Oil sands panel recommends aggressive action to stay under 100 megatonne emissions cap

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Nexen  SAGD 100 well

Oil sands production at 2.5 million b/d, projected growth to 3.7 million by 2030, expected to stay under 100 MT emissions cap

The first phase of the Oil Sands Advisory Group (OSAG) concluded and released its report with recommendations to the Alberta government on keeping the growing oil sands in compliance with its legislated 100 megatonne cap on annual emissions.

If the annual forecast indicates oil sands emissions are expected to exceed 100 megatonne limit within the year, then the 50th to 100th percentile of highest emission intensity facilities would face a mandatory emission reduction requirement equivalent to the amount needed to stay below the limit, according to the report.

The 50th to 75th percentile would share one third of the reduction requirement and the 75th to 100th percentile would share two thirds of the reduction requirement.

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If facilities exceed the authorized amount of 100 megatonne emission intensity limit then the excess amount would be authorized from an operational reserve.

If facilities exceed the authorized amount outside an acceptable level of variability, then the excess amount would face a $200 per tonne penalty that would scale with the provincial/national carbon price.

The Minister of Energy or Environment would also have the authority to suspend project approval of facilities that have not yet started construction when emissions get close to the limit.

The Wildrose Party claims that will set a dangerous precedent that could chill investment and stifle growth in the oil sands.

“The NDP government continues to fail to acknowledge the current economic climate in our province, and should they accept this report in its entirety, will hamper further growth and investment that would only serve to hurt everyday Albertans. In particular, the recommendations on this growth cap sends a strong signal that Alberta is not open for business at a time we can least afford it,” said Brian Jean, leader of the Wildrose Party.

Dave Collyer, OSAG co-chair and former president of the Canadian Assoc. of Petroleum Producers, disagrees with Jean’s math. He calculates that with current oil sands production at 2.5 million b/d, and projected growth to 3.7 million b/d by 2030, even using existing technology the odds of the oil sands reaching the emissions limit isn’t likely.

If you look at current forecast, the current environment with current technology, my view is the 4 million barrel a day mark is a fairly safe number in terms of where the emissions limit might have some impact,” Collyer says. 

Oil sands producers sat on the panel that recommended the 100 megatonne emissions cap.

And producers have been developing new emissions-reducing technology, as North American Energy News publisher Markham Hislop recently wrote in a column.

Alberta Party leader and MLA Greg Clark shares Collyer’s view.

“I think the 100 megatonne cap is reasonable, and it will spur innovation, which is already happening in the oilsands sector. If the oilsands get anywhere near the cap, our industry has expanded tremendously and we’ll be back having the human resource and cost challenges, the boom time challenges we just had previous,” Clark said in an interview.

The OSAG panel advised the government to exclude emissions from primary, experimental, and enhanced recovery oil sands sites.

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The panel has three phases and is now on track to complete the second phase of its work by the end of June, which is to provide government advice on areas of targeted investment that will yield the greatest emissions reductions as production grows.

“Industry leaders agree that our emissions limit is the best way to encourage innovation and repair the damage to Alberta’s reputation. These actions have already helped ensure federal approval for new pipelines that will mean thousands of jobs, billions in new investment and a better price for Alberta’s oil in global markets,” said Margaret McCuaig-Boyd, Minister of Energy.

We are excited to work with industry as we now turn our focus to the development of new technologies that will drive emissions reductions, grow production and create jobs.”

The government is actively recruiting new members with relevant expertise for phase three, which will focus on regional land based management and improving environmental performance.

Posted in: Jude on Alberta

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