Canada's oil producers target late 2027 for Pathways carbon capture decision

Suncor Energy (Canada)

18/08/2026 18:21

    * Pathways backers expect fiscal agreements with Alberta and
federal governments by mid-November
    * Current plan targets 6 million tonnes of emissions cuts by
mid-2030s, plus 10 million by 2045
    * Industry still supports carbon capture despite competition
concerns, Oil Sands Alliance president says

    By Amanda Stephenson
    CALGARY, Aug 18 (Reuters) - Canada's biggest oil producers
are targeting late 2027 for a final investment decision on their
proposed 6-million-tonne carbon capture and storage project, a
key piece of the country's plan to grow oil production and keep
emissions in check, the president of the Oil Sands Alliance
industry group told Reuters.
Kendall Dilling, who heads the industry group that represents
Canadian Natural Resources  CNQ.TO , Imperial Oil  IMO.TO ,
Suncor Energy  SU.TO , Cenovus Energy  CVE.TO  and
ConocoPhillips Canada, said in an interview this week that he
believes oil sands companies will reach definitive agreements
with the Alberta and federal governments on the fiscal terms by
mid-November, paving the way for a potential decision to go
ahead with the multi-billion-dollar Pathways project.
    "It depends, obviously, on regulatory approvals and a few
things, but I think late 2027 into early 2028 is kind of that
window," Dilling said.
    The Pathways project, a proposed CO2 transportation pipeline
and storage hub that could reduce greenhouse gas emissions from
Canadian oil sands production, is a key piece of a non-binding
agreement signed earlier this year by the province of Alberta
and the government of Canada, which have agreed to work together
to grow the country's oil production.
Prime Minister Mark Carney is trying to help the oil and gas
sector as part of an effort to make Canada's economy more
resilient against U.S. President Donald Trump's tariffs,
although the Canadian leader says he is still committed to
tackling climate change. He has endorsed Alberta's vision of a
new 1 million barrel-per-day export pipeline to the Pacific
Coast, but has said his support is contingent on the Pathways
project going ahead.
    Oil sands companies, which first proposed the project in
2021 but have been balking at its construction cost, signed a
deal in July with both governments. It lays out conditions for
the advancement of Pathways, including agreements around carbon
pricing, financial support and permitting. But many of the
proposed policy changes have not yet been drafted into final
legislation.
     
    SCALED-DOWN PROJECT
 Environmentalists have excoriated the Oil Sands Alliance for
scaling down the project, which had earlier targeted 22 million
tonnes of emissions reduction by 2030. But Dilling said what
industry and government have agreed to — 6 million tonnes by the
mid-2030s, with an additional 10 million tonnes by 2045 — is a
more appropriate, balanced middle ground.
    "The (prior proposal) was an incredibly aggressive scale and
timeline that would have been, I think, very difficult to manage
and to contain costs," he said.
    Earlier this year, some oil and gas executives were publicly
critical of linking the approval of a new oil pipeline to the
Pathways project. Cenovus CEO Jon McKenzie said in June that
Pathways could cost up to C$30 billion, making Canadian
producers, which are also subject to a federal carbon tax,
uncompetitive.
    While competitiveness is a concern, Dilling said, it's not
true that industry has soured on the carbon capture project. 
    "Today, global focus on the climate issue has tempered, for
sure, but I think as the industry, we take a long-term view
here," he said. "So that if 10 years from now, the
emissions-per-barrel discussion is really globally important
again, we're not on our heels. We've been out on our front
foot."

(Reporting by Amanda Stephenson in Calgary; Editing by Paul
Simao)
((amanda.stephenson@thomsonreuters.com))