Pembina, TC Energy team up to produce CO2 transport system
Pembina Pipeline Corp. and TC Energy Corp. said Thursday they are teaming up to develop a carbon transportation and sequestration grid with the capacity to transport more than 20 million tonnes of CO2 annually.
“By leveraging existing pipelines and a newly developed sequestration hub, the Alberta Carbon Grid represents the infrastructure platform needed for Alberta-based industries to effectively manage their emissions and contribute positively to Alberta's lower-carbon economy and create sustainable long-term value for Pembina and TC Energy stakeholders,” the companies said in a statement.
The project is designed as an open-access system and aims to serve as the backbone of Alberta's emerging carbon capture utilization and storage (CCUS) industry, connecting the Fort Mcmurray region, the Alberta Industrial Heartland, and the Drayton Valley region to key sequestration locations, and serving multiple industries. The two companies said they will be open to investments from other parties.
“Industry players collaborating to leverage our existing energy infrastructure and expertise to support meaningful emission reductions and reduce our carbon footprint is a great example of how we can secure meaningful new investment opportunities, serve current and future customers and achieve operational excellence while continuing to safely and responsibly deliver the energy people need,” said François Poirier, chief executive of TC Energy.
The two companies are targeting the first phase to start as early as 2025, with the fully scaled solution complete as early as 2027, subject to regulatory and environmental approvals.
“Alberta is already a global leader in advancing and investing in CCUS technology with over $1.24 billion committed to-date,” said Jason Nixon, Alberta's minister of environment and parks.
“CCUS is one of the most promising forms of emissions-reduction technology — both in terms of cost-effectiveness and tangible environmental outcomes.
“Ongoing innovation and partnerships are critical to the success of both industry and government in reaching our economic and environmental goals.”
The full build out of ACG over time represents the potential for a multi-billion-dollar incremental investment by Pembina and TC Energy over time, comprised of long-term fee-for-service contracts plus a marketing and trading pool to facilitate C02 and carbon offset transactions, the companies said.
“This is a positive for Alberta and the broader energy industry for Canada. Increasing carbon capture, utilization and storage (CCUS) will decrease the carbon intensity of Canadian oil and gas, which could increase its ability to attract capital and grow,” Robert Hope, analyst at Scotiabank, wrote in a note to clients.
“The developers are open to adding other infrastructure owners with suitable infrastructure to join the partnership. We applaud this open nature because reducing the industry's carbon footprint should have wide-ranging benefits.”
While both Alberta and the feds are supportive of the project, their financial support remains unclear.
“Given that numerous existing assets would be repurposed, the tolls on ACG are expected to be materially less than the price of carbon in Alberta,” Hope noted.
For TC Energy Corp., it partially answers a question analysts have regarding the company's growth projects, especially after it cancelled the Keystone XL project earlier this month.
“Not only will it provide a potential multi-billion dollar investment opportunity not yet in our financial model, it also could add a new business segment enhancing diversification and supports Canadian/energy industry's long-term goals to decarbonize,” said Ben Pham, analyst at BMO Capital Markets.
The Alberta Carbon Grid project will consist of a north leg to be developed by retrofitting existing pipeline systems and building new spurs to connect the oilsands to a sequestration hub and the capacity to transport 40,000 tonnes of CO2 per day.
The central leg will also retrofit existing pipeline systems and build new spurs to transport as much as 20,000 tonnes per day to the Alberta Industrial Heartland. The southwest leg will also feature a combination of repurposing existing systems and new expansion to capture around 20,000 tonnes of CO2 from power generation facilities in the region; future legs will be built through customer support, and could extend to other regions such as Joffre, Christina Lake, Cold Lake or Swan Hills.
The companies have also selected a reservoir near Fort Saskatchewan, where as much as two billion tonnes of CO2 can be sequestered at the Basal Cambrian Sands.
The parties are working with the Alberta government to secure sequestration rights.