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Oilsands producer Cenovus aims for ‘net zero’ GHG emissions by 2050

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Oilsands producer Cenovus Energy Inc. said Thursday it will aim to achieve “net zero” greenhouse gas emissions by 2050, joining a recent cavalcade of oil companies trumpeting their environmental aspirations.

The Calgary-based firm also announced it intends to reduce its emissions per barrel by 30 per cent by 2030, while keeping flat its total emissions.

Reaching the 2050 goal will require advances in technologies including carbon capture and storage that are not currently economically practical, conceded Al Reid, executive vice-president in charge of sustainability, in an interview.

But he said the company has a clear path forward to the 2030 target, adding the announcement is designed to draw the attention of both internal and external stakeholders.

“It’s aimed at a very broad audience to say … we’re so committed we’re going to set targets and we’re going to report on those targets on a year-over-year basis,” he said.

Cenovus has delayed planned expansions at its thermal oilsands projects in northern Alberta, which use steam to produce heavy bitumen from wells, because of delays in the construction of new export pipelines.

Reid said the company is hopeful that its commitments – which include ramping up spending by $1.5 billion with Indigenous businesses and reclaiming 1,500 decommissioned well sites by 2030 -will help make peace with opponents and allow growth to take place.

Cenovus’ commitment is a step in the right direction but the industry needs to say less about emissions intensity and do more to address its absolute emissions, said senior analyst Benjamin Israel of the environmental Pembina Institute.

“Flat is a good first step but more needs to happen and potentially before 2030,” he said.

“We need to start to have conversations about … credible plans to get to carbon neutral potentially before 2030.”

Cenovus’ plan echoes Prime Minister Justin Trudeau’s promise during last fall’s federal election that Canada would cut its national GHG emissions to net zero by 2050.

Israel and Greenpeace Canada campaigner Keith Stewart both pointed out that plans to cut emissions in the upstream energy sector do little to reduce emissions in the downstream, where burning fuel creates more than 70 per cent of the emissions.

Cenovus said its 2030 emissions target will be reached via a multi-pronged approach including operational optimization, incorporating electricity cogeneration capacity into future oilsands phases, more use of solvent technology to reduce steam needed to produce bitumen, methane emissions reductions in its conventional drilling operations and through increased use of data analytics.

GHG emissions at its oilsands operations have been reduced by 27%t per barrel over the past 15 years, it added.

Production went from 1.97 million cubic metres in 2014 to 21 million in 2018 while GHG emissions per cubic metre fell from 0.44 tonnes of carbon dioxide equivalent to 0.322, Cenovus said. Total emissions rose from 871,000 tonnes in 2014 to about 6.8 million tonnes in 2018.

Financial analysts welcomed the plan, which they said add to Cenovus’ reputation as one of the lowest GHG intensity producers in the oilsands.

Fellow oilsands producer Canadian Natural Resources Ltd. has also pledged to work toward a zero-emissions target without giving a specific date, using technology to improve efficiency and through its carbon capture and storage operations.

It says it has lowered emissions per barrel from its oilsands mining operations by 37% since 2012.

Calgary-based Suncor Energy Inc. set a target in 2016 of reducing GHG emissions intensity by 30 per cent below 2014 levels by 2030.

In September, it said it would spend $1.4 billion to install two cogeneration units at its Oil Sands Base Plant in northern Alberta, thus reducing greenhouse gas emissions by 25 per cent.

In December, it gave approval to build a $300-million wind power plant in southern Alberta.

Spanish energy giant Repsol, which produces oil and gas in Canada, also announced late last year it would try to achieve net zero emissions globally by 2050 through technology, increases in the production of biofuels and chemicals with low carbon footprint and expansion of low-carbon electricity generation.

 


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Cenovus boosts oil output plans on Alberta move to curtailment relief for rail

Cenovus Energy Inc. says it will add as much as 70,000 barrels per day of oilsands output following the Alberta government’s decision to ease production curtailments for producers that add crude-by-rail capacity.

The company can quickly add 10,000 to 20,000 bpd of raw bitumen output from its Christina Lake and Foster Creek northeastern Alberta thermal oilsands projects, said CEO Alex Pourbaix during a conference call Oct. 31 after the decision was announced.

Meanwhile, it plans to begin startup procedures on its $675-million, 50,000-barrel-per-day Christina Lake phase G oilsands expansion project with production expected within six to 12 months.

Construction of the expansion was completed earlier this year but commissioning was put on hold until market access questions were answered.

“We think it’s a great way to incent further rail takeway capacity out of Alberta and we applaud the government for moving forward with this initiative,” said Pourbaix.

He added the move doesn’t remove the necessity of building more oil export pipelines.

Under the previous NDP government, Alberta put a cap on the amount of oil the industry can produce starting in January as a way to narrow local price discounts that grew as oil production exceeded the ability of pipelines to get the crude to market.

The measure was continued by the United Conservative government when it was elected last spring. The total industry quota is to increase to 3.81 million barrels per day in December, up 250,000 bpd from the original limit of 3.56 million barrels a day.

“Overall, we believe this program will be an important addition to the efforts to increase market access,” said Energy Minister Sonya Savage. “Looking ahead, maximizing the amount of crude shipped by rail is an important factor in moving forward towards an orderly exit out of curtailment altogether, which, under the enhanced policy, is scheduled to be concluded by the end of December 2020.”

Alberta currently ships around 310,000 barrels per day on rail, she said, but the rail system has the capacity for daily shipments of 500,000 to 600,000 barrels.

The new program is to be available as of Dec. 1 and operators will need to apply on a monthly basis and verify their rail shipments.

The province is still working on a plan to divest railcar contracts signed by the NDP government, Savage said.

Suncor Energy Inc. CEO Mark Little also welcomed the Alberta initiative, which had been requested by several oilsands producers earlier this year.

“I think this is a very positive development because the whole purpose of curtailment was to reduce production to align with the takeaway capacity,” he said during a conference call Oct. 31.

“But I think we all know that ever since that was implemented, the takeaway capacity in Western Canada has declined, which is the exact opposite of what you want to happen when you have excess production.”

Between 200,000 and 300,000 bpd of additional rail could be brought to market to accompany about 200,000 bpd of incremental pipeline capacity additions, Little said.

He added Suncor will work to fill its currently contracted capacity of 30,000 bpd on rail “in the next month or two.”

In third-quarter results released last week afternoon, Suncor cut its production guidance for 2019 to a mid-point of 785,000 barrels of oil equivalent per day, down from 800,000 boe/d, in part because of curtailments that have been in place for longer than anticipated.

In addition, Husky Energy Inc. CEO Rob Peabody said his company was directing most of its spending to regions other than in Alberta because of the curtailments.