‘Clean’ oil and natural gas is not an oxymoron: it’s the path forward

By Terry Abel, Executive Vice-president Canada Operations and Climate. Canadian Association of Petroleum Producers

Technology and innovation are keys to the industry’s future

‘New normal. Post pandemic. Economic recovery.’ These phrases are top of mind as Canadians determine our future economic trajectory in the wake of COVID-19.

Here’s something else we commonly hear: the world needs a ‘green’ recovery, founded on renewable energy sources such as wind, solar and hydroelectricity.

While renewable energy sources will help address global emissions, all forms of energy will be needed for the foreseeable future, and oil and natural gas will be essential to global economic recovery. The Canadian Association of Petroleum Producers (CAPP) believes the oil and natural gas industry is already a vital part of the green recovery.

In Canada, ongoing environmental performance improvement has always been critical to maintaining a responsible, vibrant and competitive oil and natural gas sector. The key to continuous improvement across the industry: innovation and technology.

Oil and natural gas: cleaner than you think

For decades, the industry has made tremendous strides to break the link between the growth of the energy sector and growth in emissions and environmental impacts. For Canada’s oil and natural gas producers, investing in technology is the backbone of improved environmental performance.

However, developing advanced technologies is a complex and expensive process. From concept through engineering, testing at lab scale, then at field scale and finally commercialization, this is a daunting, multi-year journey that the industry has faced head-on. Through the work of companies, organizations, academic and research institutions, innovation and technological advances are ongoing — and technologies that have been deployed are reducing emissions every day. Some proof points include:

  • At just over $1 billion annually, Canada’s upstream oil and natural gas industry spends more on environmental protection than all other Canadian industries combined.
  • The next generation oil sand facilities’ lifecycle emissions are at or below North American average values. Since 2009, the oil sands industry has collectively reduced per-barrel greenhouse gas (GHG) emissions intensity by 21 per cent and that’s expected to drop an additional 23 per cent by 2030.
  • Alberta-based producer MEG Energy proposes to achieve net-zero GHG emissions at its Christina Lake oil sands facility through carbon capture and sequestration technology.
  • In 2019, Suncor Energy announced plans to construct a new cogeneration facility at its oil sands Base Plant operation, which will reduce emissions by replacing boilers fuelled by petroleum coke with more efficient natural gas-fired electricity generation.
  • Canada has world-leading regulations regarding flaring and venting from upstream facilities. A 2018 study by the University of Calgary concluded that global emissions could be reduced by up to 23 per cent should Canadian regulations governing venting and flaring be adopted worldwide.
  • In March 2016, the Government of Canada announced a methane emissions reduction target for the oil and natural gas sector. The goal is to further improve on Canada’s performance, reducing methane emissions by an additional 40 to 45 per cent from 2012 levels by 2025. Myriad technologies are in development or already in place to ensure the industry achieves this goal.
  • Carbon capture and storage (CCS) is showing great promise for emissions reduction. The Shell Scotford Quest CCS facility, operated by Shell Canada on behalf of the Athabasca Oil Sands Project, started operation in 2015. In its first two years of operation, Quest captured and safely stored two million tonnes of CO2. At Canadian Natural Resources Limited’s Horizon oil sands mine, a recovery plant captures and injects CO2 into tailings. In addition, the North West Redwater Sturgeon Refinery captures CO2 during processing that can be used in other industrial applications such as enhanced oil recovery. Canadian Natural estimates that its current projects will have CO2 capture capacity of 2.7 million tonnes / year, making it one of the largest industry owners of CCS capacity in the world.
  • Liquefied natural gas (LNG) projects proposed or under construction in Western Canada and Quebec will use hydroelectricity to power some of all parts of the supply and liquefaction process, reducing lifecycle emissions. For example, LNG Canada is constructing an LNG plant and export facility on Canada’s west coast. Partial electrification of this facility will reduce GHG emission intensity to approximately half of the global average for LNG production.

These examples are a fraction of the industry’s ongoing research and development. In the oil sands region alone, the organization Canada’s Oil Sands Innovation Alliance (COSIA.ca) has developed and shared more than 1,000 separate technologies that were developed at a cost of more than $1 billion.

Canada is home to organizations and funding agencies that enable research and technology development in the oil and natural gas sector. In addition to COSIA, these include: Petroleum Technology Alliance Canada (PTAC); Clean Resource Innovation Network (CRIN); Quebec’s Ministry of Energy and Natural Resources (MERN); Petroleum Research Newfoundland and Labrador (PRNL) and the Oceans Supercluster. While much of the current research and development is focused on emissions reduction, through innovation the industry is also using technology to improve water use, management and protection (including marine environments), land impacts, reclamation techniques, and advanced monitoring.

Keep calm and innovate on

We are proud of the industry’s commitment to environmental improvements. But as the world emerges from COVID-related lockdowns and economies begin to revive, there’s a movement afoot that could have disturbing, unintended consequences: large institutional investors are being encouraged to divest oil and natural gas holdings. Attempts to stifle oil and natural gas growth through such decisions demonstrates a lack of awareness of the myriad technological advances that happen when an industry is financially healthy and stable.

Technological innovation to improve the industry’s environmental performance is expensive and can take years to move from idea to commercial application. Developing such technologies relies on a financially strong industry that has access to stable, ongoing funding and investment. Divesting oil and natural gas holdings actually impedes the very environmental improvements institutional investors want to support.

Canada’s industry is positioned to contribute to a ‘green’ recovery through ongoing development and deployment of advanced environmental technologies. Creativity is alive and well in Canada’s oil and natural gas sector, but strong, ongoing financial and regulatory support are crucial to the industry’s ability to continue innovating. The challenge of continuously improving environmental performance must be addressed through focused collaboration between industry, governments, investors and other stakeholders.

The opportunity is clear: enable and continue investment in the oil and natural gas industry to support the innovation needed for successful long-term emissions reduction and environmental performance improvements.

About Terry

Terry joined CAPP in 2014 as the Oil Sands Director, shortly thereafter became the Interim VP of Oil Sands, and has recently been promoted to the position of CAPP`s Executive Vice President, where he oversees Western Canada, Atlantic Canada Operations, Policy and Regulation, Oil Sands, Markets and Transportation.

Terry has over 30 years of experience as an energy regulator in the Province of Alberta. As a regulator his technical specialty was oil sands development but he also held positions associated with virtually all aspects of hydrocarbon energy development. Terry has been an adjudicator on regulatory hearings and, through his management and executive roles, has extensive experience in the areas of policy and regulatory development, strategic planning, leading and managing change, and stakeholder collaboration.

Terry holds a Bachelor’s degree in Chemical Engineering from the University of Alberta (1983) and is a registered professional with the Association of Professional Engineers, Geologists and Geophysicists of Alberta. He was previously a Board member for the Oil Sands Research and Innovation Network and currently sits on the Board of the Canadian Energy Research Institute.

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