Embracing net zero
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Leading oil sands players join rush to eliminate greenhouse gas emissions by 2050; observers believe moves vital to company images
Gary Park for Petroleum News
Unlike anything anyone could have imagined even 5 years ago, Canada’s leading synthetic and conventional crude oil producers are scrambling on to a wagon destined for net-zero greenhouse gas emissions no later than 2050 - matching the Canadian government’s own target.
That means the Canadian industry is headed in exactly the opposite direction from the Trump administration which has just announced changes to the U.S. National Environmental Policy Act that would accelerate approvals of major projects including pipelines.
For companies such as Canadian Natural Resources, Cenovus Energy and MEG Energy, the objective is to lower GHGs by 30% over the next decade, on track for the “net-zero” goal, reflecting political pressure from the government of Prime Minister Justin Trudeau and, perhaps even more, the threat of taps being turned off by investors unless those companies demonstrate a commitment to a drastic overhaul of their environmental, social and governance or ESG policies.
Opening for sands producers? Peter Tertzakian, a Calgary energy economist, believes the issues tied to ESG present an opening for oil sands producers.
He told the Calgary Herald investors are “setting the environmental policies - the pension funds, the big players - and companies that are able to certify and validate that they have reduced their emissions are going to have access to capital.”
A clear reinforcement of that message came earlier in January when he world’s largest fund manager, BlackRock Inc., joined more than 300 other major investors - with total assets under management of more than US$41 trillion - in the Climate Action 100+ initiative, which is applying undisguised pressure for corporate action and enhanced disclosure on climate issues.
Cenovus targets Benjamin Israel, a senior analyst at the Alberta-based energy and environment think-tank Pembina Institute, said the targets set by Cenovus, which is currently producing about 380,000 barrels per day from its oil sands and liquids operations, show some companies are willing to exceed existing policies.
He noted that if at some stage there is a drop in oil demand it will affect corporate production, meaning that only the “best, the most competitive oil will be able to maintain market share. Carbon competitiveness will be a very important driver.”
Pembina said the Cenovus announcement is a “great example of leadership at the individual corporate level.”
Cenovus had earlier played a pioneer role when it held conventional oil and gas operations in Saskatchewan and Alberta, starting almost 20 years ago when it injected 6,500 metric tons a day of carbon dioxide into the Weyburn-Midale CO2 Monitoring and Storage Project, which now safely holds 30 million metric tons underground in the world’s largest GHG storage partnership of 37 companies. Cenovus has since unloaded its conventional holdings that underpinned Weyburn.
‘Aspirational’ targets Canadian Natural Resources, which is targeting up to 1.2 billion barrels of oil per day in 2020 (a maximum 970,000 bpd of crude oil plus synthetic crude and natural gas liquids) - making it the largest combined producer in Canada - and MEG have both set long-term “aspirational” targets of net-zero emissions from their oil sands operations.
Those goals are within reach through advances in technologies such as Weyburn’s carbon capture and sequestration project along with increased use of solvents for oil extraction, said Cenovus Executive Vice President Al Reid.
“On GHG emissions, we’ll need more of some of the things that we’re already doing, but we’re also going to have to push ourselves,” he conceded, adding that will require technologies “that we know exist ... but aren’t economic today.”
Those methods would likely include co-generation units relying on natural gas and efforts to curb methane leaks.
Reid acknowledged that there will have to be advances in technologies that are barely on the radar, but his confidence that GHG reductions are possible shows Alberta is capable of meeting Cenovus’s goals.
But critics have been quick to point out that lowering GHGs from extraction is a long way from making the same gains at the consumption end, which account for 80% of global GHGs.
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