Industry reacts cautiously

Industry officials are voicing concern that the federal government’s plan falls short on offering all the pieces of the puzzle needed to make its vision a reality.

The new regulations are part of Baird’s plan to target 17 industries. “Our regulations will apply to all big industry,” he said. “From the oil industry to chemical companies; from smelters to pulp and paper mills, all big industry will have to do their part.”

Pierre Alvarez, president of the Canadian Association of Petroleum Producers, said that while industry agrees that carbon capture and storage (CCS) is integral to combating climate change, the targets and timeframe set by the Tory government are in question. “On the negative side is the assumption about how quick and how affordable some of these solutions are,” he said. “It is incredibly important [for government] to not simply wave the wand and say, ‘There, you can do it.'”

Alvarez said the plan did not make it clear exactly which oil sands projects would be impacted. “Which projects are grandfathered, which are not? What are realistic targets for real capture at a SAGD [steam assisted gravity drainage] facility? How much can you do in certain areas, how long would it take to get the transportation infrastructure sorted out?”

In addition, Alvarez said the plan missed the mark on providing details on how government will incent the mandatory CO2 capture as well as bringing consumers truly into the mix of GHG reduction solutions. “What’s the tax and fiscal treatment to accelerate some of these issues? There’s fiscal issues, accelerated capital cost allowance–those types of things are important,” Alvarez said. “And then there’s the whole question of the consumer … that piece remains relatively missing.”

The federal climate change strategy includes a national carbon-emissions trading and offsets program, a measure not endorsed by Alberta Premier Ed Stelmach. “I’m not a fan of interregional wealth transfer, and I’m going to oppose it,” Stelmach told reporters after making a speech at the World Heavy Oil Congress in Edmonton. Stelmach added that Alberta officials will be studying the federal plan to ensure it doesn’t threaten the province’s constitutional right to control its natural resources–particularly the economic driver that is the oil sands.

The head of Nexen Inc. responded to news of the plan. “The issue with carbon capture and storage is that it’s very expensive and there is no infrastructure,” Charlie Fischer told reporters on Mar. 10. (Nexen is developer of the Long Lake SAGD project scheduled to start production this summer.) “We’re learning the technology, and the [carbon dioxide] infrastructure [still] has to be built. One company alone is not going to solve all the problems. We need to work with governments and other stakeholders to find ways to do this,” he said.

Extracted with permission from Nickle’s Daily Oil Bulletin, March 11, 2008.