(Oil Price)– The fate of Canada’s largest proposed carbon capture and storage project now hangs in the balance after Prime Minister Justin Trudeau announced that he would resign after a new leader of his Liberal Party is chosen.
According to industry watchers, the $16.5B project faces an uncertain future with a new federal government to be elected later this year. To be built by the Pathways Alliance, a consortium whose members include some of Canada’s largest energy companies, the high-profile project would capture harmful carbon dioxide emissions from the Canadian oilsands, the country’s heaviest-emitting sector.
“I can’t imagine a huge project like that could really move forward in a time like right now,” Michael Bernstein, executive director of the non-profit group Clean Prosperity, told Bloomberg. “When you’re looking at a project that has at least a 15-year time horizon, you want as much certainty as possible. And there’s just more uncertainty than I can remember in my whole time doing this work right now,” he added.
Over the past decade, major oil companies, under pressure from investors and environmentalists, have been fleeing Canada’s oil sands, the fourth-largest oil reserve in the world, while investment in existing projects has stalled. A lack of pipelines and heavy emissions have weighed on the Canadian heavy crude sector for years, with some companies exiting after coming under pressure to invest in projects with lower emissions. According to research firm Rystad Energy, oil sands production in Alberta generates ~160 pounds of carbon per barrel of crude pumped, the highest of any oilfield in the world.
The fate of Canada’s largest proposed carbon capture and storage project now hangs in the balance after Prime Minister Justin Trudeau announced that he would resign after a new leader of his Liberal Party is chosen.
According to industry watchers, the $16.5B project faces an uncertain future with a new federal government to be elected later this year. To be built by the Pathways Alliance, a consortium whose members include some of Canada’s largest energy companies, the high-profile project would capture harmful carbon dioxide emissions from the Canadian oilsands, the country’s heaviest-emitting sector.
“I can’t imagine a huge project like that could really move forward in a time like right now,” Michael Bernstein, executive director of the non-profit group Clean Prosperity, told Bloomberg. “When you’re looking at a project that has at least a 15-year time horizon, you want as much certainty as possible. And there’s just more uncertainty than I can remember in my whole time doing this work right now,” he added.
Over the past decade, major oil companies, under pressure from investors and environmentalists, have been fleeing Canada’s oil sands, the fourth-largest oil reserve in the world, while investment in existing projects has stalled. A lack of pipelines and heavy emissions have weighed on the Canadian heavy crude sector for years, with some companies exiting after coming under pressure to invest in projects with lower emissions. According to research firm Rystad Energy, oil sands production in Alberta generates ~160 pounds of carbon per barrel of crude pumped, the highest of any oilfield in the world.
“We’re going to make sure we do a robust consultation to get it right. If we get it right, that means that we’re going to see another economic boom here in Alberta,” Jean told Reuters in an interview.
Canada has set a net-zero emissions by 2050. A number of companies including Enbridge Inc.(NYSE:ENB), TC Energy Corp. (NYSE:TRP) as well as Pathways Alliance have proposed building major CCS storage hubs.
Their American peers are considerably ahead .
Last year, Exxon Mobil (NYSE:XOM) acquired the developer of carbon capture, utilization and storage (CCUS) solutions, Denbury Inc. in an all-stock transaction valued at $4.9B, or $89.45/share. Denbury recycles CO2 through its Enhanced Oil Recovery (EOR) operations and uses it to produce environmentally-friendly, carbon-negative Blue Oil. The company owns the largest CO2 pipeline network in the U.S. at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas and Mississippi, as well as 10 onshore sequestration sites.
The acquisition is part of ExxonMobil’s newly-launched CCUS projects. Exxon CEO Darren Woods says that the company’s Low Carbon business has the potential to outperform its legacy oil and gas business within a decade and generate hundreds of billions in revenues.
In 2023, Exxon CEO Darren Woods told investors that the company’s low-carbon business has the potential to outperform its legacy oil and gas business within a decade and generate hundreds of billions in revenues. According to Woods, the business has the potential to hit hundreds of billions after the initial 10-year ramp-up. However, Ammann said that whether Exxon is able to actualize its dream will depend on regulatory and policy support for carbon pricing and the cost of abating greenhouse gas emissions, among other changes. Exxon believes that the Low Carbon segment will be “much more stable, or less cyclical” and also less prone to commodity price swings through predictable, long-term contracts with customers aiming to lower their own carbon footprint.
In the same year, oil field services giant Schlumberger Ltd (NYSE:SLB) unveiled its newly carved SLB New Energy unit. The segment will invest in hydrogen, carbon solutions, energy storage, geothermal and geoenergy and critical minerals. According to SLB New Energy president Gavin Rennick, the new unit has the potential to hit revenue of $3 billion by the end of the current decade and at least $10 billion by the end of the next decade.
By Alex Kimani for Oilprice.com
