The Pathways Alliance is a group of six Canadian oil sands producers working together on a multi-stage plan to achieve the goal of net-zero greenhouse gas emissions from operations by 2050. Alliance president Kendall Dilling spoke to Petroleum Economist to elaborate on the work of the group.

Can you outline how Canadian oil sands producers can achieve the goal of net-zero scope one and two emissions from their operations by 2050?

Dilling: Clearly, technology is the answer. Pathways’ six member companies have assigned hundreds of their brightest minds to work on the alliance’s net-zero plan, and a core Pathways Alliance team of more than 30 experts has also recently been established.

We have a really healthy pipeline of more than 70 technology development projects to bring to bear on this problem. Some of the most important are in what we call natural gas decarbonisation. Oil sands producers burn natural gas to generate steam, which heats underground reservoirs and the heavy oil inside, enabling it to flow to the surface more easily.

CCS is a well-known, well-understood technology. The main challenge is that it is expensive

Hydrogen can be used as a low-carbon substitute or blending agent for natural gas without significant equipment changes. In the oil sands, a lot of our sites are large hydrogen producers already because they use it in the upgrading process, so it is just a question of producing more low-carbon hydrogen.

We are also looking at ways to dramatically reduce the amount of steam we put in the ground, injecting naturally occurring hydrocarbons such as propane instead that chemically mix with heavy oil to make it more mobile and easier to recover. It has a much lower energy footprint than steam and you can strip the propane back out and recycle it. We are also working on longer-term things such as small modular nuclear reactors, which when configured to produce heat are actually a very good technical fit with our operations.

On top of that, you have got the myriad of energy efficiencies going on in the oil sands mining side of the equation, where big trucks, scoop shovels and other heavy equipment associated with mining operations produce a big chunk of emissions. There is a lot of work going on there with electrifying these vehicles or converting them to run on biofuels instead of diesel.

Tell us about the Carbon Storage Hub project.

Dilling: There are a number of large operating facilities in northeastern Alberta in the oil sands region with highly concentrated carbon point sources. The plan is to build carbon capture on those plants, concentrate the CO₂, and put it in a pipeline that takes it 400km to the sequestration area. This is a very large area with ideal geology to safely and permanently store carbon. We are in the final stages of evaluating the hub in order to secure an agreement with the government of Alberta to use the space to sequester carbon on behalf of all emitters in that part of the province. It is one of the best geological reservoirs in the world for CO₂ storage because multiple overlying layers of impermeable rock formations act as natural seals in the Western Canadian Sedimentary Basin. We have a gigaton of storage just in our Pathways hub, and while our proposed project would be one of the largest in the world, there are more than 20 that are proposed in Alberta. This is a huge competitive advantage for Alberta because there are heavy emitters out there that will choose to relocate or grow their operations in areas where they will have access to an established CCS network.

There are about 25 indigenous communities along the proposed CO₂ transportation and storage network corridor, and we are in the early stages of formal consultation with them to ensure their needs are understood and incorporated into the design of the project, and to ultimately ensure they are participating in—and benefiting from—this project being developed.

We are submitting regulatory applications for the project later this year. It will be at least a year until regulatory approval if all goes well, so we could be looking at FIDs in 2025 or 2026. This would put us on track to being in service by 2030, which coincides with Canada’s commitments under the Paris Agreement.

Overall, CCS is a well-known, well-understood technology. The main challenge is that it is expensive.

Is the policy regime in Canada helping meet those costs?

Dilling: Last spring, Canada rolled out an investment tax credit for CCS, which is a good foundational piece to build a fiscal framework on. Alberta also has a provincial carbon regulatory framework called the Technology Innovation and Emissions Reduction [Tier] that may also provide some support.

The CEOs from the six Pathways member companies meet every Friday morning for an hour to discuss solutions

As governments and companies work together to do this, there is a real value case in setting yourself up as a leader in a technology that is going to be needed around the world. In the US, they have understood this, and the Inflation Reduction Act [IRA] sets higher levels of support for CCS than the current Canadian policy framework does. The Canadian structure is also going to be more complicated than the IRA support, which is very straightforward. We continue to work with our governments to try and close that gap so we can attract the capital and make that investment happen here rather than south of the border.

Do you see firms working together in new ways when tackling the challenges of the transition?

Dilling: The CEOs at the Pathways member companies realised they had to decarbonise their operations to remain relevant. They knew the world would need oil for some time but saw an increasing demand for low-carbon barrels. But no one can do this alone. So they determined they had to work together. The CEOs from the six Pathways member companies meet every Friday morning for an hour to discuss solutions. If that is not unprecedented collaboration, I do not know what is. I've certainly never seen anything like that previously during my career.

In lots of other parts of the business they remain fierce competitors, but when it comes to environmental technology, why would they compete? When you look at something like CCS, it just does not make sense to go it alone. If you get the whole sector together to share the cost of the infrastructure it becomes a much better economic proposition. You see that happening elsewhere in the world, with industrial clusters in the UK as well.

What is the alliance hoping to achieve in land reclamation?

Dilling: From the inception of the industry, reclamation has been foundational. All our operations are in the northern boreal forest, which is a really important ecosystem globally. We work with universities, government and research institutes, industry and the wider public to bring together world-class expertise to find solutions for land conservation and management issues within these regions. Operators are required to submit detailed land reclamation plans as part of their request for approval of a project. Some mines operate for decades, so reclamation occurs in phases throughout a mine’s lifetime.



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