Pembina, TC Energy Partner for CCS Project

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Two major Canadian midstream firms are joining forces to build a carbon capture and sequestration (CCS) system in Alberta. TC Energy and Pembina announced on Thursday that they will use existing pipelines and a new sequestration hub to create a system called the Alberta Carbon Grid (ACG), which will be capable of transporting 20 million tons of CO2 per year and storing some 2 billion tons of CO2 in total. The first phase of the project should come on line in 2025 and the second in 2027, pending regulatory approvals. The ACG “represents the infrastructure platform needed for Alberta-based industries to effectively manage their emissions and contribute positively to Alberta's lower-carbon economy and create sustainable long-term value for Pembina and TC Energy stakeholders,” the companies said in a press statement. The project shows how midstream firms are tackling the ongoing energy transition and shifting supply and demand dynamics in North America by repurposing existing infrastructure and shifting from the accommodation of new fossil fuel supply to address new carbon emissions goals. Canada targeted reducing national greenhouse gas emissions by 40%-45% by 2030, both firms noted. Repurposing pipelines to deal with waste from output rather than oil production also reflects a recent development in North America -- following a flurry of newbuild pipelines and reversals, the region now has surplus pipeline takeaway capacity (OD Jun.7'21). Analysts noted that the project could add to both companies’ longevity and boost the attractiveness of the oil sands to investors. “Increasing carbon capture, utilization and storage will decrease the carbon intensity of Canadian oil and gas, which could increase its ability to attract capital and grow,” said Robert Hope and Jessica Hoyle of Scotiabank. The announcement also highlights just how quickly the energy transition is moving. TC Energy, for example, only recently gave up on the Keystone XL pipeline (OD Jun.9'21). And a massive build-out in pipeline capacity in the Permian Basin only ended in late 2019. Even Flow The ACG project comes amid a broader industry shift toward emissions mitigation and renewable fuels production. That shift is already visible in North America’s downstream, where over 1 million barrels per day in throughput capacity is set to be converted to renewable diesel output, closed, or put up for sale (OD Feb.11'21). The midstream has several advantages when it comes to the energy transition, market players say. Midstream giant Enbridge has said it is looking at the opportunities CCS provides for pipeline operators, with Senior Vice President Dai-Chung Yu recently telling investors that “there's a big opportunity to provide a network or carbon pipelines in highly industrialized areas, such as the oil sands, where we can then capture a significant amount of carbon [and] move it by pipeline to a series of storage areas.” Enbridge CEO Al Monaco has also noted the opportunities for pipelines in hydrogen and biofuels. Such adaptations allow midstream companies to continue functioning in a lower-carbon energy economy with a minimum of expenditure -- the assets already exist and are often directly connected to the origin of CO2 emissions. Given to Fly

Gas Pipelines, Oil Pipelines, Carbon Capture (CCS), Corporate Strategy , Midstream Companies
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