Share this Story : Edmonton Journal Copy Link Email X Reddit Pinterest LinkedIn Tumblr

Varcoe: 'We need to get this across the goal line' — Cenovus CEO hopeful of deal on pivotal carbon capture project

'If we get the regulatory policy framework right ... that will put us in a position where we can commit barrels to that pipeline,' said Jon McKenzie

You can save this article by registering for free here. Or sign-in if you have an account.

Negotiations between Ottawa, Alberta and major oilsands producers on a massive carbon capture project are now two weeks beyond an initial deadline. An agreement on carbon pricing between the two levels of government is also past the April 1 target date.

Subscribe now to read the latest news in your city and across Canada.

Exclusive articles by David Staples, Keith Gerein and others, Oilers news from Cult of Hockey, Ask EJ Anything features, the Noon News Roundup and Under the Dome newsletters.

Unlimited online access to Edmonton Journal and 15 news sites with one account.

Edmonton Journal ePaper, an electronic replica of the print edition to view on any device, share and comment on.

Daily puzzles, including the New York Times Crossword.

Support local journalism.

Subscribe now to read the latest news in your city and across Canada.

Exclusive articles by David Staples, Keith Gerein and others, Oilers news from Cult of Hockey, Ask EJ Anything features, the Noon News Roundup and Under the Dome newsletters.

Unlimited online access to Edmonton Journal and 15 news sites with one account.

Edmonton Journal ePaper, an electronic replica of the print edition to view on any device, share and comment on.

Daily puzzles, including the New York Times Crossword.

Support local journalism.

Create an account or sign in to continue with your reading experience.

Access articles from across Canada with one account.

Share your thoughts and join the conversation in the comments.

Enjoy additional articles per month.

Get email updates from your favourite authors.

Create an account or sign in to continue with your reading experience.

Access articles from across Canada with one account

Share your thoughts and join the conversation in the comments

Enjoy additional articles per month

Get email updates from your favourite authors

Sign In or Create an Account

Yet, the head of Cenovus Energy, who is also chair of the Canadian Association of Petroleum Producers (CAPP), remains hopeful.

And the entire industry, along with many groups in Canada, are waiting to see if the promise of a ”grand bargain” becomes a reality, and a new oil pipeline and carbon capture network are eventually built.

Get the latest headlines, breaking news and columns.

There was an error, please provide a valid email address.

By signing up you consent to receive the above newsletter from Postmedia Network Inc.

A welcome email is on its way. If you don't see it, please check your junk folder.

The next issue of Headline News will soon be in your inbox.

We encountered an issue signing you up. Please try again

Interested in more newsletters? Browse here.

“I wouldn’t describe myself as confident — I’m hopeful,” said Jon McKenzie, chief executive of Cenovus Energy, one of five members of the Oil Sands Alliance, which has proposed building a $16.5-billion carbon capture network in northern Alberta.

“This is something that we need to do as a country, and we need to get this across the goal line, and we need to get this debate behind us, and we need to start getting things built.”

As part of an energy memorandum of understanding (MOU) reached between the Carney and Smith governments in November, the two sides agreed to negotiate on several key policies.

It supported the idea of a “grand bargain,” including developing a new oil pipeline to the West Coast, which has been pitched by Alberta. But it is conditional on the proposed Pathways carbon capture network being developed, with a CO2 pipeline built between oilsands facilities that connects to an underground storage hub near Cold Lake.

The two governments also pledged to reach an agreement on industrial carbon pricing in the province; it calls for the carbon price under Alberta’s Technology Innovation and Emissions Reduction (TIER) system to reach a minimum effective rate of $130 per tonne, although no timeline was set on when it would need to be reached.

New Alberta bill seeks to expedite approval of $250M+ mega projects

Varcoe: 'We have the resources in Canada' — Nova Scotia premier touts development during pivotal moment for global oil and gas

Advertisement 1Story continues belowThis advertisement has not loaded yet, but your article continues below.document.addEventListener(`DOMContentLoaded`,function(){let template=document.getElementById(`oop-ad-template`);if(template&&!template.dataset.adInjected){let clone=template.content.cloneNode(!0);template.replaceWith(clone),template.parentElement&&(template.parentElement.dataset.adInjected=`true`)}});

The deadline on carbon pricing agreement, and a trilateral MOU between the Oil Sands Alliance and both levels of government, was initially set for the beginning of this month.

(Two other key agreements on methane reduction and reforming the impact assessment process for projects were reached before the April 1 deadline).

McKenzie said the industry needs to remain competitive in being able to attract capital. Canada, the world’s fourth-largest oil producer, faces an industrial carbon tax that other nations don’t place on their industry, while the country also needs to see regulatory reform, he said while attending the annual BMO CAPP Energy Symposium in Toronto.

Stan Bowman just pulled off his second great trade as Edmonton Oilers GM Cult of Hockey

Stan Bowman just pulled off his second great trade as Edmonton Oilers GM

'Further burden the public system': AMA raises concerns with Alberta's plan to allow patients to privately pay for diagnostic testing Local News

'Further burden the public system': AMA raises concerns with Alberta's plan to allow patients to privately pay for diagnostic testing

Advertisement 2Story continues belowThis advertisement has not loaded yet, but your article continues below.document.addEventListener(`DOMContentLoaded`,function(){let template=document.getElementById(`oop-ad-template`);if(template&&!template.dataset.adInjected){let clone=template.content.cloneNode(!0);template.replaceWith(clone),template.parentElement&&(template.parentElement.dataset.adInjected=`true`)}});

'Not a punchline': Kevin Lowe disappointed by Chris Pronger's recollection of Edmonton trade Sports

'Not a punchline': Kevin Lowe disappointed by Chris Pronger's recollection of Edmonton trade

Wednesday's letters: Residents warned city about 132 Ave. redesign Letters

Wednesday's letters: Residents warned city about 132 Ave. redesign

Tuesday's letters: No more public money for Ice District Letters

Tuesday's letters: No more public money for Ice District

“There’s very little doubt in my mind that without fundamental policy and regulatory overhaul and reform, it’s going to be very difficult for industry to grow and backstop that (proposed West Coast) pipeline,” McKenzie said in an interview.

“But if we get the regulatory policy framework right . . . that will put us in a position where we can commit barrels to that pipeline.”

Members of the Oil Sands Alliance have been working on the Pathways project since at least 2021, but the group has not given it the green light. The companies have said the federal and provincial governments need to provide more support for such an expensive decarbonization development to proceed.

The federal government has an investment tax credit that would cover up to half of the capital costs for the development. The UCP government has created a program that would provide a 12 per cent grant to carbon capture developments in Alberta.

The alliance has said those aren’t enough, given the large expenditures involved.

“We have an understanding of what it would take, but we haven’t reached agreement on a trilateral basis,” McKenzie said, noting the group previously said it needs about 75 per cent of capital costs and 50 to 60 per cent of operating costs covered by government.

Given the complexity of the MOU and the fact at least four major agreements had to be reached within a four-month timeline, it’s not surprising that the most complex parts are still being discussed.

“The MOU was important because it kind of reset the relationship between Alberta and the federal government,” said BMO Capital Markets analyst Randy Ollenberger.

“But I do get a bit of a sense of disappointment, discouragement . . . that maybe we’re not going to see the MOU actually come to a meaningful end point.”

Much has changed since the deal was signed, including the war in the Middle East and a spike in oil prices, although benchmark U.S. crude closed Tuesday at US$92.11 a barrel, down almost eight per cent. The conflict has also increased concerns surrounding security of global energy supplies.

Speaking to reporters Tuesday, Prime Minister Mark Carney was asked if these new circumstances have changed views on the Pathways project and if it still makes sense for all sides.

“What’s happened, in many respects, has reinforced the motivations on all aspects of the agreement. It’s reinforced the importance of energy security here in Canada, but also in our potential partners, including very much in Asia. So there’s even more interest in what the Alberta agreement could unlock,” he said.

“We’re making good progress.”

Likewise, Alberta Energy Minister Brian Jean sounded hopeful when asked about the industrial carbon price discussions.

“This is a long, complicated process,” Jean said. “I’m very optimistic. I think the MOU is moving ahead very well.”

Tamarack Valley Energy CEO Brian Schmidt noted Western Canada will run out of spare pipeline capacity later this year or in 2027; plans for a new West Coast line would enhance the country’s ability to export oil to the world in the future.

“We’ve just got to make this thing competitive,” Schmidt said.

“The thing that we got to do is figure this out — so we can get these projects back on the (front) burner.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

Share this Story : Edmonton Journal Copy Link Email X Reddit Pinterest LinkedIn Tumblr

Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

© Edmonton Journal