolutely doable… but basically we need everything to go as planned between now and 2030,” he said.

“Even in a worst-case scenario, where some of it is delayed, I still think we’ll have buried CO2 by 2030. It would be more a question of whether it’s the full complement or whether it’s an initial tranche.” and we continue to move forward from there.”

This report by The Canadian Press was first published March 21, 2024.

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