The amount of progress over the last decade in curbing greenhouse gases has given executives at CNRL the confidence to set a target of achieving net zero emissions at its oilsands operations in the future. (CNRL)
Canada’s largest oil and gas producer is setting an ambitious target, albeit aspirational, to reduce the amount of pollution from its oilsands operations to effectively zero in terms of carbon emissions.
Instead of relying on planting trees or purchasing carbon offsets to reach the net-zero goal, a company executive said innovation will be the key.
“We’re trying to get there just using technology and Canadian ingenuity. That makes a big difference,” said Steve Laut, the company’s executive vice-chairman, in an interview.
“We’re trying to do our part on climate change,” said CNRL’s Steve Laut. (Louise Moquin/CBC)
While there is no timeline to reach the goal, Laut called it “doable.”
“It’s good to have a big target,” he said. “It’s going to take some time and it won’t be easy, but there’s a lot of technology out there. It’s impressive.”
Setting such a goal may sound remarkable, considering the oilsands industry’s reputation as producing ‘dirty oil’ because of the amount of greenhouse gases it produces.
Laut admits the oilsands were one of the most carbon-intensive oil operations around the world about 10 years ago. However, since then, he said the industry has worked hard to reduce its impact on climate.
Since 2012, CNRL reports it has cut the amount of greenhouse gases per barrel of oil it produces, company-wide, by 29 per cent. It’s also reduced its methane emissions by 78 per cent during that time.
“It’s been a game changing performance” over the last decade, said Laut. “It’s really exciting because this is not the end, this is the start. We’ve got a lot more to go.”
Cenovus, another oilsands producer, has said it reduced its greenhouse gas intensity by one-third over the last decade.
The environmental performance of facilities varies across the oilsands, but some companies now emit as much greenhouse gas as the average barrel of oil produced in the U.S.
The oilsands used be one of the highest carbon-intensive oil operations in the world, but industry has found ways to reduce emissions. The chart shows life cycle greenhouse gas emissions of crude oils (kg co2e/bbl). (BMO Capital Markets Estimates, IHS 2018, Natural Resources Canada)
For Canadian Natural Resources, one of the ways it has reduced emissions is through three different carbon capture and storage projects. The company captures up to 2.7 million tonnes of greenhouse gases per year.
“Taking this credit into consideration, CNRL’s oil sands mining/upgrading operations have net emissions intensity that is nearly on par with that of the average global crude oil,” according to a recent report by BMO Capital Markets.
The report also estimates how quickly companies will be able to further reduce emissions.
“In our base case, we assume modest improvement in total oil sands emissions intensity of roughly 1.5 per cent per year through 2030 compared to average improvements of 4.5 per cent since 2013,” the report said.
A policy analyst with the Pembina Institute, a Calgary-based environmental think tank, described the announcement as a step in the right direction.
“I think it’s really great to see a company like Canadian Natural Resources showing leadership on climate,” said Ben Israel.
“I think this is definitely a step in the right direction. I think it’s really great to see a company like Canadian Natural Resources showing leadership on climate,” said Ben Israel with the Pembina Institute. (Kyle Bakx/CBC)
While the industry is reducing its emissions intensity, the Pembina Institute expects total emissions to continue to climb as more oilsands projects are constructed and existing facilities are expanded.
Oilsands emissions were about 77 million tonnes in 2018, a figure that could climb to 131 million tonnes if all of the proposed projects that have received regulatory approval are constructed.
“We see a lot of companies showing good progress on reducing emission intensity per barrel, but I think it’s critical to also make sure to reduce absolute emissions of the oilsands sector, especially so they are aligned with our climate targets as a country,” said Israel.
If Canadian Natural Resources reaches net-zero emissions in the years or decades to come, that would only solve part of the greenhouse gas equation. Of the total emissions produced from a barrel of oil, about 20 per cent of it comes from pulling the oil out of the ground, refining it into gas and diesel and transporting the product.
The remaining 80 per cent of pollution is created in cars and trucks when the fuel is burned.
The oil industry often has a financial incentive to reduce their greenhouse gas emissions, since a drop in emissions usually means a company is using less energy, such as electricity or natural gas, for instance, to produce oil.
The majority of emissions from a barrel of oil are produced at the point of consumption, such as using gas in a vehicle.
Israel said the Canadian Association of Petroleum Producers (CAPP), the largest oil and gas industry group, should follow the lead of Canadian Natural Resources by changing its approach to climate issues.
CAPP encourages companies to reduce greenhouse gases, but it has faced some criticism for not commenting on the Paris climate agreement nor does it publicly support federal and provincial carbon taxes.
CAPP has since said it supports the broad mandate of the Paris climate accord, but said not all of the tools to achieve the target are efficient or effective.
In its recent stewardship report, CNRL said it supports Canada’s “leadership in the Paris Agreement as a pathway to reduce greenhouse gas emissions and drive innovation.”
Laut said the industry has to keep finding ways to tackle climate change.
“I think it’s something we have to deal with, it’s part of the world,” he said. “We stepped out and made this goal because we can see a path forward with technology.”
BMO Capital Markets forecasts oilsands production to keep increasing in the future. The chart represents millions of barrels per day.