Canada’s oil producers have been working to reduce the green house gas (GHG) emissions of their operations. Still, emissions are on the rise.
“After hovering between 700 and 720 megatonnes of carbon dioxide equivalent in recent years, in 2018 (the most recent annual dataset in this report) Canada’s greenhouse gas (GHG) emissions increased to 729 megatonnes of carbon dioxide equivalent. This increase is attributed to higher fuel consumption for transportation, winter heating and oil and gas extraction,” noted the United Nations Climate Change’s Canada 2020 National Inventory Report.” In 2018, it continues, the Energy sector (consisting of Stationary Combustion, Transport and Fugitive Sources) emitted 82% of Canada’s total GHG emissions.”
From 2005 to 2018, Canada has managed to decrease total emissions by 0.4 Mt, or 0.1%. Reduced emissions of 21.5 Mt in the sector of electricity generation were offset by the increases in oil and gas (34 Mt) and in transport (24 Mt), the report notes. It also indicates that “Canada’s most recent GHG emissions projections estimate that Canada’s GHG emissions in 2030 will be 227 million tonnes lower than projected prior to the PCF (Pan-Canadian Framework on Clean Growth and Climate Change) or 19% below 2005 levels
Work in Progress
Though absolute volumes of emissions have increased, Canadian oil and gas producers are enhancing the sustainability of their production infrastructure. “Over the last 10 years, emission intensity has fallen by about 20%, says Kevin Birn, vice-president of crude oil markets at IHS Markit. Some have reduced much more, others less.”
Work by Canadian oil producers to reduce GHG emissions began in the 1990s. A federal government report finds that in 2014, oil sands GHG emissions per barrel were 31% below 1990 levels. “It is expected emissions per barrel will continue to decline over the coming years,” it notes.
If we refer to Suncor’s Report on Sustainability 2020, for example, we can see that total production has gone from 303 to 351 million barrels of oil equivalent (BOE) between 2015 and 2019, an increase of 16%. Direct and indirect GHG emissions, for their part, have moved from 20.5 to 22.8 Mt, an increase of 11%. Meanwhile at Canadian Natural Resources’ Stewardship Report to Stakeholders, during the same period, production shot up by 29%, while GHG emissions (direct only) between 2016 and 2019 increased by 7%.
Reaching Net Zero
For the immediate future, net emissions will undoubtedly continue to be positive. But there is a point when they will enter into negative territory, continuing to a point where we would get to net zero emissions.
This is a key notion to keep in mind, highlights Jonathon Smith, Senior associate of oil and gas research, at Sustainalytics. “There will never be zero emissions, he says, but getting to net zero emissions is a possibility.” Net zero emission means that all man-made greenhouse gas emissions are neutralized through compensating measures of capture or reduction. This would reduce the Earth’s net GHG balance to zero and would help stabilize global temperatures.
Most major players aim to reach that threshold by 2050. To get there, the Canadian oil industry still needs to integrate key technologies and processes. A major one is carbon capture, storage and sequestration. This could stand out as a major reducer of absolute emissions, and the oil industry is a natural candidate for such technologies, agrees Birn, since it has the required expertise, engineering and land pits to implement them.
“Some are trying to come up with the business case, but not all of them are doing it,” Smith notes. Imperial Oil has one carbon sequestration unit in operation and Canadian Natural is developing a CO2 capture unit from natural gas-fired processing that would generate electricity. “There will be a point when releasing carbon will become more expensive than capturing it, says Smith. At that point, for companies who have developed the capability, it will be big business.”In the meantime, oil producers are working at many levels to reduce emissions: migrating from steam to solvents in extracting oil, electrifying the drilling process, calling on solar energy where possible, and installing co-generation facilities, as an example.
The most important level is in situ at mines and wells, as the main emitter of GHGs is the energy apparatus required to extract oil. At this level, producers increasingly use solvents and paraffinic froth treatment (PFT) instead of steam, processes that procure additional benefits. Birn explains that PFT is more efficient, as it “precipitates some of the heavier molecules without upgraders. It saves capital costs and allows the producer to send a higher-grade crude to refiners.”
Transition Out of Oil
The next major step to sustainability will be transitioning, that is diversifying into low-carbon fuels, first and foremost natural gas, but more significantly, biofuels, hydrogen, transport electrification, wind and solar power. Suncor is the company that has moved farthest along that path, having become a major producer of biofuels, working on a 200 megawatt wind power project in Alberta and developing a cross-Canada electric vehicle charging network in collaboration with Petro-Canada.
However, the Canadian oil industry is not that far along on the transitioning path. “It is key to the industry’s sustainability challenge, Smith points out. While we see European producers taking more significant steps to engage with non-fossil fuel based products and services, the momentum in Canada hasn’t moved far past the project-level for most companies.”
