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Cenovus Energy is planning a carbon capture and storage (CCS) project at the Lloydminster Upgrader to help meet carbon emissions targets.
The Upgrader project is slated to take place between 2023 and 2027 and is not contingent on the company moving ahead with its Christina Lake Phase 1 Pathways carbon capture project.
That was clarified by Keith Chiasson, executive vice-president, downstream, in response to an investor question during the company’s second-quarter conference call on July 27.
“The interesting thing about the Lloyd Upgrader is we have a steam methane reformer there, relatively high concentration carbon dioxide source, relatively straightforward to capture,” said Chiasson.
He says they also have a very large resource (C02) in close proximity to the upgrader that they can actually use for enhanced oil recovery.
“So I would say it’s not dependent on Pathways. We can build the infrastructure and have an economic project at that asset,” he said.
“That’s why we’re advancing today through our standard project development process and looking at ways to integrate that with our upstream business for enhanced oil recovery.”
Emissions reductions at the Upgrader, however, will count toward the six-industry Pathways target of 22 megatons of carbon reduction by 2030 set by the federal government.
Pathways will be anchored by a 400-kilometre pipeline to capture, use and store (CCUS) carbon in an underground hub near Cold Lake.
The first phase of Cenovus’ three-phased carbon capture project at Christina Lake for its Pathways commitment, is underway with preliminary engineering, as the pipeline will run adjacent to their operations in the area.
Rhona Delfrari, chief sustainability officer and executive vice-president, stakeholder engagement, reports it’s full steam ahead on Pathways with the federal and Alberta governments onboard.
Delfrari says Pathways companies meet weekly with government reps on how they can progress the policy and the fiscal frameworks that are needed to push forward with the 400-plus kilometre CO2 pipeline in the hub.
She notes there’s still 70 other technologies Pathways companies are working on to help meet their net zero target by 2050.
“We’re so pleased with the amount of attention that the federal and provincial governments are putting towards this,” said Delfrari.
“They are taking this really seriously and the government understands how important the CCS project is not just for our sector, but for the entire country. I’m optimistic we are going to get going on this.”
Delfrari says the next big spend would be the purchase of a pipeline for the C02 trunkline to the hub.
“So governments understand that and they understand that they need to clarify things like the investment tax credit and give us more details on that,” she said.
In other quarterly news, Cenovus reported a profit of $866 million, down from $2.4 billion in the same quarter last year.
Upstream production in the quarter was 729,900 barrels of oil equivalent per day, down from 761,500 a year earlier due to the impacts of Alberta wildfire activity and planned maintenance.
Jonathan McKenzie, president and chief executive officer, told the call, the Lloydminster Upgrader and refinery ran at a combined utilization rate of 86 per cent in the quarter.
“We expect both of these assets to run at high levels of utilization through the remainder of the year,” said McKenzie.
Lloyd thermals also record daily and quarterly production volumes of approximately 112,700 barrels a day and 106,000 bbls/d respectively.
“We expect strong production from oil sands in the second half of 2023 with all major maintenance behind us,” said McKenzie.
