TD – Can Canada’s oil-rich Alberta capture a low-carbon future?
TORONTO (Thomson Reuters Foundation) – At a research site in rural Alberta, carbon dioxide is injected deep into the ground. Using remote sensors, scientists monitor its movement to ensure the planet-heating gas does not migrate upwards.
“Basically, think of ultrasound on bodies – we’re doing ultrasound on the earth,” said Don Lawton, director of the Containment and Monitoring Institute and a geophysics professor at the University of Calgary.
The research findings are shared with oil and gas companies exploring ways to capture carbon dioxide (CO2) during production before the greenhouse gas is released into the atmosphere, and storing it underground or using it for other purposes.
“If you pick up a rock, it’s not totally solid – it’s like a sponge, right? It’s got lots of little holes in it,” Lawton said. “Those have held oil and gas for millions of years, so the conclusion is then they’ll be able to hold CO2 as well.”
The oil sands in the western Canadian province of Alberta contain one of the world’s largest deposits of crude oil, with more than 165 billion barrels of bitumen in the ground, according to the Alberta Energy Regulator.
But Alberta’s oil and gas industry has also contributed to making Canada the world’s fifth-largest greenhouse gas emitter per capita, and the only G7 nation whose emissions have risen every year since the Paris Agreement came into force in 2016.
Aiming to change course, Canadian Prime Minister Justin Trudeau recently committed to almost halving the country’s emissions by 2030 compared to 2005 levels.
For Alberta, capturing and storing carbon could prove a key tool for cutting those emissions and smoothing its transition from Canada’s largest polluter to a lower-carbon economy.
The technology received a boost in April’s federal budget, with Ottawa announcing a tax credit for capital invested in Carbon Capture, Utilization and Storage (CCUS) projects, to cut combined emissions by at least 15 megatons of CO2 annually.
The Alberta government is also collaborating on a CCUS working group with federal agency Natural Resources Canada.
Recognizing its unique geography for storing carbon, Alberta has invested in carbon capture projects since the 2000s and boasts two major projects out of just a few dozen large-scale operations globally.
Shell’s Quest facility has stored 5 megatons of CO2 from oil sands operations since 2015, while the Alberta Carbon Trunk Line (ACTL), a 240-km (149-mile) CO2 pipeline, opened last year.
According to the U.S. Department of Energy’s Carbon Storage Atlas, Alberta has the capacity to sequester an estimated 78 gigatons of CO2, such as in depleted oil and gas reservoirs.
But building facilities to capture carbon dioxide during production is extremely expensive.
“Capture has always been the big price monster,” said Rick Chalaturnyk, a professor of civil and environmental engineering at the University of Alberta.
Quest, for example, got $865 million from the governments of Canada and Alberta to build and operate its facility, though it has said construction would cost 30% less today.
Uncertainty around government policies and carbon taxation has also made it hard for businesses to invest heavily in carbon capture, Chalaturnyk said.
“These projects are built based on 20-plus-year lives and long pay-backs, so regulation that has the risk of disappearing in four years is challenging,” said Kevin Jabusch, chief executive of Enhance Energy, part of a consortium that owns and operates the ACTL.
The CO2 pipeline was built with government support to serve as a distribution system once more heavy industries in Alberta such as cement manufacturers start capturing carbon. It is currently at just 10-15% capacity, Jabusch said.
“If we look at the goals for 2030 and the carbon price, there is definitely a moment in the next decade when the economics work,” said Alison Cretney, managing director of the Energy Futures Lab, a nonprofit research group.
Canada’s federal carbon tax is set to rise gradually to $170 per ton by 2030 from $30 today, while the new CCUS incentive is inspired by a U.S. tax credit called 45Q which has encouraged U.S. oil companies to capture carbon.
Projects like the ACTL have been economically viable due to capturing carbon for “enhanced oil recovery”, where pressurized CO2 is injected into oil fields to boost the amount of oil extracted.
However, Cretney said it should eventually be possible to fund emissions capture through storage or selling carbon for new uses, such as incorporating it into cement.
As Alberta looks to lower greenhouse gas emissions, calls have been growing to diversify the economy more quickly beyond oil and gas – particularly as depressed oil prices have caused significant economic pain since 2014.
“In the long-run, the demand for oil and gas is going to go down as countries start to very deliberately move away from using fossil fuels,” said Chris Severson-Baker, Alberta regional director at the Pembina Institute, a think-tank.
A report released by TD Economics in April found that three-quarters of Canada’s oil and gas sector workers – 450,000 people – could lose their jobs by 2050, most of whom work in Alberta.
“I think we only do ourselves harm if we don’t recognize that and start planning for it,” Severson-Baker said, adding that emerging industries like geothermal energy have struggled to get government attention due to the focus on oil and gas.
However, Alberta’s Minister of Energy Sonya Savage said her government had moved fast since coming to power in 2019, including to develop a regulatory framework for geothermal energy and set up an advisory panel on mining minerals like lithium for batteries.
“What you’re seeing in Alberta is a remarkable transformation of the energy sectors, and we have a strong future ahead in oil and gas,” she said.
Savage argued continued global demand for oil and gas means stopping production in Alberta would only increase it elsewhere in the world under lower environmental standards.
“We would actually not be doing anything to reduce global emissions by phasing out oil and gas in Alberta,” she said. “It’s not the oil and gas that is a concern, it’s the carbon emissions.”
However, the oil sands industry is more carbon-intensive than other forms of oil extraction, including lighter and more accessible oils, and investors are putting more pressure on companies to publish decarbonization plans.
“Investors have chosen to leave more oil in the ground – that’s already happening,” said Jason Switzer, director of the Alberta Clean Technology Industry Alliance.
“I don’t think we’re going to see the kind of development that was originally forecast for the Canadian oil sands,” he added.
Switzer has been mapping new clean technology projects such as for greener fuels like hydrogen, and said Alberta has “one of the densest clean tech ecosystems in the world”.
According to a recent forecast by the Canada Energy Regulator, Alberta is expected to see the fastest growth in renewable energy capacity from 2018-2023 of all provinces.
Switzer said decarbonization efforts are being bolstered by Alberta’s concentration of researchers, technical professionals and entrepreneurs who understand large industry and its needs.
“A lot of smart people have been working on these issues for a long time,” he said.
Reporting by Jack Graham; Editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit news.trust.org