In a significant energy agreement inked between Alberta and Ottawa last November, a crucial stipulation was laid out – no pipeline without Pathways, and no Pathways without a pipeline. The deal entails Alberta leading the initial planning and regulatory groundwork for a potential new pipeline to the West Coast with a capacity of one million barrels per day. This pipeline aims to facilitate increased oilsands production and elevate exports to Asia. However, the agreement mandates a significant counterbalance to the carbon emissions associated with the pipeline.
The cornerstone of this balance is the Pathways initiative, a multi-billion-dollar scheme designed to capture and store approximately 16 million tonnes of carbon dioxide annually from the oilsands by 2045. Although the project has been in progress for about four years, the companies behind it and the provincial and federal authorities are still in the process of determining the allocation of costs and risks. While the Alberta-Ottawa agreement set a deadline of April 1 for a trilateral agreement, the negotiation is ongoing.
The Pathways project, put forth by the Oil Sands Alliance (formerly the Pathways Alliance), comprises five major oilsands players: Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., Suncor Energy Inc., and ConocoPhillips Canada. According to Brendan Frank, the vice-president of policy at Clean Prosperity, carbon capture and storage represent a cost-effective approach for industrial decarbonization in Alberta.
The technical and economic dimensions of the Pathways project encompass several key components. Firstly, the capture phase involves the installation of carbon capture equipment at individual oilsands sites, where carbon dioxide is separated and compressed into a liquid. The transport phase entails a proposed 650-kilometre pipeline network to convey CO2 from oilsands sites to a storage hub. The storage phase involves injecting the captured gas deep underground in the Basal Cambrian Sandstone formation.
Although an updated cost estimate is not specified, the initial phase of the project was projected to require $16.5 billion in investments by 2030. The negotiation on cost-sharing among companies, Ottawa, and Alberta has been protracted. While some financial support exists through federal and provincial programs, including investment tax credits and grant programs, there are ongoing discussions on the extent of support required to make the Pathways project economically viable.
The recent agreement between Alberta and the federal government includes a target of $130 per tonne for effective carbon pricing by 2040. Environmental groups have criticized the timeline, citing concerns about insufficient private investment incentives for the Pathways project. However, provisions such as carbon contracts for difference in the implementation agreement aim to provide stability in the carbon pricing regime for clean energy investors in the long term. Analysis suggests that carbon prices ranging from $130 to $150 could render the Pathways project economically feasible, marking progress towards its viability.