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Oil sands leaders highlight industry’s work in shaping Canada’s paths to both net zero, prosperity during 3rd quarter earnings

November 21, 2022

Canada’s oil sands leaders reinforced the value the industry brings to Canadians and the progress they are making on their net zero emissions goals during third-quarter earnings calls earlier this month.

Speaking to investors, analysts and media, leaders from Pathways Alliance companies emphasized the economic benefits oil sands development brings to governments and communities as well as early work underway to progress one of the world’s largest carbon capture and storage (CCS) networks.

Cenovus Energy President & Chief Executive Officer Alex Pourbaix referenced a recent analysis by Peters & Co. that found in 2022 oil and gas companies are expected to send $50 billion in taxes and royalties to Canadian federal and provincial governments.

“That’s money that pays for health care, education, arts and culture, and much more across this country,” Pourbaix said on the call. “To put this in perspective, our sector’s anticipated government contributions this year are equivalent to more than two-thirds of the funding for all of Canada’s hospitals last year. That’s at a time of heavy demand under the strain of COVID.”

Leaders also highlighted key milestones achieved on Pathways Alliance’s foundational $16.5 billion CCS project. The proposal would eventually tie in more than 20 oil sands facilities – 14 to start – where greenhouse gas emissions would be captured, transported and stored safely and permanently deep underground in the Cold Lake region of Alberta.

“I’m pleased to see the Government of Alberta select the Pathways Alliance for pore space in the Cold Lake area and this is an important milestone in Pathways’ plans to develop a world scale carbon capture system for the oil sands industry,” said Suncor Interim President & Chief Executive Officer Kris Smith during the company’s earnings call. “I am encouraged by this progress and continued industry, government and stakeholder co-investment and collaboration will be key to the success of this world-scale endeavor.”

Smith was referencing a recent announcement from the Government of Alberta that the Pathways Alliance secured the right to continue exploratory work on its proposed storage hub for its ambitious CCS project.

The proposed CCS project will be one of the largest in the world and is expected to reduce carbon dioxide emissions by 10 million tonnes annually by 2030. Expansion in later phases of the Pathways Alliance plan would see the potential to capture and store 40 million tonnes annually.

A project of this size and scale requires significant collaboration, study and groundwork and that work is progressing.

“The Alliance is also conducting engineering studies for the first phase of the CO2 capture facilities as well as executing environmental field programs to support the necessary regulatory application submissions,” said Brad Corson, Imperial’s President & Chief Executive Officer on the company’s call.

Pathways Alliance also highlighted much of that progress in a recent news release.

Canadian Natural President Tim McKay spoke about provincial and federal levels of governments coming together to support this critical project.

“We would like to thank the Alberta government for their continued support as we work together on this ambitious GHG emissions reduction project,” said McKay. “Additionally, we appreciate the federal government’s recent public statements in support of the Canadian oil and gas sector’s role in global energy security, along with the commitment to be competitive on a fiscal framework for carbon capture.

“Both these developments are important steps to help Canada’s oil sands industry meet its commitment of net zero GHG emissions by 2050, which will have the industry and governments investing approximately $24 billion between now and 2030 on the Pathways foundational carbon capture storage project, and other emission reduction projects.”

MEG Energy President & Chief Executive Officer Derek Evans emphasized the need to continue working with the federal and Alberta governments to ensure Canada’s co-funding programs and regulatory environment for CCS are globally competitive and that emissions reduction targets for the industry are realistic and achievable.

“We have a 2030 target for this pipeline to be up and running. I will tell you, it’s a very challenging timeline without the sort of regulatory certainty or the financial incentive certainty that we’re going to need to make a FID (final investment decision),” Evans told the Financial Post.

“There’s no lack of will, there’s no lack of desire to make sure that this happens,” he said, reinforcing the early work being done on the project.

“We are progressing the engineering work, the survey work. We just let a contract for multiple millions of dollars to get the surveying done on the right-of-way. So we are moving forward sort of faster than you normally would in a company. You would wait typically until you had FID approval on some of the expenditures that we’re moving forward on today with the assumption that we will be able to sort out the regulatory aspects of this as well as the financial incentives that we need to achieve FID.”

Learn more about the Pathways Alliance plan here.

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Cautionary Statement: Statements of future events or conditions in this press release, including projections, targets, expectations, estimates, and business plans are forward-looking statements. Forward-looking statements can be identified by words such as achieve, aspiration, believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, forecast, vision, strategy, outlook, schedule, future, continue, likely, may, should, will and/or similar references to outcomes in future periods. Forward-looking statements in this press release include, but are not limited to, references to the viability, timing and impact of the Oil Sands Pathways to Net Zero initiative collaboration and the development of pathways in support of a net-zero future; support for the pathways from the Government of Alberta and the Government of Canada; the ability to enable net zero emissions from oil production and preserve economic contribution from the industry; the continued role of fossil fuels as part of a diversified energy mix; and the deployment of technologies to reduce GHG emissions, such as CCUS, process improvements, energy efficiency, fuel switching, electrification, infrastructure corridors and new emissions-reducing technologies. All net-zero references in this announcement apply to emissions from oil sands operations (defined as scope 1 and scope 2 emissions).

Forward-looking statements are based on current expectations, estimates, projections and assumptions at the time the statements are made. Actual future results, including expectations and assumptions concerning: demand growth and energy source, supply and mix; amount and timing of emissions reductions; the adoption and impact of new facilities or technologies, including on reductions to GHG emissions; project plans, timing, costs, technical evaluations and capacities, and the ability to effectively execute on these plans and operate assets; that any required support for the pathways from the Government of Alberta and the Government of Canada will be provided; applicable laws and government policies, including climate change and restrictions in response to COVID-19; production rates, growth and mix; general market conditions; and capital and environmental expenditures, could differ materially depending on a number of factors. These factors include global, regional or local changes in supply and demand for oil, natural gas, and petroleum and petrochemical products and the resulting price, differential and margin impacts; political or regulatory events, including changes in law or government policy and actions in response to COVID-19; the receipt, in a timely manner, of regulatory and third-party approvals including for new technologies; lack of required support from the Government of Alberta and the Government of Canada; environmental risks inherent in oil and gas exploration and production activities; environmental regulation, including climate change and GHG regulation and changes to such regulation; availability and allocation of capital; availability and performance of third-party service providers; unanticipated technical or operational difficulties; project management and schedules and timely completion of projects; reservoir analysis and performance; unexpected technological developments; the results of research programs and new technologies, and ability to bring new technologies to commercial scale on a cost-competitive basis; operational hazards and risks; general economic conditions, including the occurrence and duration of economic recessions; and other factors referenced by the companies’ in their most recent respective annual reports and management’s discussion and analysis, as applicable.

Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to the companies. Actual results may differ materially from those expressed or implied by its forward-looking statements and readers are cautioned not to place undue reliance on them. The companies undertake no obligation to update any forward-looking statements contained in this press release, except as required by applicable law.