Pembina and TC Energy Propose Multibillion-Dollar Carbon Grid for Alberta

The midstream operators plan to have the CO2 pipeline network operational as soon as 2025 and flowing at full stream by 2027.

Molecular sieve dehydration system : Oil and gas Refinery
Credit: Getty Images.

Pembina Pipeline and TC Energy announced on 17 June plans to build a transportation network capable of moving nearly 20 million metric tons of CO2 annually to sequestration hubs in Alberta. The annual volume equates to 60,000 metric tons of CO2 per day, or roughly 10% of Alberta’s industrial greenhouse gas (GHG) emissions, according to the companies.

The two midstream operators are calling project the Alberta Carbon Grid and say it will tie the Fort McMurray region—the center of the province’s heavy-oil production—along with the Drayton Valley region to sequestration sites and other delivery points.

CO2 could start flowing from these sites as soon as 2025 with a ramp up to full capacity possible by 2027. First, the project must clear regulatory hurdles, and Pembina is in the midst of an acquisition that must close before a final investment decision can be made. The companies said they have prepared permit applications and are engaged with the government on acquiring sequestration rights.

Pembina operates more than 11,000 miles of oil and gas pipelines in the US and Canada, while the larger TC Energy controls nearly 58,000 miles of pipeline across North America. Both companies emphasized in their announcement that carbon sequestration and reuse projects will be essential in order for Canada to achieve its goal of a 4045% reduction in GHG emissions (from 2005 levels) by 2030.

The announcement comes one week after the five largest oil sands producers in Canada—representing 90% of total output—shared their joint ambition to achieve net-zero GHG emissions by 2050. It also follows by only a week the formal decision by TC Energy to abandon all efforts to build the controversial Keystone XL pipeline that was envisioned to move more than 800,000 B/D of heavy oil from Alberta to storage and refining hubs in the US.

Cost figures for the carbon grid have not been shared, however Pembina and TC Energy said it represents a “multibillion-dollar incremental investment.” Capital spending is expected to be mitigated in part by the use of existing pipeline infrastructure that can be retrofitted to handle the CO2.

The companies also highlighted that the carbon grid will rely on long-term contracts and a marketing system to enable carbon offset trading. To boost the project’s commercial viability further, the companies said usage tolls will be “materially less than the current price of carbon in Alberta.”

In addition to sourcing CO2 from the oil and gas industry, the proposed network will also collect from the region’s power sector. Key components of the proposed carbon grid include:

  • North Leg—Retrofit existing pipeline systems and build new sections to connect oil sands developments near Fort McMurray to sequestration hub in vicinity of Redwater, Alberta. Potential capacity for this leg is a maximum of 40,000 metric tons of CO2 per day.
  • Central Leg—Retrofit existing pipeline systems and build new gathering lines to interconnect the power generation plants in the “Alberta Industrial Heartland.” This section could transport between 10,000 and 20,000 metric tons of CO2 per day.
  • Southwest Leg—Pembina and TC Energy plan to retrofit existing pipeline systems, combined with new-build expansion, to form the southwest leg of the system. This portion would capture CO2 from power-generation facilities in the region with possible capacity of 10,000 to 20,000 metric tons per day.
  • Sequestration Hub—Permitting work is under way to access a reservoir located near Fort Saskatchewan. The sequestration target is in the Basal Cambrian Sands formation, which, based on initial surveys, may have a sequestration capacity surpassing 2 billion metric tons of CO2.

Depending on demand, Pembina and TC Energy said they have identified several other potential locations for sourcing and sequestration that lay beyond this initial scope. The companies said they are also open to partnering with other infrastructure owners to expand the project’s capacity.