Canada's oilsands producers get Alberta government OK to evaluate proposed carbon storage site

Canada's largest oilsands producers signed an agreement with the Alberta government allowing them to assess the geology of an underground carbon storage site, a step in their plan to tackle greenhouse gas emissions, the companies said on Wednesday.

The Pathways Alliance, consisting of six companies representing 95 per cent of Canada's oilsands production, is proposing a carbon capture and storage (CCS) hub that will gather and store emissions from 14 oilsands projects in northern Alberta by 2030.

The oil and gas sector is Canada's highest-polluting industry and CCS is an important plank in Pathways' plan to reach net-zero emissions by 2050.

But the costly technology takes years to build, and proposed Canadian projects are relying on government support to move forward.

The CCS plan is expected to cost about $16.5 billion by 2030. Last year the Canadian government unveiled a CCS investment tax credit, but the oil industry is asking federal and provincial governments for further financial support.

The agreement enables the alliance to immediately start a detailed evaluation of its proposed storage hub in the Cold Lake region, which will help with field development plans to support the final application to the Alberta government.

Pathways Alliance president Kendall Dilling called it a significant milestone.

"You just need that next level of detail of understanding. So this allows us to go out and start acquiring that data," he said.

Dilling says the engineering and regulatory work for the project will get rolling as well.

"It'll be a really busy year for the project."

Pathways has not yet made a final investment decision on the CCS project. The alliance plans to file a regulatory application in the fourth quarter of 2023 for a proposed carbon transportation pipeline and storage network.

If the project proceeds, some facilities that do not need a carbon pipeline to reach the hub could be injecting as early as 2026.

Critics of the strategy have concerns about possible CO2 leaks in the future and say decarbonizing production doesn't move the world away from fossil fuels.

And a report released earlier this year by the Pembina Institute said Canadian oil and gas companies aren't spending much of their recent record profits on decarbonizing and have been instead pursuing share repurchases and dividend payments.

The Pathways Alliance includes Canadian Natural Resources Ltd., Suncor Energy, Cenovus Energy, Imperial Oil, ConocoPhillips Canada and Meg Energy.