Producers spent past decade developing emissions-reducing technology but aren’t using it at scale. Why aren’t we talking about that story?
“I heard many times, people like Joy Romero, one of the key [COSIA] vice-presidents saying their [oil sands] company’s not going to invest in reducing emissions if it is a net-cost to them. They will absolutely, aggressively embrace emissions reductions if somehow in that solution they can make more money at it.” – Dan Wicklum, former COSIA CEO
Um, what? Canada’s biggest greenhouse gas emitters won’t lower emissions because they can’t make money from reducing their pollution? No wonder oil sands companies are pushing back against the proposed federal oil and gas emissions cap.
On the face of it, Wicklum’s argument seems absurd. Policymakers and regulators have shut down or modified the behaviour of polluters like coal power plants for decades without worrying if protecting the environment turned a profit. Why should oil and gas be any different?
And it’s not just oil sands producers who think cleaning up environmental liabilities should be a revenue-generator. Watch this interview with Will Ratliffe, a veteran oil and gas liabilities consultant, as he explains why conventional oil and gas companies don’t want to spend capital reclaiming old wells.
This is an industry-wide problem. Companies prioritize capital spending on revenue-generating projects while under-funding (or not funding at all) efforts to address their environmental liabilities, including emissions.
For some reason, executives think their sector deserves a special dispensation from governments.
A recent Globe and Mail story leaked an S&P Global modeling that showed the oil sands losing up to 1.3 million barrels per day of production (out of 3.2 million barrels per day total supply) and almost 10,000 jobs under the cap. The usual suspects (Alberta government, Pathways Alliance) were quoted bemoaning the federal emissions cap, but where were the voices arguing that the oil sands companies should be responsible for their own mistakes and strategic miscalculations?
I laid out a number of problems with the story in this thread.
The point I want to make here is that oil and gas companies only want to lower emissions at the lowest possible cost, on a timeframe that suits them, when technologies they prefer like small modular nuclear reactors are ready to deploy in the 2030s and 2040s, and if taxpayers will pay the bill. And CEOs are doing this while enjoying record profits that are likely to continue at least until 2030, according to experts Energi Media has interviewed.
Talk about hubris and entitlement.
Instead, why aren’t oil sands producers being asked to speed up deployment of emissions-reducing technologies they have developed over the better part of a decade?
For example, I wrote this story (Cenovus dramatically lowering SAGD production costs thanks to new technology – Part 1) in 2017 about dissolving bitumen to make it flow instead of burning natural gas and injecting steam underground. Part 2 of the story explained how Cenovus and other producers were adopting data analytics to help drive operational efficiencies that lowered costs and emissions.
A year later, I reported on CNRL’s IPEP (In-Pit Extraction Process) technology that promised to dramatically lower costs and GHGs. CNRL’s latest investor presentation claims IPEP is a success.
Alberta-based innovators are also busy developing new clean extraction technologies. Acceleware’s RF LX downhole heater essentially microwaves bitumen. I first reported on this new clean tech in 2017, followed up last year with a video interview (see below), and will be reporting next month on the imminent commercialization of the technology.
The oil sands have plenty of technology to begin reducing emissions. Instead, S&P Global’s forecast is that emissions will increase from 85 megatonnes per year (Mt/yr) in 2022 to 90 Mt/yr by 2025, perhaps rising close to 100 Mt/yr by 2030 if carbon capture and storage (CCS) projects are delayed.
Let’s talk about CCS for a moment. The Pathways Alliance, the oil sands lobbying group, estimates that net-zero by 2050 will cost $75 billion. Two-thirds of emissions reduction will come from CCS at a cost of $50 billion. Not coincidentally, Pathways wants governments, primarily Ottawa, to pay $50 billion toward decarbonization. The federal government has already provided $7.1 billion of CCS investment tax credits just for the oil sands. Pathways is demanding more.
One final point. COSIA (Canadian Oil Sands Innovation Alliance) was launched in 2012 with Wicklum as CEO in order to advance innovations that could be shared by all producers. As Wicklum describes in the video above, COSIA was an utter failure. This is important because CNRL’s Romero told me that her company would consider licensing IPEP to other bitumen miners through COSIA. That doesn’t appear to have happened.
How many other emissions-reducing technologies were not widely adopted because companies retreated to old competitive habits?
Premier Danielle Smith and her UCP government, the Pathways Alliance, the Alberta business community, and the oil and gas industry in general have mounted a blitzkrieg PR campaign to convince Canadians that oil sands companies are the victims of a predatory federal government and its supposedly unworkable oil and gas emissions cap.
The campaign needs to be stood on its head.
The counter-argument is that oil sands companies, which account for a whopping 11 per cent of Canada’s emissions, are putting shareholders before their legal and social obligations. Producers developed emissions-reducing technologies but failed to deploy them at scale in a timely manner. They began sharing these technologies in 2012, but within two years the initiative (COSIA) began to fail. Executives prioritize higher dividends and share buybacks over doing their share to combat climate change.
Those executives are not being held accountable by Canada’s corporate media, as the Globe story clearly demonstrates. They are not being held accountable by opposition parties like the Alberta NDP, which is missing in action on this issue.
But they should be held accountable by Canadians, who are watching as forests across the country burn because of record heat caused by climate change.
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