As the world economy accelerates in the long race to decarbonize, Canada is quietly becoming a leader in carbon capture — a technology increasingly seen as indispensable in bridging the energy transition from fossil fuels to renewables.
The head of an Alberta oil sands company hopes that the end of the political impasse on the carbon tax will help realize its ambition of utilizing carbon capture as a means to achieve net zero emissions by 2050.
Derek Evans, CEO of MEG Energy, says that carbon capture and storage could effectively erase the emissions from its Christina Lake oil facility, south of Fort McMurray. While the timeline and projected costs of the plan have not been released, he says the project could sequester emissions from other oil facilities nearby as well.
Carbon capture and storage involves chemically isolating carbon dioxide (CO2) that’s released when fossil fuels are burned. The captured CO2 is then sent via pipeline to be permanently stored deep underground.
While critics point to the high costs and long timelines of the technology, there’s also a growing awareness that Canada, as an oil producing nation, has no realistic path to achieve its emissions targets without some form of carbon capture. Beyond the oil sector, there are the heavy-emitting industries of steel, cement and fertilizer production — all of which lack viable renewable energy options to power their operations and stand to benefit from carbon capture and storage infrastructure.
In recent years, some of the world’s largest and most advanced carbon capture projects have been developed in Canada — projects like the Boundary Dam Power Station in Saskatchewan, Shell’s Quest facility near Edmonton and Alberta’s Carbon Trunk line, which spans 200 km through central Alberta.
As Canada continues to fall far short of its emissions targets under the Paris Accord, giant projects like these are leading a new wave of proposed developments attracting funding from the federal and provincial governments. This year’s Federal Budget included new tax incentives for companies to pursue the technology. It’s just a fraction of the $30 billion in carbon capture funding Alberta is seeking from Ottawa — funding that MEG Energy would seek to access for its project.
Derek Evans, president and CEO of MEG Energy, sat down with Global National’s Farah Nasser to discuss his vision for the future of the sector in a decarbonizing world.
Farah Nasser: Why would an oil company CEO want to go net zero by 2050?
Derek Evans, CEO MEG Energy: That’s a great question and probably the easiest one to answer because it’s absolutely critical to get to net zero from from a number of perspectives — but most importantly, from a shareholder perspective — to ensure that we’re going to continue to have the social license to continue to operate the resources and and do it in a way that is going to be environmentally acceptable and sensitive. So to me, it’s a natural step in the evolution of the oil and gas business and one that you could argue is somewhat overdue.
Farah Nasser: Can you outline your vision to get there?
Derek Evans, CEO MEG Energy: MEG Energy has a very long history of reducing its intensity of carbon emissions. Since we’ve been in existence, we’ve got one of the lowest greenhouse gas or CO2 emissions intensities in the business — 20 per cent below everybody else’s. And we’ve managed to be able to do that with advocating and using a bunch of different types of technologies. But a while ago, we realized you can only take the intensity reduction to so far. You’re going to have to decarbonize… After some investigation, we determined the single easiest way to do that, the technology that had the biggest impact and could be put to work in in short order was really carbon capture and storage.
Carbon capture involves three different types of technologies. The first is the actual capture where you’re taking the CO2 out of the flue gas, or the combustion products, and you’re taking it and concentrating it up to a pure CO2 liquid form. You’re taking that pure liquid CO2 liquid form, you’re putting it into a pipeline and you’re transporting it to a reservoir deep underground where you can sequester it or store it for eternity. So three different types of phases. The first phase, the capture phase is the most expensive. It’s about 70 to 80 per cent of the total cost. And the pipeline phase is somewhere in the neighbourhood of 10 per cent. And the sequestration phase is approximately 10 per cent as well.
Farah Nasser: So what are the biggest challenges and obstacles to this?
For anybody to undertake a carbon capture and storage project, they’re going to want to know that there is going to be a contractually set price of carbon that they can take to the bank and say, look, we want to build this project. And the bank is going to say, ‘well, do you have a contract?’ And you’re going to go, ‘yes.’ And then the next thing the bank is going to say is ‘what price is it at?’ And is that economic for you to undertake these activities and generate a rate of return? So you can’t have a situation that we’ve had in the past where one government comes in — or one provincial government comes in — and changes the price of carbon or changes the method in which carbon prices are determined. That sort of uncertainty has been a big, big problem for people in the business that wanted to move forward on carbon capture and storage.
Farah: When we talk about the carbon tax, the oil and gas sector has been kind of sitting back while politicians duke it out over the carbon tax. What has that done to the sector?
Derek Evans, CEO MEG Energy: There’s a palpable shift… I’d say in the last three or four years, the urgency to get after doing more on the carbon file has has definitely increased. You’re seeing large portions of the oil and gas sector, and particularly the oil sands sector saying this is something we need to turn our attention to and we need to agitate and get in front of government and say, this is how we can achieve your Paris Accord goals, as opposed to standing back and waiting for the government to come and provide incentives. We need to be proactive in terms of how we’re how we’re presenting ourselves and how and laying out the plans that we do have and how they can be beneficial. So there has been a massive change in terms of not only the sense of urgency that we see with respect to decarbonizing, but also how proactive we have become as an industry in terms of working with all levels of government to achieve these goals.
Farah Nasser: Was there something specific that changed your view?
Derek Evans, CEO MEG Energy: I’d say the specific piece was frustration. It was frustration that we have continued to talk and talk and talk about this, and our children are going to hang us up by the thumbs for our lack of action on this file. So the frustration with respect to lack of activity, lack of action — that’s been the single biggest challenge we had reaching a tipping point with myself and I think others in the business that we can’t rely on others. We need to chart that path forward, and we need to chart it in an aggressive fashion. That’s a large part of the reason why you’re seeing oil and gas companies leading industries across the country with a net zero commitments.
Farah Nasser: Can you paint a picture as to what Alberta will look like in your mind in 2030?
Derek Evans, CEO MEG Energy: It’s going to be an extraordinarily exciting place… In 2030, I think we are going to be a high tech sector. Oil and gas production will not be the biggest part of the economy. I think in 2030, you’ll see carbon capture and storage hubs just outside of Calgary and Edmonton. We will be storing five to 10 million tons of of CO2 in each of those. And you’ll start to see primary industries such as steel, fertilizer companies, power companies, all developing around those hubs. And my basis in belief for that is we have the technology, we have the understanding, we have the storage reservoirs. But most importantly, we have the entrepreneurial spirit and innovative sort of genetic material inside of our bones that is going to make that all possible.