Business

'It's not a pipe dream': Oilsands company developing project to wipe out its emissions

MEG Energy says it is developing a pilot project that will provide the runway for the oilsands producer to achieve net-zero emissions.

MEG Energy wants government support to help achieve net-zero emissions

A large scale carbon capture project by MEG Energy could be 'massive' for the oilsands industry considering its reputation as a carbon-intensive sector, according to analyst Kevin Birn. (David Bell/CBC)

An Alberta oilpatch company is looking for government support toward a new project that aims to erase emissions from its oilsands facility and possibly from other nearby oil-producing operations.

MEG Energy is proposing to capture greenhouse gas emissions and bury them below the surface.

The company wants to achieve net-zero emissions and chief executive Derek Evans said this new development actually provides a tangible way to reach that goal.

"It isn't a pipe dream," he said.

"We're actually well beyond the dreaming stage. We've identified a place where we think we can sequester our greenhouse gas emissions. We think it's large enough to handle not only ours, but a large component of the people in the Christina Lake area and we think it's doable," he said.

'We're going to focus on net zero emissions because we believe that's the end game,' says MEG Energy chief executive Derek Evans. (CBC)

Christina Lake is an area about 150 kilomtres south of Fort McMurray that is well-populated by oilsands development.

MEG Energy will provide more details within the next 12 months, according to Evans, and the pilot project should be operational within the next two years.

"We're going to focus on net-zero emissions because we believe that's the end game and that's where we need to get to as quickly as possible," he said.

Evans made the comments during a wide-ranging interview with CBC News about the state of the industry and the current federal election campaign. The company would not provide any additional information about the carbon capture project such as its total cost, how much government funding it is pursuing or whether it is partnering with other oilsands companies.

Carbon capture growth

MEG Energy's facility already has above-average greenhouse gas performance compared to other oilsands projects, according to Kevin Birn, an analyst with IHS Markit. A carbon capture investment of this kind has the potential to create some of the lowest greenhouse gas intensive oil in North America, from a production standpoint.

"You're talking about taking a resource that, I think, has a reputation for being higher carbon," said Birn. "Removing the upstream emission profile from it would be massive."

Two other oilsands facilities are within 50 kilometres of MEG Energy's oilsands operation, which Birn said provides the opportunity "to build larger scale solutions and share those solutions with some of the other facilities."  

MEG Energy began producing oil from its Christina Lake project in 2008. (MEG Energy)

Carbon capture projects aren't new to the oilsands, although only a few of the facilities exist. Shell Canada opened its Quest project in 2015 which cost about $1.35 billion, backed with $745 million from the Alberta government and $120 million from Ottawa. 

Earlier this year, Quest reached the milestone of four million tonnes of stored carbon dioxide, equivalent to the annual emissions of about one million cars.

That project removed almost nine per cent of the greenhouse gas intensity of the oilsands mining extraction sector, according to Birn.

Two years ago, a Shell Canada official had said future growth in the carbon capture industry would depend on carbon taxes rising to about $100 a tonne.

The economics have likely changed since then, but Evans said a higher carbon price would not only encourage more oilsands companies to fund carbon capture projects, but it would also create more awareness about the emissions issue.

"We need a carbon tax. It would be nice if we weren't sitting around arguing about it, but it seems to be a political football today," he said.

"Is it large enough to incent producers today to look more seriously at sequestering carbon? I'm not sure it's high enough yet."  

BMO Capital Markets forecasts oilsands production to keep increasing in the future. The chart represents millions of barrels per day.

About the Author

Kyle Bakx

Reporter

Kyle Bakx is a Calgary-based journalist with CBC's network business unit. He's covered stories across the country and internationally.

With files from the CBC's Kathleen Petty

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