CALGARY — Canada’s energy minister is “highly confident” that Alberta oil and gas companies can handle the cost of building the massive Pathways carbon capture project despite numerous industry insiders saying Canada’s climate policies are hurting investment and global competitiveness.Tim Hodgson told Bloomberg that the oil sands companies were predominantly protesting because they weren’t directly involved in negotiations between Alberta and Ottawa.“The reality is the federal government and the provincial government had to agree on what the framework for carbon pricing was before we got them to the table,” Hodgson said.“Now that that’s been done, the engagement will happen. I am highly confident that given how we’ve structured this, that the cost of Pathways can be readily absorbed.”Prime Minister Mark Carney and Premier Danielle Smith signed an energy agreement earlier this month, which saw both governments come to a deal regarding the carbon tax and a target date of September 1, 2027, for construction approval on a BC coast oil pipeline..A major part of the deal involves building the controversial $16.5 billion Pathways project, which Carney has stated is a necessary condition for approving the one-million barrel per day (bpd) pipeline to the West Coast.The project — which is spearheaded by five of the largest oil sands companies, including Cenovus Energy Inc., Imperial Oil Ltd., and Suncor Energy Inc. — is set to capture carbon dioxide from multiple facilities and ship it more than 400 kilometres by pipeline to an Eastern Alberta storage hub where it will be stored underground.Pathways is expected to target 16 million metric tonnes of annual emissions reductions gradually over the next twenty years, with the first phase — which will build enough carbon capture to remove 6 million metric tonnes per annum — set to be completed by 2035.“I think you’re going to see a bunch of new technologies that are going to get cheaper and cheaper and cheaper, and that’s going to create options for the Pathways folks,” Hodgson said.The minister cited technologies such as direct air capture and both pre- and post-combustion carbon sequestration as examples of how emissions reductions in the oil sands could evolve.Hodgson also suggested small modular nuclear reactors could eventually be used to power oil sands operations instead of natural gas.“If your heat source was nuclear, you would dramatically reduce the carbon intensity because you wouldn’t be burning natural gas,” Hodgson said..UPDATED: Smith, Carney announce new West Coast pipeline plan, industrial carbon tax deal.Kendall Dilling, president of the Oil Sands Alliance, which represents the companies backing the Pathways project, said the industrial carbon tax continues to put Canada’s oil sector at a competitive disadvantage. However, he added that the prospect of a new pipeline to Asian markets changes the equation.“That’s the value add, that’s an offset on the production side,” Dilling said Thursday at an event in Calgary.“I think there is a way where that all comes together, and on balance is a win-win.”He is not the only energy sector executive to suggest this in recent months.Numerous oil companies have argued that the carbon tax imposes a cost on the Canadian industry that major oil producers in other countries don’t incur.Earlier this month, Cenovus Energy CEO Jon McKenzie said federal and provincial climate policies were driving investment out of Canada and that the national dialogue on future oil and gas development has been “myopically focused on the climate agenda and climate policy,” rather than the multiple benefits brought to the country through the oil and gas sector.Smith said on Friday she expects an agreement on advancing the Pathways project could be reached sometime later this summer.
