Tarsands in Canada have found novel way to export some carbon emissions but still not on path to net zero

Fossil fuel companies have largely made commitments to become net zero for some time in the future. No one said it would be easy but it is absolutely essential as we realise we need to fully decarbonise to meet our long-term climate and energy objectives. Emily Chung writes on the CBC News website about how tarsands companies in Canada are making themselves look better at, obviously, the expense of others.

How the oilsands cut some emissions by exporting them

Canada’s big oil companies say they have an ambitious plan that will make oil and gas production net zero by 2050.

But so far, oil and gas production emissions have been growing. Emissions from crude oil production increased 67 megatonnes, or 170 per cent, since 1990, according to Canada’s latest greenhouse gas emission inventory, submitted to the United Nations in April.

That’s largely because of the increase in emissions-intensive oilsands production in Alberta, which has nearly doubled since 2005. Oilsands emissions alone have increased 66 megatonnes, or 437 per cent, since 1990.

Yet oilsands producers such as Canadian Natural Resources and Cenovus point out that they’ve drastically reduced the volume of greenhouse gases they generate per barrel of oil in recent years — a measure called emissions intensity.

How?

The report to the UN credits three factors. The first is that oilsands producers have cut the amount of fuel that must be burned to produce a barrel of oil, thanks to technology and efficiency improvements.

The second is that they’ve reduced the volume of methane emissions vented, flared and leaked during production, thanks to new regulations. That’s important, because methane is a very powerful greenhouse gas that leaks during all kinds of fossil fuel production and is considered crucial to limiting warming over the coming decades.

Those are real cuts to the emissions generated when a barrel of oil is produced.

The third factor is that more crude bitumen is being produced without being “upgraded” to synthetic crude oil. When oilsands production began in the 1960s, oil companies built expensive “upgraders” to heat the sludgy bitumen and process it into lighter synthetic crude oil (SCO). That allowed it to meet specifications to be transported by pipeline for export.

New technology and the increase of “in-situ” oilsands extraction using horizontal underground wells instead of open pit mining have made it possible to simply dilute the non-upgraded bitumen to be transported as “dilbit.”

Meanwhile, the shale oil boom in the U.S. flooded the market with light sweet crude, similar to SCO, eroding the price difference between that product and dilbit since the 2010s and reducing the incentive to upgrade, according to the Canadian Energy Regulator.

Kevin Birn, vice-president of emissions co-ordination and chief analyst for Canadian oil markets at the market intelligence firm S&P Global, said production of competing heavier sour crudes from Mexico and Venezuela has also declined, creating more room in the market for Canada’s dilbit.

Between 2010 and 2020, non-upgraded bitumen production increased more than 130 per cent, while synthetic crude oil production increased just 41 per cent, Canada’s report to the UN says. “The additional energy required to process the crude bitumen (and resulting emissions) is therefore transferred downstream, mainly to export markets where the bitumen is processed at petroleum refineries,” it adds.

Birn said that compared to SCO, dilbit requires higher temperatures to process in the U.S. after export. So exporting dilbit results in lower oil production emissions in Canada, while increasing processing emissions in the U.S.

But does it make a difference to the total emissions from production and processing?

Birn said no. “When you actually compare it on a full lifecycle basis, [dilbit and SCO are] quite similar in terms of their overall profile because you’re doing the same sorts of things — you’re just doing it in a different place.”

Jan Gorski, director of the oil and gas program at the Pembina Institute, a Calgary-based think-tank focused on energy, put it this way: “It makes a difference for accounting purposes, but the atmosphere doesn’t care whether the emissions were generated in Canada or in the U.S.”

Gorski said he commends oil companies for the work they’ve done since 1990 to reduce their emissions, but they need to do more to meet Canada’s — and their own — commitments to reach net-zero emissions by 2050.

“We really have to get on a path to net zero,” he said. “The big oilsands companies have already committed to go down that path, and now we need to see them show what their plans are for how they’re going to achieve those goals.”

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