Oil and gas giant sets big target of net zero oilsands emissions

Canada's largest oil and gas producer is setting an ambitious target, albeit aspirational, to reduce the amount of pollution from its oilsands operations to effectively zero in terms of carbon emissions.

Instead of relying on planting trees or purchasing carbon offsets to reach the net-zero goal, a company executive said innovation will bethe key.

"We're trying to get there just using technology and Canadian ingenuity. That makes a big difference," said Steve Laut, the company's executive vice-chairman, in an interview.

While there is no timeline to reach the goal, Laut called it "doable."

"It's good to have a big target," he said. "It's going to take some time and it won't be easy, but there's a lot of technology out there. It's impressive."

Setting such a goal may sound remarkable, considering the oilsands industry's reputation as producing 'dirty oil' because of the amount of greenhouse gases itproduces.

Laut admits the oilsands were one of the mostcarbon-intensive oil operations around the world about 10 years ago. However, since then, he said the industry has worked hard to reduce its impact on climate.

Since 2012,CNRLreports it has cut the amount of greenhouse gases per barrel of oil it produces, company-wide, by 29 per cent. It's also reduced its methane emissions by 78 per cent during that time.

"It's been a game changing performance" over the last decade, said Laut."It's really exciting because this is not the end, this is the start. We've got a lot more to go."

CNRL's Steve Laut on the technologies that give him confidence the company will be able to achieve net zero emissions in the oilsands

5 years ago

Duration 1:48

Carbon capture and storage is one of the areas where progress is being made to reduce the companies greenhouse gas emissions.

Cenovus, another oilsands producer, has said it reduced its greenhouse gas intensity by one-third over the last decade.

The environmental performance of facilities variesacross the oilsands, but some companies now emit as much greenhouse gasas the average barrel of oil produced in the U.S.

For Canadian Natural Resources, one of the ways it has reduced emissions is through three differentcarbon capture and storage projects. The companycaptures up to 2.7million tonnes of greenhouse gases per year.

"Taking this credit into consideration, CNRL's oilsands mining/upgrading operations have net emissions intensity that isnearly on par with that of the average global crude oil," according to a recent report by BMO Capital Markets.

The report also estimates how quickly companies will be able to further reduce emissions.

"In our base case, we assume modest improvement in total oilsands emissions intensity of roughly 1.5 per centper year through 2030 compared to average improvements of 4.5 per centsince 2013," the report said.

A policy analyst with the Pembina Institute, a Calgary-based environmental think tank, describedthe announcement as a step in the right direction.

"I think it's really great to see a company like Canadian Natural Resources showing leadership on climate," said Ben Israel.

While the industry is reducing its emissions intensity, the Pembina Institute expects total emissions to continue to climb as more oilsands projects are constructed and existing facilities are expanded.

Oilsands emissions were about 77 million tonnes in 2018, a figure that could climb to 131 million tonnes if all of the proposed projects that have received regulatory approval are constructed.

"We see a lot of companies showing good progress on reducing emission intensity per barrel, but I think it's critical to also make sure to reduce absolute emissions of the oilsands sector, especially so they are aligned with our climate targets as a country," said Israel.

If Canadian Natural Resources reaches net-zero emissions in the years or decades to come, that would only solve part of the greenhouse gas equation. Of the total emissions produced from a barrel of oil, about 20 per cent of it comes from pulling the oil out of the ground, refining it into gas and dieseland transporting the product.

The remaining 80 per cent of pollution is created in cars and trucks when the fuel is burned.

The oil industryoften has a financial incentive to reduce their greenhouse gas emissions, since a drop in emissions usually means a company is using less energy, such as electricity or natural gas, for instance, to produce oil.

Israel said theCanadian Association of Petroleum Producers (CAPP), the largest oil and gas industry group, should follow the lead of Canadian Natural Resources by changing its approach to climate issues.

CAPP encourages companies to reduce greenhouse gases, but it has faced some criticism for not commenting on the Paris climate agreement nor does it publiclysupport federal and provincial carbon taxes.

CAPP has since said it supports the broad mandate of the Paris climate accord, but said not all of the tools to achieve the target are efficient or effective.

In its recent stewardship report, CNRL said itsupports Canada's "leadership in the Paris Agreement as a pathway to reduce greenhouse gas emissions and drive innovation."

Laut said the industry has to keep finding ways to tackle climate change.

"I think it's something we have to deal with, it's part of the world," he said. "We stepped out and made this goal because we can see a path forward with technology."