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Old, small and CO2-intense: Why Canada’s highest-carbon oil sites keep pumping

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The tasks current one other problem to Canada’s purpose to chop emissions by 40-45 per cent by 2030

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WINNIPEG — Within the shadow of Canada’s mega oilsands tasks, smaller, technologically outdated amenities are churning out as much as thrice extra emissions per barrel than the sector’s already excessive common.

These tasks current one other problem to Canada’s purpose to chop emissions by 40-45 per cent by 2030. With oil costs close to 2-1/2-year highs and dim prospects for constructing new tasks in a world heading towards internet zero, operators are aiming to pump dry current amenities, together with probably the most carbon-intense websites.

Prime Minister Justin Trudeau’s authorities is slowly ramping up a nationwide carbon worth from $40 per tonne of carbon dioxide equal (CO2e) to $170 by 2030. These rising prices could ultimately render the websites uneconomic, however till then, producers are looking for most profit from rebounding oil costs.

“These property are flying underneath the regulatory radar they usually would possibly for awhile,” mentioned Andrew Logan, senior director of oil and fuel at shareholder advisory group Ceres.

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“In a rational world, these property wouldn’t be producing.”

Canadian Pure Assets Ltd’s Peace River web site emits 0.197 tonnes of CO2e per barrel, highest within the oil sands, in accordance with 2019 Alberta authorities information. Peace River, which has pumped oil for the reason that late Nineteen Seventies, expects to double output to five,000 barrels per day (bpd) within the fourth quarter.

“Within the worth surroundings we’re in now, areas like Peace River could be good working properties by way of money circulation,” mentioned CNRL Chief Working Officer Scott Stauth, including it might function for many years extra.

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Rising manufacturing would cut back emissions per barrel, he mentioned.

CNRL is piloting know-how to make use of much less emissions-generating steam to extract oil at bigger websites, and as soon as commercially confirmed, hopes to use that know-how to Peace River, Stauth mentioned.

Canada has the very best emissions per barrel of oil equal among the many high 10 international producers, in accordance with consultancy Rystad Vitality.

Canadian Setting Minister Jonathan Wilkinson mentioned the federal government has addressed some considerations about high-intensity websites, corresponding to tighter methane laws and an incoming customary for lower-carbon fuels, however added it must do extra.

Alberta laws present the identical incentive for producers to chop emissions, no matter their carbon depth, slightly than an strategy the place authorities chooses which operations should shut, mentioned Paul Hamnett, spokesperson for the provincial surroundings minister.

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For producers, the price of lowering emissions is larger than the present carbon worth, and working prices are low, making it worthwhile to maintain operating the websites, mentioned Chris Severson-Baker, Alberta regional director for the Pembina Institute.

Greenfire Acquisition Corp, which owns the second-highest carbon-intensity facility, is trying to double manufacturing at Hangingstone within the subsequent few months to as much as 7,500 bpd, Chief Government Robert Logan mentioned.

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Logan mentioned emissions depth at Hangingstone is excessive due to begins and stops in manufacturing, which devour extra power. However he mentioned preserving amenities operating so long as attainable makes environmental sense, since exploring and drilling new properties generate further emissions.

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“We’re going to be leaving a number of oil within the floor from superb wells,” Logan added.

Imperial Oil’s Chilly Lake has operated for 45 years and is without doubt one of the few massive websites with comparatively excessive carbon depth.

Imperial produces 11,000 bpd with solvents to cut back steam use and plans so as to add one other 15,000 bpd within the subsequent few years — changing about 19 per cent of its whole thermal manufacturing to lower-emitting output, mentioned Senior Vice-President of upstream, Simon Youthful.

Cenovus Vitality, which owns two carbon-intense websites, Tucker and Dawn, plans to cut back their reliance on steam, after it acquired them this 12 months, mentioned Chief Government Alex Pourbaix.

“Persons are going to be very pleasantly shocked at how considerably we are able to enhance the efficiency of these amenities.”

© Thomson Reuters 2021

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