Strathcona Announces $1.5B Oil Sands Carbon Capture Project

Strathcona Announces $1.5B Oil Sands Carbon Capture Project In Canada - Carbon Herald

Strathcona Resources, a Canadian oil drilling company, is investing heavily in carbon capture for its oil sands operations. This ambitious project, estimated to cost up to $1.5 billion (C$2 billion), is backed by the Canadian government’s Growth Fund.

Strathcona will own and run the facilities, but the upfront costs will be shared equally with the Growth Fund. The company will pay back the government using the money earned from selling carbon credits generated by the captured emissions.

Strathcona claims their system can capture up to 2 million metric tons of carbon emissions annually. This technology has the potential to significantly reduce the environmental impact of their oil sands production.

From High-Emission to Low-Emission Oil

Strathcona‘s CEO, Adam Waterous, believes successful carbon capture could drastically improve the environmental footprint of their oil sands operations. He estimates it could bring emissions down to one-fifth of the global average for crude oil production.

Waterous sees widespread adoption of carbon capture as a game-changer. It could transform Canada’s oil sands, currently a target for environmental criticism, into a more sustainable source of crude oil.

Critics argue that carbon capture for oil production has limited impact on climate change. They point out that the majority of emissions come from burning the finished product, not from oil extraction. Additionally, past carbon capture projects haven’t always lived up to expectations.

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Waterous acknowledges the technology’s novelty but expresses confidence in its success. He highlights the suitability of the geological formations in Strathcona’s drilling areas for storing captured CO2.

The Canada Growth Fund is providing an initial investment of C$500 million with the potential to increase it to C$1 billion later. Strathcona expects government tax credits and grants to cover their share of the project’s cost.

The company anticipates making a final decision on the first project by mid-2025, with operations starting a year later.

Unlike other companies seeking government guarantees for carbon pricing, Strathcona has agreed to guarantee the carbon price for this project.

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The future economic viability of the project hinges on the carbon tax implemented by the Canadian government. While the current tax is set to rise, the leading opposition party has pledged to eliminate it. The impact of this potential policy change on the industrial carbon tax applicable to oil sands projects remains unclear.

Waterous acknowledges the risk but believes captured CO2 will become a valuable commodity in the future. He is confident that Strathcona’s pioneering efforts will pave the way for wider adoption of carbon capture technology in the oil industry.

“Over time, sequestered CO2 is going to be an important community good, and we think we’ll be economically rewarded for that,” he said.

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