Page 5 - NorthAmOil Week 40 2022

NorthAmOil COMMENTARY NorthAmOil

Ottawa recently
approved Equinor’s
proposed Bay du Nord
project, with emissions-
related conditions.

New challenges with the prospect of new takeaway capacity
The publication of the draft guidance illustrates coming online in the region in the medium
that at the same time as oil and gas producers term.
are being given additional clarity on Ottawa’s For projects that would be less emissions-in-
direction as far as decarbonisation goes, they are tensive from the outset, though, the prospects
also being presented with more obstacles. This look better, and the Bay du Nord approval could
is in line with Canadian Prime Minister Justin serve as evidence that it is worth pushing for-
Trudeau’s overall stance on oil and gas, whereby ward with new proposals.
he recognises its contribution to the country’s
economy, but is also aiming to accelerate the What next?
industry’s decarbonisation. Scrutiny of oil and gas companies’ environmen-
However, requirements to achieve best-in- tal credential and performance on emissions
class emissions do not necessarily mean that can only be expected to increase. Indeed, not
new projects will be rejected based on their long before the draft guidance on emissions was
environmental credentials. In April, at the same released, the Pembina Institute, an energy think-
time that the government first said it wanted tank, published a new analysis that found that
new projects to achieve best-in-class emissions, the leading oil sands producers were prioritising
it also approved Equinor’s Bay du Nord project share repurchases and dividend payments ahead Scrutiny of oil and
offshore Newfoundland and Labrador. For the of decarbonisation initiatives.
first time ever, the government’s decision state- This is despite the fact that these producers gas companies’
ment on Bay du Nord required the developer to have formed the Pathways Alliance, which aims environmental
achieve net zero emissions from the project by to achieve net-zero emissions from their oil
2050. sands operations by 2050. credential and
“At five times less emissions-intensive than The Pathways Alliance has insisted that it is
the average Canadian oil and gas project, and decarbonising as fast as possible while still hav- performance on
ten times less than the average project in the oil ing to wait for regulatory certainty from the gov-
sands, the Bay du Nord development project is ernment. Ottawa, for its part, is working to help emissions can
an example of how Canada can chart a path for- bring about such certainty, including by devel- only be expected
ward on producing energy at the lowest possible oping a national strategy for carbon capture and
emissions intensity while looking to a net-zero storage (CCS). The government has also been to increase.
future,” the Impact Assessment Agency of Can- consulting on a proposed emissions cap for the
ada said in its April 6 announcement. oil and gas industry.
This does not bode well for projects that These initiatives are also expected to give the
would be more emissions-intensive, including industry additional clarity on emissions and
those in the oil sands, unless new proposals in support for decarbonisation measures, while
such regions can decarbonise faster and more simultaneously illustrating the challenges that
dramatically. And indeed, there appears to be lie ahead. Additional clarity helps oil and gas
little appetite for new oil sands projects, even companies to decide how best to proceed, but
against a backdrop of higher crude prices and does not mean that it will be easier.™

Week 40 06•October•2022 www. NEWSBASE .com P5