It’s long been the elephant in the room in the federal government’s war on carbon dioxide, and the justification for emissions caps..But now a new study has found that emissions from Alberta’s oil sands stayed flat in 2022 despite higher production, providing solid proof industry’s efforts to reduce its emissions footprint is working..It also makes the case that proposed federal emissions caps on the oil sector — which are bitterly opposed by Alberta Premier Danielle Smith — may not be needed, after all..According to US consultants S&P Global, absolute oil sands emissions held steady at 81 million metric tonnes of CO2 equivalent while total production topped 3.1 million barrels per day (bpd) last year — up more than 50,000 bpd — the first time it’s happened since the oil price crash of 2009..“The Canadian oil sands have demonstrated a consistent trend of reductions in GHG intensity for the past decade,” said Kevin Birn, S&P Global Commodity Insights’ VP of Canadian oil markets and chief analyst. . Oil sands production chartOil sands production is expected to hit new records after 2030. .“The pace of production growth has historically outstripped the intensity improvements. That emissions held steady even as production grew is a significant first.”.The S&P Global Commodity Insights Oil Sands Dialogue analysis found the greenhouse gas (GHG) intensity of oil sands production fell to 67 kilos of CO2 equivalent per barrel in 2022, the most recent year that estimates are available. .Since 2009 the average GHG intensity of oil sands crude has declined 20 kg or 23%—an average decline of just over 1.5 kg per year or about 1.8% annually..According to the report, the flattening of absolute emissions in 2022 came from industry-wide GHG intensity improvements that were below the sector averages, specifically Steam Assisted Gravity Drainage (SAGD) and mined diluted bitumen which are collectively marketed and sold on global oil markets as Western Canadian Select (WCS)..At the same time, some of the more GHG intensive forms of production such as mined synthetic crude, which is upgraded at source, saw modest declines in output. .The net effect was able to keep emissions flat even with the rise in overall production, S&P said..However, the firm’s independent estimates do not include emissions from the Sturgeon Refinery (also often referred to as the North West Redwater refinery) which refines the government’s share of royalty barrels, or the bi-provincial upgrader in Lloydminster. .“We believe this is why our estimates for absolute oil sands emissions are approximately 3 megatonnes per year lower compared to the Canada National Inventory Report,” it added..S&P’s previous analyses predicted that absolute oil sands emissions would likely peak and begin to decline by the middle of this decade as GHG intensity improvements combine with slowing production growth. .Absolute emissions are still expected to rise in the near term on account of 'more pronounced' production additions in the next few years. However, the new findings indicate the potential for the peak to occur sooner and at a lower level than previously believed. .With near term production growth expected to come from optimization of existing facilities as opposed to new greenfield mega projects, those barrels could come at even lower intensity than initially expected.. Oil sands forecastCER says oil sands production would have to fall 85% to meet net-zero targets. .“We do not believe that absolute emissions from the Canadian oil sands have peaked, but it may be close,” said Birn. “The potential stalling of emissions growth in 2022 is a clear signal that oil sands absolute emissions will indeed peak and begin to decline, perhaps sooner than previously expected.”.Oil sands are the the largest single source of emissions, accounting for about 12% of Canada’s 670 megatonnes per year, according to Statistics Canada and less than 1% of global emissions..The news means oil sands may yet play a greater role in Canada’s energy transition than believed, even under a proposed emissions cap that many observers believe would translate into a de facto production cut of more than 1 million bpd. .A report from the Canadian Energy Regulator in June suggested that oil sands production would have to be chopped almost 85% if the country were to meet its net-zero obligations under the Paris Accord by 2050.
