Oil Sands Companies Set Aside Competitiveness with an Ambitious Plan to Help Canada Meet Climate Goals

At 7 a.m. each Friday morning, for the better part of three years, CEOs of some of the country’s largest companies have laid bare their intellectual property and rolled up their collective sleeves to work on an unprecedented plan to reduce greenhouse gas emissions from Canada’s oil sands.

This allegiance, now known as the Pathways Alliance, follows more than a decade-long recognition by Canada’s highly competitive oil sands companies that a merger of efforts is essential to protecting the environment.

Kendall Dilling, President, Pathways Alliance

“Each one of the CEOs knows expectations are high that companies continue to raise the bar on environmental management and that it’s necessary to support collective efforts and keep each other accountable,” said Kendall Dilling, president of Pathways Alliance, an association representing the six largest oil sands operators representing about 95 percent of Canada’s oil sands production. 

“I’ve worked in the oil and gas industry for more than 30 years, and I can say that I’ve never been more awed by what I see today in an industry that embodies the spirit of Canadian cooperation and a collective can-do desire right from the highest executive level to do what’s right to protect the environment.”

Pathways Alliance, made up of Canadian Natural Resources, Cenovus Energy, ConocoPhillips Canada, Imperial, MEG Energy, and Suncor Energy, are working together – and with governments – on an ambitious plan to help meet the national 2050 net zero goal and deliver the world’s preferred barrel of responsibly produced oil.

The organization has set goals to reduce emissions from oil sand operations by twenty-two million tonnes per year in the first phase of its plan and achieve net zero from operations by 2050.

It is a monumental challenge, but one the companies recognize is essential for their part to help the country meet its climate commitments while assuring the long-term benefits to Canadians of one of Canada’s most important industries and economic drivers.

The industry has made great strides in reducing the greenhouse gas emissions intensity of each barrel of oil it produces – more than 20% in the last decade alone.

But despite bringing the intensity to a level comparable with other heavy oils worldwide, overall emissions continue to grow with increased production. In fact, the oil sands industry represents about 11% of Canada’s GHG emissions.

“Despite all of the incredible innovation work that we have achieved together to reduce our overall footprint on land, air and water, we know the future of this important Canadian industry rests with how well we collaborate with governments to tackle the climate challenge,” said Dilling.

Dilling refers to the innovative work that includes the collective investment of more than 1,000 clean technology projects and initiatives through Canada’s Oil Sands Innovation Alliance (COSIA), founded in 2012 and now the innovation arm of Pathways Alliance.

But the industry recognizes that its Achilles heel remains its ability to reduce absolute emissions – something governments are increasingly expecting.

With that in mind, some industry leaders pre-emptively approached the federal government with the foundations of an emissions reduction plan.

“Oil sands CEOs went directly to key ministers and key departments and said, ‘Look, we know we generate significant emissions, but if you work with us, we can also be a significant part of the Canadian solution you are looking for’,” said Dilling.

Discussions with the federal and Alberta governments progressed, as did membership in the Friday morning CEO meetings, culminating in the announcement of the formation of Pathways Alliance in June 2021.An unprecedented multi-phased plan towards net zero from oil sand operations came.

At its heart is a proposed carbon capture and storage (CCS) project that would be one of the world’s largest.

The project is designed to have the capacity to transport captured CO₂ from more than 20 oil sands facilities to a hub in the Cold Lake region for safe, permanent, deep underground storage. 

The multi-stage project is anticipated to reduce net CO₂ emissions from operations by 10 to 12 million tonnes a year from several oil sands facilities in the plan’s first phase. That’s about half of Pathways Alliance’s overall goal of reducing emissions from operations (Scope 1 and Scope 2 emissions) by 22 million tonnes a year by the initial phase’s end..

The potential to expand the project to reduce an additional 30 million tonnes per year in subsequent phases makes this CCS project an essential part of the Pathways’ 2050 goal of net zero emissions from operations.

The project benefits from Alberta’s incredibly favourable conditions for geologic storage. An enormous, deep formation of Cambrian Basal Sandstone that underlies much of the Western Canadian Sedimentary Basin has the necessary natural seals and cap rock ideal for permanent storage of large volumes of CO₂.

Notes Dilling, “It’s a major reason why Alberta is a leader in CCS and has a strong track record of successfully deploying the technology.”

While Pathways Alliance and governments work hard to get the regulatory and co-financing work in place to enable final investment decisions on the capture facilities, pipeline and storage hub, preliminary work on the project charges ahead.

Engineering and feasibility studies are well underway, as is an evaluation of the storage hub and the second season of environmental field studies.

After more than two years of early engagement, formal consultation is beginning in earnest in fall 2023 with Indigenous groups, communities, and landowners – all with a target of a formal application in the fourth quarter of this year.

CCS is also a great enabler of other technologies.

About 300 scientists, engineers and other experts within Pathways Alliance and its member companies continue to work on over 70 technologies in addition to CCS to tackle this challenge from multiple angles.

“A number of these, such as hydrogen and direct air capture, can only be utilized if there is somewhere to put the resulting CO₂ stream. So having a CCS infrastructure backbone in Alberta is a critical enabler of these other technologies,” said Dilling.

It’s expected that with co-financing from governments, more than $24 billion will be needed by the end of the decade to achieve the first phase of the Pathways Alliance plan.

According to a recent analysis, the economic stimulus expected from this investment could see more than 100,000 jobs created during the construction phase and bolster Canadian GDP by $16.5 billion during that period.

“We believe the Alliance is a model for all sectors within Canada and globally of how peer companies can set aside their competitiveness to work together towards a common goal,” said Dilling.

“When we all work together – industries, governments, Indigenous communities, and non-governmental organizations alike – we can achieve Alberta’s full economic potential and meaningful climate action.”