IPC Urges Federal Funding For Carbon Capture and Storage

International Petroleum Corp. might consider implementing carbon capture and storage if additional government funding is received, according to their CEO. This would be the first foreign oil company to take on such a project in Canada’s oil sands in over 10 years.

Last month, IPC, a member of Sweden’s Lundin Group, sanctioned the first stage of the 30,000 bpd Blackrod thermal project in northern Alberta.

To reduce emissions from the carbon-intensive oil sands, the company has joined Canada’s largest oil producers in pushing policymakers to increase public financing for the expensive equipment.

According to the industry, carbon capture and storage (CCS) projects need more government backing to become financially efficient; however, Ottawa and the province of Alberta disagree on who should provide this additional funding.

“There’s still an opportunity, if we can have some sensible government decisions about getting serious about meeting climate targets, that if the right incentives come along, we’re in a very good position to look at carbon capture down the line,” said CEO Mike Nicholson in February.

With assets in Canada, France, and Malaysia, IPC will invest $850 million in building phase one of Blackrod. The company has regulatory approval to generate up to 80,000 bpd and expects to produce its first oil in 2026.

Nicholson stated that the decision was supported by the increased export pipeline capacity in Canada and IPC’s current strong economic position.

He also noted that the industry’s new focus on debt reduction and stock buybacks has left the world’s oil supplies very limited.

“Our industry hasn’t been invested in for more than a decade; all the recent investment has been very short-cycle,” he said.

“There’s still definitely a preference for shareholder returns. But that’s not how you build long-term sustainable businesses.”

Due to rising global concerns over energy security, International Petroleum Corp.’s investment highlights the significance of Canada’s huge bitumen deposits, the world’s third-largest oil reserves.

However, despite its moderate size, Blackrod serves as an example of how Canada’s expanding production could undermine Prime Minister Trudeau’s efforts to reduce the country’s carbon footprint.

According to S&P Global, Canadian oil sands production will reach 3.7 million bpd by 2030, up from a record 3.15 million bpd in 2022.

Between 2005 and 2021, oil sands emissions increased by 137%, or 48 megatons, as reported by the Canada Climate Institute.

The institute predicts an additional increase of 23 megatons by the year 2030 unless CCS development takes off and the Canadian government implements stricter climate legislation, such as a federal oil and gas emissions cap.

Analysts suggested that, although the prospects of new oil sands projects such as Blackrod are dim, the ongoing high prices of crude oil will likely lead to further increases in output levels due to the expansion of current projects.

“The oil sands are long-life, low-decline assets,” said analyst Scott Norlin. “We use the term ‘cash-flow generating machines’. They just print money, especially when oil is above $70.”

Original source material for this article taken from here