Alberta and Ottawa have struck a significant energy deal, linking the development of a new one-million-barrel-a-day pipeline to the West Coast with a carbon offset initiative known as Pathways. The pipeline, aimed at facilitating increased oilsands production and exports to Asia, is contingent upon the implementation of Pathways, a multibillion-dollar plan to capture and store 16 million tonnes of carbon dioxide annually from oilsands operations by 2045.
Despite being in the works for approximately four years, the Pathways project faces unresolved issues regarding cost-sharing among the involved parties. The Oil Sands Alliance, comprising major oilsands players such as Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., Suncor Energy Inc., and ConocoPhillips Canada, is behind the proposal.
The project involves installing carbon capture equipment at oilsands sites to extract carbon dioxide from flue gases, compressing it into a liquid form, and transporting it through a 650-kilometre pipeline network to a storage hub in Cold Lake, Alberta. The stored carbon dioxide would be injected deep underground into the Basal Cambrian Sandstone formation for long-term sequestration.
While the exact costs are yet to be finalized, the initial phase of the project requires an estimated $16.5 billion investment by 2030. Discussions on cost-sharing and government support mechanisms, including federal investment tax credits and Alberta’s grant program covering a portion of capital costs, are ongoing.
Looking ahead, the federal and Alberta governments aim to establish an effective carbon price of $130 per tonne by 2040. Industry experts suggest that carbon prices within the range of $130 to $150 could make the Pathways project economically viable. The inclusion of carbon contracts for difference in the implementation agreement provides additional assurance to clean energy investors, enhancing the project’s financial viability and reducing uncertainties in the market.