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Canada remains on the sidelines as global competitors double down on energy projects

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By Deborah Jaremko of the Canadian Energy Centre

From the Taliban to Russia, billions in oil and gas investment underway around the world

As Canada’s oil and gas industry faces the uncertainty of a looming emissions cap and a “Just Transition,” billions of dollars of investment is underway in other countries to grow oil and gas supply for the future.  

Here’s just a handful of examples.

Afghanistan – Amu Darya basin  

US$690 million 

Xinjiang Central Asia Petroleum and Gas Co. 

Afghan Deputy PM Mullah Abdul Ghani Baradar at a news conference in Kabul announcing an oil development agreement with Xinjiang Central Asia Petroleum and Gas Co. Photo: Twitter/Zabihullah Mujahid

In January, Chinese state-owned Xinjiang Central Asia Petroleum and Gas Co. signed a deal with the Taliban-controlled Afghanistan government to invest nearly US$700 million over four years on oil development in the country’s north. 

The 25-year contract also involves building Afghanistan’s first oil refinery.  

The Taliban militant group returned to power in Afghanistan after the withdrawal of U.S. forces in 2021. Its ownership share of the oil project will gradually rise to 75 per cent, according to spokesman Zabihullah Mujahid.  

The Taliban maintains close ties with the terrorist group al-Qaeda, according to the Council on Foreign Relations (CFR). Since resuming its rule in Afghanistan, authorities have resumed public floggings and executions, violently cracked down on protesters and activists, “obliterated” women’s rights, and “enforced prohibitions on behavior deemed un-Islamic,” the CFR says.  

Brazil – Santos Basin 

TotalEnergies 

US$1 billion 

Map courtesy TotalEnergies

France-based TotalEnergies announced in January it will go ahead with a US$1 billion expansion of oil production offshore Brazil. 

The development is located about 300 kilometres off the coast in the Santos Basin. TotalEnergies, which has operated in Brazil for more than 40 years, is 45 per cent owner along with partners Shell, Repsol and Sinopec.  

The project will consist of three new deepwater wells connected to an existing floating production and storage vessel. It is expected to increase production to 60,000 barrels per day in 2025, up from about 35,000 barrels per day today.  

Norway – Norwegian Continental Shelf 

Aker BP 

US$29 billion 

Rendering courtesy Aker BP

Oslo, Norway-based Aker BP and its partners filed formal plans in December for four offshore oil and gas projects on the Norwegian Continental Shelf. 

A total investment of nearly US$30 billion, the developments are expected to increase Aker BP’s oil and gas production to around 525,000 barrels per day in 2028, compared to 400,000 in 2022. 

The company’s strategy is to meet the world’s growing need for energy while simultaneously contributing to reducing emissions, said CEO Karl Johnny Hersvik. 

The projects are enabled by a 2020 government stimulus package that “allowed oil companies to embark upon new commitments,” he said. 

Qatar – North Field East LNG expansion 

Qatar Energy 

US$29 billion

Qatar’s Minister of State for Energy Affairs and QatarEnergy CEO Saad Sherida al-Kaabi (R) and TotalEnergies CEO Patrick Pouyanne announce partnership in the giant North Field East LNG project at the QatarEnergy headquarters in Doha on June 12, 2022. Getty Images photo

One of the world’s largest LNG exporters is expanding its capacity with the largest LNG project ever built.  

State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year. Startup is expected in late 2024.  

A planned second phase of the project will further increase capacity to 126 million tonnes per year. QatarEnergy’s partners include Shell, TotalEnergies, Exxon Mobil, ConocoPhillips and Eni.  

World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.  

Russia – Vostok Oil  

Rosneft  

US$170 billion  

Russian President Vladimir Putin and executives with state oil company Rosneft present a major shipbuilding complex to Indian Prime Minister Narendra Modi. India will be an investor in a new US$170 billion oil project in the Russian Arctic. Photograph courtesy Rosneft

Despite the war in Ukraine and wide-ranging energy sanctions, Russian state-owned oil company Rosneft says work continues to advance on schedule for the massive Vostok oil project.  

The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase.  

Rosneft reports that as of mid-2022, more than 1,000 units of special construction equipment are in operation, as well as seven new Russian arctic class drilling rigs, with another five on the way. Over 4,000 people and 2,000 vehicles have been mobilized.  

“This means that the project lives and develops as planned, the inevitable difficulties are being overcome, but we have full confidence that all the tasks will be completed,” Rosneft CEO Igor Sechin said. 

“In the context of decreasing investment in the oil and gas sector, Vostok Oil is the only project in the world capable to provide a stabilizing effect on the hydrocarbon markets.” 

From the Canadian Energy Centre Ltd. 

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Canadian Energy Centre

Hubs are the future of carbon capture and storage: Why Alberta is an ideal place to make it happen

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From the Canadian Energy Centre

By Deborah Jaremko

Alberta Carbon Trunk Line a ‘perfect example’ of a successful carbon capture and storage hub in action

Call it a CCS highway – a shared transportation and storage network that enables multiple industrial users to reduce emissions faster. 

So-called “hubs” or networks are becoming the leading development strategy for carbon capture and storage (CCS) as the world moves faster to fight climate change, according to the Global CCS Institute.  

Alberta, with its large industrial operations and more CO2 storage capacity than Norway, Korea, India, and double the entire Middle East, is an early leader in CCS hub development.  

“For Alberta, the concept of CCS hubs makes a lot of sense because you have many industry players that are trying to reduce their emissions, paired with beautiful geological opportunities beneath,” says Beth (Hardy) Valiaho, vice-president with the International CCS Knowledge Centre in Regina, Saskatchewan. 

Jarad Daniels, CEO of the Melbourne, Australia-based Global CCS Institute, says that historically, CCS would be a single project integrating a CO2 capture plant with dedicated CO2 compression, pipeline and storage systems.  

“Networks, where each entity typically operates only part of the full CCS value chain provide several benefits,” he says. 

“They reduce costs and commercial risk by allowing each company to remain focused on their core business.” 

The institute, which released its annual global status of CCS report in November, is now tracking more than 100 CCS hubs in development around the world. 

Alberta already has one, and Valiaho says it is a “perfect example” of what she likens to on and off-ramps on a CO2 highway.   

The Alberta Carbon Trunk Line (ACTL) went into service in 2020 as a shared pipeline taking CO2 captured at two facilities in the Edmonton region to permanent underground storage in a depleted oil field.  

Map of the Alberta Carbon Trunk Line system. Courtesy Enhance Energy

So far ACTL has transported more than four million tonnes of CO2 to storage that would have otherwise been emitted to the atmosphere – the equivalent emissions of approximately 900,000 cars.  

ACTL was constructed with a “build it and they will come” mentality, Valiaho says. It has enough capacity to transport 14.6 million tonnes of CO2 per year but only uses 1.6 million tonnes of space per year today. 

The future-in-mind plan is working. A $1.6 billion net zero hydrogen complex being built by Air Products near Edmonton will have an on-ramp to ACTL when it is up and running later this year.  

Air Products will supply hydrogen to a new renewable diesel production plant being built by Imperial Oil. Three million tonnes of CO2 per year are to be captured at the complex and transported for storage by the ACTL Edmonton Connector.  

Hub projects like this are important globally, Daniels says, as CCS operations need to dramatically increase from 50 million tonnes of storage per year today to one billion tonnes by 2030 and 10 billion tonnes by 2050 

“It’s clear the development of CCS networks and hubs is critical for achieving the multiple gigatonne levels of deployment all the climate math says is required by mid-century,” he says. 

Valiaho says Alberta is an encouraging jurisdiction to develop CCS hubs in part because the government owns the geological pore space where the CO2 is stored, rather than developers having to navigate dealing with multiple resource owners.  

“Alberta is a model for the world, and the fact that the government has declared crown ownership of the pore space is very interesting to a lot of international jurisdictions,” she says.  

There are 26 CCS storage project proposals under evaluation in Alberta that could be used as shared storage hubs in the future, including the project proposed by the Pathways Alliance of oil sands producers.  

If just six of these projects proceed, the Global CCS Institute says they could store a combined 50 million tonnes of CO2 per year, or the equivalent emissions of more than 11 million cars. 

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Alberta

Oil sands technology competition to generate low emissions carbon fibre moves into final phase

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Bryan Helfenbaum, associate vice-president of clean energy with Alberta Innovates, holds a hockey stick made with carbon fibre derived from oil sands bitumen. Photo by Dave Chidley for the Canadian Energy Centre

From the Canadian Energy Centre

By Will Gibson and Deborah Jaremko

Study found carbon fibre made from oil sands bitumen has 69 per cent lower emissions than conventional sources

Having spent most of a long and distinguished academic career working with metals, Weixing Chen became fascinated by the potential of repurposing a heavy hydrocarbon from Alberta’s oil sands into a high-value product for a low-carbon economy. 

The product is carbon fibre – thin as human hair but four times stronger than steel – and research has shown producing it from oil sands bitumen generates lower greenhouse gas emissions than today’s sources.  

“This is a great opportunity for me to challenge myself moving forward to develop this technology that will benefit society,” says Chen, a chemical and material engineering professor at the University of Alberta.  

His team at Edmonton-based Thread Innovations is one of five receiving a total $15 million in funding in the final round of the Carbon Fibre Grand Challenge, announced in December. 

Great potential for carbon fibre 

With its light weight and high strength, today carbon fibre is used in products like aircraft and spacecraft parts, racing car bodies, bicycles, hockey sticks and golf clubs. 

It has great potential, but its use is limited by cost. Carbon fibre averages $10 to $12 per pound, compared to less than $1 per pound for steel.   

Part of the Alberta competition is that the carbon fibre derived from oil sands bitumen must cost 50 per cent less than current carbon fibre products.  

This would unlock new markets for carbon fibre, says Byran Helfenbaum, associate vice-president of clean energy for Alberta Innovates, which is funding the challenge along with Emissions Reduction Alberta.  

“At the end of this phase, the intention is the technology is at a point where a company could make a funding decision for if not a commercial project, then at least a commercial demonstration project,” he says. 

“It’s really to get it out of the lab and start hitting the key specifications, identifying the existing and new markets, and pumping out prototypes that can be tested.  We have already generated our first two prototypes, a truck side mirror and a hockey stick, but we need to go bigger and faster and test a wide range of market opportunities.” 

Long-term need for carbon-based products 

The future is likely to be full of carbon fibre products, Helfenbaum says. 

“This ‘low-carbon future’ is a misnomer. When we say low-carbon future, what we mean is let’s keep carbon out of the atmosphere. Carbon is still going to be around us in solid form, and probably in increasingly higher amounts,” he says.  

“We’re going to have 10 billion people on the planet by mid-century. They need energy, but they also need stuff. They need housing, infrastructure, and consumer goods. And most of that stuff is or can be made of pure carbon.” 

Lower emissions from oil sands carbon fibre 

Most carbon fibre today is generated from a chemical compound called polyacrylonitrile (PAN), which is derived from a component of natural gas. 

recent study by researchers at the University of Alberta found that life cycle emissions from carbon fibre derived from oil sands bitumen are 69 per cent lower than PAN-based product.  

It’s the high carbon content of oil sands bitumen that provides the benefit, Helfenbaum says.  

“The heaviest fraction of bitumen takes more energy to break down to be turned into fuels. But that same fraction can be used to produce carbon fibre with fewer greenhouse gas emissions than the current PAN process,” he says. 

“If we are successful in reducing its cost, then it can be deployed into new markets that will further reduce carbon emissions, such as lightening passenger vehicles and improving the longevity of concrete infrastructure.” 

Adding value while reducing emissions 

The Carbon Fibre Grand Challenge is part of Alberta Innovates’ broader Bitumen Beyond Combustion  research program. The work considers opportunities to use bitumen to create value-added products other than fuels like gasoline and diesel.   

“From an economic perspective, the Bitumen Beyond Combustion program could triple the value of a barrel of bitumen,” Helfenbaum says.  

“Carbon fibre is among the most valuable of those products, but it’s not the only one. This is potentially in the tens of billions of dollars a year of gross revenue opportunity, so this is transformational.” 

It also presents environmental benefits.  

“Eighty per cent of the emissions associated with petroleum happen at combustion of gasoline, diesel, and jet fuel so by diverting into these products, that becomes carbon that is sequestered forever and doesn’t get into the atmosphere,” he says.  

Pathway to commercial production 

Winners of the grand challenge will have a credible pathway to manufacturing 2,000 tonnes or more of carbon fibre per year. The challenge is scheduled to end in summer 2026.  

Thread Innovations is building a new facility to produce samples for potential buyers and demonstrate the ability to scale up production. This phase will also focus on improving characteristics of the carbon fibre produced by their technology to build commercial demand. 

“Our target is to complete the current project and then establish a commercialization plan in 2025,” says Chen.  

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