KEYSTONE PIPELINE REDUX

TC Energy CEO sees opportunity in Trump win as company refocuses on natural gas

By The Canadian Press

November 19, 2024 

CALGARY — Donald Trump’s return to the White House is good news for Canada’s energy sector and an opportunity for TC Energy Corp., the CEO of the Calgary-based pipeline company said Tuesday.

François Poirier made the comments in a phone interview following TC Energy’s investor day presentation in Toronto. He said the former U.S. president’s re-election has been “top of mind” for the company, which has a network of natural gas pipelines in Canada, the U.S. and Mexico.

“He (Trump) is very focused on affordability. He understands the role that energy plays, and energy security, on the international stage,” Poirier said.

“Having the free flow of energy between the three countries in North America is very important. Natural gas and oil want to flow south, generally speaking. And having more supply of oil and gas from Canada will help contribute to lower prices in the U.S.”

As a company, TC Energy has already seen first-hand how business can flourish or be derailed by political winds south of the border.

Its Keystone XL project — a 1,900-kilometre proposed crude oil transportation pipeline that would have carried oil from the oilsands of northern Alberta to the major U.S. crude storage hub at Cushing, Okla. and then on to Gulf Coast refineries — was first proposed under the Obama administration, which rejected it on environmental grounds.

Keystone was then revived under the first Trump administration, before President Joe Biden killed it again by revoking the pipeline’s permit on his first day as president in 2021.


Last month, TC Energy completed the spinoff of its crude oil pipeline business into a new company called South Bow Corp., and as a result, TC is no longer the owner of the Keystone system.

South Bow “supports efforts to transport more Canadian crude oil to meet U.S. demand,” the company said in an emailed statement provided Tuesday by spokeswoman Katie Stavinoha.

“South Bow’s long-term strategy is to safely and efficiently grow our business,” the statement said.

But Poirier said the Alberta government has already reached out to TC in the wake of the U.S. presidential election, keen to see if that project could be revived or if there are other ways to increase Alberta’s oil and gas pipeline export volumes to the U.S.

Trump has proposed sweeping tariffs on all U.S. imports, but most experts believe Canadian oil and gas would be exempt from such a plan due to the highly integrated nature of the North American energy system. Trump has also been a vocal supporter of oil and gas generally, calling for more domestic drilling and tapping Liberty Energy CEO Chris Wright for secretary of the U.S. Department of Energy.

“We’ve had high-level conversations (with the Alberta government) around Keystone XL. We did mention that project is owned by South Bow ... and for conversations around increasing the export of crude oil from Alberta, that would be for South Bow to consider,” Poirier said.

“Our conversations have been more around expanding access to U.S. markets for natural gas — both for export to international markets as well as into the U.S. markets, particularly in the northwest and the Midwest of the U.S. where Canadian natural gas has important market share.”

For TC Energy, a second Trump administration is timely because it coincides with what is already a renewed focus on natural gas for the company. The spin-off of South Bow was designed to enable TC Energy to pursue a natural gas-focused strategy at a time when the company sees growing demand for the commodity.

TC believes a combination of factors — including the phase-out of coal-fired power, increased exports of liquefied natural gas, growing electrification, and the rise of power-hungry data centres to fuel the AI revolution — will lead to a dramatic increase in natural gas usage in North America in years to come.

It predicts North American natural gas demand rising to a total of 160 billion cubic feet per day by 2035, an increase of 40 billion cubic feet per day from today’s levels. The company also believes natural gas and electricity will account for 75 per cent of total growth in overall North American energy consumption by 2035.


“We have seen this developing for quite a number of years ... What I would say, however, is the degree of visibility that has developed over the last 12 months or so around data centres and around the importance of LNG exports has been more rapid,” Poirier said.

Approximately two-thirds of the 350 or so data centres currently proposed or under construction in North America are within 50 miles of TC Energy’s assets, Poirier said, meaning the company is uniquely poised to benefit from the AI boom by supplying much-needed natural gas infrastructure to the power-hungry industry.

While some hyperscale data centre operators south of the border have announced investments in nuclear or renewable power to reduce their emissions profile, Poirier said he is confident natural gas will play a major role in the industry’s growth.

“The issue with wind and solar is that on its own, you don’t have 100 per cent reliability because these data centres operate on a 24/7 basis,” he said.

“They consume energy on a 24/7 basis, which is why we’re so confident in the role that natural gas will play in empowering data centre growth.”

On Tuesday, TC Energy announced it has green-lit a total of about $1.5 billion in capital spending across four new projects, including two in the U.S. that will help with coal-to-gas conversion at two existing power plants as well as the sanctioning of a liquefied natural gas peaking project in southeast Virginia.

It also said its share of the capital required at an expansion at Bruce Power is about $175 million.

Poirier said the company is committed to remaining within its previously sanctioned $32 billion sanctioned capital growth program between now and 2027, but added the prospective opportunities related to natural gas right now are huge.

“We see probably twice the opportunity set that we can afford to spend our human and our financial capital on, based on all the opportunities in our footprint,” he said.

“Actually the skill that we’ve had to learn is how to say no, because we see so many good projects come across our desks.”

This report by The Canadian Press was first published Nov. 19, 2024.

The myth that carbon dioxide can save us is not just an Alberta thing

By

• Adrienne Tanner
•  
• 
  

• Opinion

November 11th 2024

Alberta Premier Danielle Smith speaks at a Carbon Capture Canada conference in Sept., 2024. Photo from Danielle Smith's official Facebook page

Only in Alberta. That was the refrain when my colleague Natasha Bulowski broke the story that Alberta’s ruling party was considering striking carbon dioxide from the list of planet-heating pollutants and instead, embracing the gas as a "foundational nutrient for all life on Earth.”

Those types of broad-brush remarks about our fellow Canadians are unfair, of course. There are a good many people in my home province who wouldn’t buy into this line of thought for a second. However, Alberta is the powerhouse producer of oil and gas in Canada, and politically deserves its bad rap for thwarting efforts to reduce greenhouse gas emissions. Its premier, Danielle Smith, is an unabashed fossil fuel booster, who lashes out at absolutely anything that would make life more difficult for corporations mining the oil sands and fracking for gas.

She throws around threats of lawsuits against federal climate policy like a major league pitcher. Days before her leadership review, Alberta filed suit against the federal carbon pricing system, on grounds it was being unfairly applied across the country — pointing to the tax carveout on home heating oil in the Atlantic provinces. 

This week, Smith threatened another court challenge, this one against the proposed federal oil and gas emissions cap, claiming it encroaches on provincial jurisdiction and threatens to lead the country “into economic and societal decline.”

And of course there are the roadblocks the Smith government has thrown up to thwart Alberta’s thriving renewable energy sector, designed to ensure fossil fuel companies maintain their edge. 

But even against this backdrop, the CO2 love-fest motion by the United Conservative Party (UCP) seemed beyond the pale. But lo and behold, it passed. An overwhelming majority of UCP members voted last weekend to ditch the province’s emissions reduction targets and recognize carbon dioxide as “a foundational nutrient for all life on earth.” 

That put Smith in a bit of a quandary. She couldn’t wholeheartedly promise to back the resolution; giving up on emissions reductions all together would rob the giant oilsands companies of huge amounts of money they want for their carbon capture projects and place them at a disadvantage internationally, where carbon intensity is starting to matter.

Smith tiptoed through that dilemma by saying she would honour the spirit but not the text of her party’s resolution and promised to continue support for the oil and gas industry’s commitment to reach net-zero by 2050. 

All of this made us at Canada’s National Observer wonder where the motion came from in the first place. To be sure, some carbon dioxide is a foundational part of life on our planet; plants need it to grow. All animals exhale it when they breathe. Of course, just like coffee that eventually gives you the shakes, there is a limit to how much carbon dioxide is good for the planet. 

Only in Alberta, you say? Not really. The CO2 as a life giving force myth has been around a long time. #emissions #CO2 #carbon #climate #abpoli

The Alberta motion ignores entirely the fact we are well past the threshold. Carbon dioxide, produced when humans burn fossil fuels, and other greenhouse gases like methane, act like a blanket that traps more and more of the heat around the planet. As the planet warms, more energy is added to the atmosphere, creating more violent storms, less predictable weather patterns, drying forests and rising sea levels. The hurricanes, floods and forest fires tell you all you need to know about how far past optimum levels we have already gone.

Turns out the disinformation spreaders, who designed the pro-CO2 slogans and urged us to forget the facts, were from a front group for a coalition of American coal producers. They first blasted out the argument in 1997 to prevent climate policies curtailing coal. It has been in circulation ever since, used as a rallying cry by fossil fuel boosters, climate deniers, online conspiracy theorists, and now, sadly, some Canadian political parties. The same myth was propagated by at least two Conservative Party of B.C. candidates during the recent provincial election.

It all goes to show how persistent disinformation in the service of the fossil fuel industry can be, and how eager those who stand to profit from the economic status quo are to continue its spread. In this case, it is the political parties lacking foresight who are to blame. 

So, no, it’s not only in Alberta. The UCP is just the latest one to jump on this bandwagon. 

 SEE LA REVUE GAUCHE - Left Comment: Search results for CCS

NATONAL OBSERVER

November 11th 2024

Adrienne Tanner

Editor-in-Chief

@AdrienneTanner

Experimental bitumen extraction project in Fort McMurray area faces local opposition

Story by Dennis Kovtun
• 1d • CBC

Damian Asher, president of Saprae Creek Residents Society, says the area is popular among residents, who like to use it for recreation.© Dennis Kovtun/CBC

Anovel bitumen extraction project in the Fort McMurray region is facing significant opposition by the community close to which it is located.

Drift Resource Technologies, an Okotoks, Alta.-based carbon technology firm, says it developed a mechanical process to access oilsands deposits that significantly reduces greenhouse gas emissions, eliminates the need for tailings ponds and allows sites to be reclaimed much earlier.

But residents of Saprae Creek, a hamlet about 25 kilometres southeast of Fort McMurray, close to which the project would be built, don't want it to materialize.

"It's in our residential backyard. It's in our recreational backyard," Damian Asher, president of Saprae Creek Residents Society, told CBC in an interview. "Us residents are back here, our kids are back here. We ride mountain bikes, quads, horseback, go for hikes, grab firewood."

He is worried about the project's impact on the area.

"The plant's going to run all night long. They're going to have generators, there is going to be lights. They're doing directional drilling," he said.

Asher said the forested area close to Saprae Creek is just regrowing, eight years after the 2016 fire.

"And now they want to come in and clear more of that forested area so they can set up drill rigs and start doing directional drilling underneath this land. It's just not acceptable," he said.

Asher, a professional firefighter, is also concerned about the fire risk.

"If a fire were to open up at a place like this, one kilometre within residential houses, it's going to enter the community and we're going to lose houses and it's going to risk lives," he said.

In a statement to CBC, Ryan Cameron, Drift's regulatory and sustainability manager, said the project "holds the potential for significant investment and economic benefits for both Fort McMurray and the province."

The company has "followed all applicable rules, regulations, and processes to obtain the necessary approvals and licences for our proposed project," Cameron said, "including engaging with community members.

"In response to the feedback we've received, we have proposed several mitigation strategies aimed at addressing the concerns raised by community members."

Wood Buffalo's Mayor Sandy Bowman had his concerns about how Drift went about engaging community members.

"When we hear from a company that says they've engaged, we're the ones that will fact check, and we did get ahold of the stakeholders and had these meetings, and see that the results from engagement were not recorded accurately, whether it was with the residents or with the stakeholders, the communities around there," he said at the council meeting on Tuesday.

During the meeting, the council voted to authorize Bowman to write a letter to the Minister of Energy and Minerals Brian Jean on behalf of the residents of Saprae Creek.

In response to an inquiry from CBC, Jean's office responded that they would "review the letter once we receive it. We expect all proponents to engage with impacted communities to resolve their concern."

 

Shell going ahead with Canadian carbon capture and storage projects

Amanda Stephenson, The Canadian Press

Shell Canada is going ahead with its Polaris carbon capture project in Alberta.

The company — the Canadian subsidiary of British multinational Shell PLC — announced Wednesday it has made a positive final investment decision on the project, which is designed to capture up to 650,000 tonnes of carbon dioxide annually from the Shell-owned Scotford refinery and chemicals complex near Edmonton.

That works out to approximately 40 per cent of Scotford's direct CO2 emissions from the refinery and 22 per cent of its emissions from the chemicals complex.

Shell did not disclose the dollar value of the Polaris project, but said it is expected to begin operations toward the end of 2028.

"It's a very good day, it's an exciting day for us," said Shell Canada president Susannah Pierce in an interview.

"Certainly for me as country chair of Canada, it's great to see this capital investment from Shell in Canada. Because as you know, I compete for capital in my portfolio, and I'm pleased that Shell has decided to put it here."

Shell also said Wednesday it will proceed with the related Atlas Carbon Storage Hub in partnership with ATCO EnPower. The first phase of Atlas, which will be connected to the Polaris project by a 22-kilometre pipeline, will provide permanent underground storage for CO2 captured by Polaris.

Polaris is Shell's second carbon capture and storage project in Canada. Its first, named Quest, was completed in late 2015 and is also located at the Scotford complex.

That project — which cost $1.3 billion to build — has captured and stored about nine million tonnes of CO2 from the Scotford upgrader since 2015, Shell said.

Shell's decision to greenlight the Polaris project comes just days after a new federal investment tax credit for carbon capture and storage received royal assent. 

That tax credit was first announced in 2022, but its finalization means that companies can now apply for and claim the credit to offset the capital costs of building carbon capture facilities.

"That was a critical component of the (Polaris) decision," Pierce said.

There has been a flurry of carbon capture proposals in Canada in recent years, though few have received a final investment decision. 

Carbon capture and storage, which involves capturing and compressing harmful CO2 emissions from industrial processes and then storing them safely underground, is viewed by many as the best way of decarbonizing heavy-polluting industries such as oil and gas and cement production.

But the technology is very expensive and corporations have proved reticent to invest in it without significant support from governments.

The largest proposed carbon capture project in Canada, a $16.5-billion proposal by a group of oilsands companies called the Pathways Alliance, has yet to receive a final investment decision.

Earlier this spring, Edmonton-based Capital Power Corp. cancelled plans for its proposed $2.4-billion carbon capture and storage project at its Genesee natural gas-fired power plant. Capital Power said while the project was technically feasible, the economics didn't work.

Pierce said every project is different, but in Shell's case, Polaris is a "key piece" of the company's overall decarbonization strategy.

"We have a commitment to decarbonize our Scotford facility, we have experience in CCS (carbon capture and storage) with our years of operating the Quest facility," she said.

"With the right combination of a fiscal framework as well as regulation, we were able to take a look at CCS compared to any of the other alternatives to meet our compliance obligations, and this one worked."

In addition to the federal investment tax credit, Pierce said the Polaris project can take advantage of a range of existing and proposed federal and provincial programs, regulations, and incentives. 

These include Alberta's carbon capture incentive program, the federal clean fuel regulations and the Alberta Technology Innovation and Emissions Reduction regulation which allows companies that have reduced emissions to generate credits that can be saved or sold to other emitters.

In a report Wednesday, global consultancy Wood Mackenzie said it projects carbon capture and storage will represent a US$196-billion investment opportunity worldwide over the next decade. 

About 70 per cent of that investment will take place in North America and Europe, Wood Mackenzie said. 

"The expected pace of CCUS deployment will be driven by the level of regulation and support in different countries," the report said, adding the U.S. and Canada have "robust" regulatory and funding mechanisms in place to drive implementation.

"Announced government funding specifically for CCUS across key countries – including the U.S., Canada, the U.K., Denmark and Australia — amounts to around US$80 billion," Wood Mackenzie said in its report.

"The U.S. leads funding with a 50 per cent share of the total, followed by the U.K. at 33 per cent and Canada at 10 per cent."

Federal Environment Minister Steven Guilbeault told reporters in Ottawa on Wednesday he expects carbon capture and storage to account for seven to eight per cent of Canada's overall emissions reduction efforts by 2030 — making it part of a "portfolio" of technologies that this country will need to deploy to achieve its international climate commitments.

“I’ve always said that carbon capture is one of many solutions to fight climate change," Guilbeault said.

"If you look at our emissions reduction plan, carbon capture will play a role, but it’s not a silver bullet.”

- With files from Alessia Passafiume in Ottawa

This report by The Canadian Press was first published June 26, 2024.

 

Emissions cap not possible without oil, gas production cuts: Deloitte

Amanda Stephenson, The Canadian Press

Canadian oil and gas companies facing a federally imposed emissions cap will decide to cut their production rather than invest in too-expensive carbon capture and storage technology, a new report by Deloitte says.

The Alberta government-commissioned report — a copy of which was obtained by The Canadian Press — aims to assess the economic impact of the proposed cap.

Its findings contradict the federal government's stance that its proposed cap on greenhouse gas emissions from the oil and gas sector would be a cap on pollution, not a cap on production. And it supports Alberta's position that a mandated cap would lead to production curtailments and severe economic consequences.

But the Deloitte report also casts doubt on the idea that widespread deployment of carbon capture and storage technology will drive down emissions from the oil and gas sector in the coming years, suggesting that scenario doesn't make financial sense. 

"We expect that the cap (will impose) 20 megatonnes in emissions reduction on producers by 2030, which will need to be achieved by CCS (carbon capture and storage) investments, or through production curtailment," the Deloitte report states.

"Curtailing production would be a more cost-effective option compared to investing in CCS." 

The oil and gas sector is Canada's heaviest-emitting industry, and rising oilsands production has meant total emissions from the sector are increasing at a time when many other sectors of the economy are successfully reducing overall emissions. 

Globally, oil demand is growing, with the International Energy Agency forecasting global oil demand to be 3.2 million barrels per day higher in 2030 than in 2023, though the agency also suggests growing supply will outstrip demand growth sometime this decade.

In a draft framework released last December, the federal government proposed mandating a ceiling on oil and gas emissions in order to help slow climate change. The rules would require the industry to cut greenhouse gas emissions by 35 to 38 per cent from 2019 levels by 2030. Companies would also have the option to buy offset credits or contribute to a decarbonization fund that would lower that requirement to cutting just 20 to 23 per cent.

But the Deloitte report suggests oil production in this country could increase 30 per cent, and gas production over 16 per cent, from 2021 to 2040. Those figures are based on a Canada Energy Regulator forecast and on current government policies.

This means that producers will have two choices to meet the constraints of an emissions cap, Deloitte argues. They can invest heavily in carbon capture and storage — trapping greenhouse gas emissions from oil production at site and storing them safely underground — or cut back on planned production increases. 

The oil and gas industry itself has been promoting carbon capture and storage as the key to reducing emissions while still increasing production. The oilsands industry, which is responsible for the bulk of Canada's overall oil and gas sector emissions, has proposed spending $16.5-billion on a massive carbon capture and storage network for northern Alberta. 

But the group of companies behind the proposal, called the Pathways Alliance, has not yet made a final investment decision, saying more certainty about the level of government support and funding for the project is required.

In its report, Deloitte concludes the cost of carbon capture and storage is so high that in many cases, it is "economically unviable."

It says it is unlikely that many companies would go that route in an effort to comply with an emissions cap, and would instead simply curtail production. 

"It is important to note that once implemented, the investment in CCS is irreversible," the report states. 

"However, production curtailment can be reversed. Considering these factors, we do not foresee any oilsands CCS investments being implemented.”

The Deloitte report concludes a mandatory limit on greenhouse gas emissions from the oil and gas sector would result in decreased production, job losses and investment, as well as a "significant" decline in GDP in Alberta and the rest of Canada.

The mining, refinery products and utilities sector will also experience a decrease in real output in the event of an emissions cap, Deloitte says, due to their proximity to the oil and gas sector.

Alberta's oil production in 2030 would be 10 per cent lower with a cap than without one, the Deloitte report suggests, and its natural gas production would be 16 per cent lower. The cap would also mean decreased fossil fuel production in B.C., Saskatchewan and Newfoundland.

By 2040, Deloitte says, Alberta’s GDP would be 4.5 per cent lower, and Canada’s GDP would be one per cent lower, than if no emissions cap were in place.

Federal Environment Minister Steven Guilbeault told reporters in Ottawa Tuesday that the findings are "baffling" given the government has not even published draft emission cap regulations yet.

"How can they come up with these scenarios about production cuts when all they have seen is basically a white paper, defining contours of what the regulations could be?" he said.

Guilbeault added that oil and gas companies themselves, including the Pathways Alliance, have committed to getting to net-zero emissions by 2050.

"All we're doing with the oil and gas emissions cap is taking companies at their word," he said.

"They said they wanted to be carbon-neutral by 2050, and what we're doing with these regulations is making sure nobody waits until 2048 to start putting in place the measures that are necessary."

But Alberta Environment Minister Rebecca Shulz said the report supports what the province has been saying all along.

"We have to use common sense. You have to take socio-economic data into perspective when you're looking at policies like (an emissions cap)," said Shulz in an interview.

"I don't think Canadians want to see us throw the country into further economic decline."

Shulz added Alberta recognizes that the economics of carbon capture and storage are challenging. She said heavy-handed government policy that makes companies less profitable will only have the effect of discouraging investment in emissions reduction.

"From a policy perspective, the layering of all of these punitive measures are continuing to drive away the emissions reduction technology that we actually want to see happen here," she said.

The Deloitte report predicts Alberta would have 54,000 fewer jobs in 2030 with an emissions cap than without one.

This report by The Canadian Press was first published June 18, 2024.