This week, two major listed Canadian pipeline operators, Pembina and TC Energy, unveiled plans to jointly develop a large-scale carbon transportation and sequestration (CCUS) infrastructure project that, upon completion, will be capable of moving more than 20 million tons of carbon dioxide each year. The project, based around a new sequestration hub to be called the Alberta Carbon Grid (ACG), will connect to existing pipelines through an open-access system between the Fort McMurray region, the Alberta Industrial Heartland, and the Drayton Valley region.
The companies say the first phase of the Alberta Carbon Grid will be operational as early as 2025, with project completion aimed for as early as 2027. Construction and operation of the grid, together with other investments in CCUS technology and infrastructure, will create a new business platform for each company, and, they say, create new high-value jobs and support economic growth across the province.
In a joint statement announcing the project this week, Pembina and TC Energy noted that Canada’s commitment to a 40-45 percent reduction in year 2005-level greenhouse gas emissions by 2030 will require significant buildout of CCUS technology and infrastructure. The two companies say the project is a tangible example of their own commitment to energy diversification, industry collaboration and a lower carbon future.
“An extremely attractive value proposition”
The full build-out of the grid over time represents a potential “multi-billion-dollar” incremental investment for the companies, supported by long-term fee-for-service contracts, plus a marketing and trading pool to facilitate CO2 and carbon offset transactions.
By repurposing existing pipelines, and at the scale proposed, tolls on the ACG will be materially less than the current price of carbon in Alberta, ensuring the grid’s long-term competitive viability as a CCUS solution, and (what the companies term) “an extremely attractive value proposition for customers.”
According to figures from Alberta’s Ministry of Environment and Parks, the province has already committed to $1.24 billion to CCUS technology to date.
“Carbon capture, utilization and storage will lower emissions, create jobs, and increase our competitiveness,” said the Hon. Seamus O’Regan Jr., Canada’s Minister of Natural Resources. “Congratulations to Pembina and TC Energy for coming together with an integrated CO2 transportation and storage infrastructure solution to lower emissions in Alberta. This is how we get to net-zero.”
“For more than 65 years, Pembina’s integrated network of energy transportation and midstream assets has provided a full spectrum of services to Alberta’s energy sector, helping our customers connect to high-value markets and take advantage of opportunities for diversification and growth,” said Mick Dilger, Pembina’s President and Chief Executive Officer.
“The ACG highlights our commitment to customers by helping them solve problems and creating new services; communities, by reducing emissions and using existing infrastructure to reduce the impact to the land; employees, through development of an entirely new line of business and job opportunities; and shareholders through attractive incremental capital investment. Pembina is proud of our commitment to all stakeholders and pleased to leverage our expertise to provide a key market solution toward a lower carbon economy with another industry leading partner.”
“It is innovative partnerships like this that excite me about our collective energy future,” said François Poirier, Chief Executive Officer and President of TC Energy. “Industry players collaborating to leverage our existing energy infrastructure and expertise to support meaningful emission reductions and reduce our carbon footprint is a great example of how we can secure meaningful new investment opportunities, serve current and future customers and achieve operational excellence while continuing to safely and responsibly deliver the energy people need.”
