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Canada will need as much as US$60 billion (C$75 billion) to make its oil sands operations net-zero emission businesses by 2050, top executives at the biggest oil firms told Bloomberg, adding that the government would need to step up and likely fund up to two-thirds of that cost.
Carbon capture and storage is set to make up half of the reductions in emissions, but it may need government support for two-thirds of the cost to implement such projects, as Norway has been doing, Mark Little, president and chief executive officer of Suncor Energy, told Bloomberg in an interview.
Alex Pourbaix, CEO of Cenovus Energy, also thinks that the industry cannot make all necessary investments on its own.
“I don’t think any of us would ever be in a position to go at this on our own. It’s just too significant an undertaking,” Pourbaix told Bloomberg.
Cenovus Energy and Suncor Energy became last month part of a net-zero collaboration initiative of the biggest oil sands producers in Canada aimed at achieving net-zero emissions from oil sands operations by 2050. The initiative includes companies that operate some 90 percent of Canada’s oil sands production—Canadian Natural Resources, Cenovus Energy, Imperial, MEG Energy, and Suncor Energy.
The initiative is ambitious and “will require significant investment on the part of both industry and government to advance the research and development of new and emerging technologies,” they said.
Meanwhile, despite the pandemic-related slump in global oil demand last year and curtailments in output last spring and summer, Canada managed to raise its market share of total world oil production. The share of Alberta’s crude oil production rose to 3.3 percent of global demand in 2020 from 3.1 percent in 2019, according to data from the Alberta Department of Finance cited by Natural Gas Intelligence.
“Canadian oil sands production recovered rapidly to exceed pre-pandemic levels by the end of 2020 and the outlook for longer-term growth remains substantial,” Kevin Birn, vice president and head of Canadian oil market, IHS Markit, said last month. IHS Markit expects Canada’s oil sands production to rise to 3.6 million barrels per day (bpd) in 2030, up by 650,000 bpd compared to 2021 levels. The forecast is lower than the previous IHS Markit projection which expected production to reach 3.8 million bpd in 2030.
“[L]ingering impacts from the "COVID-19 Shock," delays to critical transportation infrastructure, and rising energy transition pressures have trimmed that growth outlook from previous estimates,” Birn said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.