From the Canadian Energy Centre

By Deborah Jaremko

Record oil production, more Indigenous ownership and inching closer to LNG

It’s likely 2024 will go down in history as a turning point for Canadian energy, despite challenging headwinds from federal government policy.   

Here’s some of the good news.

10. New carbon capture and storage (CCS) projects to proceed 

Photo courtesy Shell Canada

In June, Shell announced it will proceed with the Polaris and Atlas CCS projects, expanding emissions reduction at the company’s Scotford energy and chemicals park near Edmonton.  

Polaris is designed to capture approximately 650,000 tonnes of CO2 per year, or the equivalent annual emissions of about 150,000 gasoline-powered cars. The CO2 will be transported by a 22-kilometre pipeline to the Atlas underground storage hub.   

The projects build on Shell’s experience at the Quest CCS project, also located at the Scotford complex. Since 2015, Quest has stored more than eight million tonnes of CO2. Polaris and Atlas are targeted for startup in 2028.    

Meanwhile, Entropy Inc. announced in July it will proceed with its Glacier Phase 2 CCS project. Located at the Glacier gas plant near Grande Prairie, the project is expected onstream in mid-2026 and will capture 160,000 tonnes of emissions per year.  

Since 2015, CCS operations in Alberta have safely stored roughly 14 million tonnes of CO2, or the equivalent emissions of more than three million cars. 

9. Canada’s U.S. oil exports reach new record 

Expanded export capacity at the Trans Mountain Westridge Terminal. Photo courtesy Trans Mountain Corporation

Canada’s exports of oil and petroleum products to the United States averaged a record 4.6 million barrels per day in the first nine months of 2024, according to the U.S. Energy Information Administration.  

Demand from Midwest states increased, along with the U.S. Gulf Coast, the world’s largest refining hub. Canadian sales to the U.S. West Coast also increased, enabled by the newly completed Trans Mountain Pipeline Expansion. 

8. Alberta’s oil production never higher

A worker at Suncor Energy’s MacKay River oil sands project. CP Images photo

In early December, ATB Economics analyst Rob Roach reported that Alberta’s oil production has never been higher, averaging 3.9 million barrels per day in the first 10 months of the year.  

This is about 190,000 barrels per day higher than during the same period in 2023, enabled by the Trans Mountain expansion, Roach noted.  

7. Indigenous energy ownership spreads 

Communities of Wapiscanis Waseskwan Nipiy Limited Partnership in December 2023. Photo courtesy Alberta Indigenous Opportunities Corporation

In September, the Bigstone Cree Nation became the latest Indigenous community to acquire an ownership stake in an Alberta energy project.  

Bigstone joined 12 other First Nations and Métis settlements in the Wapiscanis Waseskwan Nipiy Holding Limited Partnership, which holds 85 per cent ownership of Tamarack Valley Energy’s Clearwater midstream oil and gas assets.  

The Alberta Indigenous Opportunities Corporation (AIOC) is backstopping the agreement with a total $195 million loan guarantee.   

In its five years of operations, the AIOC has supported more than 60 Indigenous communities taking ownership of energy projects, with loan guarantees valued at more than $725 million.  

6. Oil sands emissions intensity goes down 

Oil sands steam generators. Photo courtesy Cenovus Energy

A November report from S&P Global Commodity said that oil sands production growth is beginning to rise faster than emissions growth.  

While oil sands production in 2023 was nine per cent higher than in 2019, total emissions rose by just three per cent. 

“This is a notable, significant change in oil sands emissions,” said Kevin Birn, head of S&P Global’s Centre for Emissions Excellence. 

Average oil sands emissions per barrel, or so-called “emissions intensity” is now 28 per cent lower than it was in 2009. 

5. Oil and gas producers beat methane target, again 

Photo courtesy Tourmaline

Data released by the Alberta Energy Regulator in November 2024 confirmed that methane emissions from conventional oil and gas production in the province continue to go down, exceeding government targets. 

In 2022, producers reached the province’s target to reduce methane emissions by 45 per cent compared to 2014 levels by 2025 three years early.  

The new data shows that as of 2023, methane emissions have been reduced by 52 per cent.  

4. Cedar LNG gets the green light to proceed 

Haisla Nation Chief Councillor Crystal Smith and Pembina Pipeline Corporation CEO Scott Burrows announce the Cedar LNG positive final investment decision on June 25, 2024. Photo courtesy Cedar LNG

The world’s first Indigenous majority-owned liquefied natural gas (LNG) project is now under construction on the coast of Kitimat, B.C., following a positive final investment decision in June.  

Cedar LNG is a floating natural gas export terminal owned by the Haisla Nation and Pembina Pipeline Corporation. It will have capacity to produce 3.3 million tonnes of LNG per year for export overseas, primarily to meet growing demand in Asia.  

The $5.5-billion project will receive natural gas through the Coastal GasLink pipeline. Peak construction is expected in 2026, followed by startup in late 2028. 

3. Coastal GasLink Pipeline goes into service 

Workers celebrate completion of the Coastal GasLink Pipeline. Photo courtesy Coastal GasLink

The countdown is on to Canada’s first large-scale LNG exports, with the official startup of the $14.5-billion Coastal GasLink Pipeline in November.  

The 670-kilometre pipeline transports natural gas from near Dawson Creek, B.C. to the LNG Canada project at Kitimat, where it will be supercooled and transformed into LNG.  

LNG Canada will have capacity to export 14 million tonnes of LNG per year to overseas markets, primarily in Asia, where it is expected to help reduce emissions by displacing coal-fired power.  

The terminal’s owners – Shell, Petronas, PetroChina, Mitsubishi and Korea Gas Corporation – are ramping up natural gas production to record rates, according to RBN Energy. 

RBN analyst Martin King expects the first shipments to leave LNG Canada by early next year, setting up for commercial operations in mid-2025.  

2. Construction starts on $8.9 billion net zero petrochemical plant  

Dow’s manufacturing site in Fort Saskatchewan, Alberta. Photo courtesy Dow

In April, construction commenced near Edmonton on the world’s first plant designed to produce polyethylene — a widely used, recyclable plastic — with net zero scope 1 and 2 emissions. 

Dow Chemicals’ $8.9 billion Path2Zero project is an expansion of the company’s manufacturing site in Fort Saskatchewan. Using natural gas as a feedstock, it will incorporate CCS to reduce emissions.  

According to business development agency Edmonton Global, the project is spurring a boom in the region, with nearly 200 industrial projects worth about $96 billion now underway or nearing construction.  

Dow’s plant is scheduled for startup in 2027.  

1. Trans Mountain Pipeline Expansion completed 

The “Golden Weld” marked mechanical completion of construction for the Trans Mountain Expansion Project on April 11, 2024. Photo courtesy Trans Mountain Corporation

The long-awaited $34-billion Trans Mountain Pipeline Expansion officially went into service in May, in a game-changer for Canadian energy with ripple effects around the world.   

The 590,000 barrel-per-day expansion for the first time gives customers outside the United States access to large volumes of Canadian oil, with the benefits flowing to Canada’s economy.   

According to the Canada Energy Regulator, exports to non-U.S. locations more than doubled following the expansion startup, averaging 420,000 barrels per day compared to about 130,000 barrels per day in 2023.  

The value of Canadian oil exports to Asia has soared from effectively zero to a monthly average of $515 million between June and October, according to ATB Economics. 

From the Canadian Energy Centre

Pipeline front-end engineering and design to be complete by end of year

Canada’s largest oil sands companies continue to advance a major proposed carbon capture and storage (CCS) network in northeast Alberta, including filing regulatory applications, conducting engineering and design, doing environmental surveys and consulting with local communities.   

Members of the Pathways Alliance – a group of six companies representing 95 per cent of oil sands production – are also now closer to ordering the steel for their proposed CO2 pipeline.   

“We have gone out to potential pipe suppliers and asked them to give us proposals on costs and timing because we do see this as a critical path going forward,” Imperial Oil CEO Brad Corson told analysts on November 1.  

He said the next big milestone is for the Pathways companies to reach an agreement with the federal and provincial governments on an economic framework to proceed.  

“Once we have the right economic framework in place, then we will be in a position to go order the line pipe that we need for this 400-kilometre pipeline.” 

Pathways – which also includes Suncor Energy, Canadian Natural Resources, Cenovus Energy, MEG Energy and ConocoPhillips Canada – is proposing to build the $16.5 billion project to capture  emissions from oil sands facilities and transport them to an underground storage hub. 

The project was first announced in 2022 but Pathways had not provided recent public updates. The organization had stopped advertising and even briefly shut down its website during the summer in wake of the federal government’s amendments to the Competition Act in June.  

Those changes include explicit provisions on the need to produce “adequate and proper testing” to substantiate environmental benefit claims. Critics say the provisions could lead to frivolous lawsuits and could or even scuttle the very projects that Canada is relying on to slash greenhouse gas emissions.  

In early December, the Alberta Enterprise Group (AEG) and the Independent Contractors and Businesses Association jointly filed a constitutional challenge against the federal government over the new “greenwashing” rules, which they say unreasonably restrict free speech. 

“These regulations pre-emptively ban even truthful, reasonable and defensible discussion unless businesses can meet a government-imposed standard of what is the truth,” said AEG president Catherine Brownlee. 

Pathways has since restored its website, and president Kendall Dilling said the organization and its member companies continue working directly with governments and communities along the corridors of the proposed CCS project. 

Canadian Natural Resources began filing the regulatory applications to the Alberta Energy Regulator on behalf of Pathways earlier in the year. The company has so far submitted 47 pipeline agreement applications along with conservation and reclamation plans in seeking approvals for the CO2 transportation network. 

Pathways has also continued consultation and engagement activities with local communities and Indigenous groups near its pipeline corridors and storage hubs. 

“Engagement is ongoing with local communities, Indigenous groups and landowners, as well as a consultation process with Indigenous groups in accordance with Aboriginal Consultation Office requirements,” Dilling says.  

An environmental field program that began in 2021 continues to survey the network’s project areas. 

“Environmental field studies are ongoing and we are supporting Indigenous groups in completing traditional land use studies,” Dilling says.  

“Studies are supported by hundreds of heritage resource assessments, wetland classifications, soil assessments, aquatic habitat evaluations and other environmental activities.” 

In addition to working with governments and communities, Pathways expects front-end engineering and design on the proposed 400-kilometre-plus main transportation line and more than 250 kilometres of connecting pipelines to be complete by the end of this year.  

Pathways has also drilled two test wells in the proposed storage hub and plans to drill another two or three evaluation wells in the final quarter of 2024.