Cenovus CEO: Net-Zero Push Luring Investors Back

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A plan to build a massive carbon capture and sequestration (CCS) project in Alberta is luring investors back to the oil sands, Cenovus Energy CEO Alex Pourbaix tells Energy Intelligence.

International banks and investors have fled the region over the past several years, citing its carbon footprint and fear that further development could exacerbate climate change. But Pourbaix said the Alberta CCS project has “absolutely” caught investor interest.

“I think that pivot was occurring with investors long before what is presently happening with respect to security of supply in Europe, and I think the challenges Western Europe is seeing right now are really just additive to that trend of looking much more positively on Canadian barrels,” Pourbaix told Energy Intelligence in an interview.

The Alberta CCS project aims to eliminate 68 megatons of oil sands production emissions annually in three phases over the next three decades. Partners include Suncor, ConocoPhillips and Canadian Natural Resources.

Suncor CEO Mark Little told reporters at CERAWeek by S&P Global in Houston earlier this week that the alliance was in the process of submitting its detailed application to the provincial government and expects a decision by October. Pourbaix told attendees at the conference that the initial phase of the project could start up by the end of the decade.

Little told conference attendees that investors were interested in the project, but were still cautious.

“What they really want to know is, is this really happening? Because if this happens, this is transformative to the Canadian industry within the globe,” he said. “And I think they're excited about it. But they're cautious, because we still need to sort out the details … and we need to create the financial framework.”

Oil Sands to the Rescue

During the conference, Little posited that Canadian supply could increase this year to help calm markets in the wake of Russia’s invasion of Ukraine. He estimated that Canadian volumes could replace about a third of the disrupted Russian oil exports to the US.

Pourbaix agreed.

“If you assume Russia represents about 600,000 or so barrels [per day] of supply, then I think Canada, over the course of a year or so, especially given the pricing ... could very much bring that level of production on,” he said.

Those incremental barrels would be added by ramping up output at existing projects through debottlenecking exercises or brownfield expansions, Pourbaix added.

“In none of that are we talking about executing on large-scale capital projects, the kind that we've seen in the past out of the oil sands,” he told Energy Intelligence. “This is a relatively modest capital thing that would allow us to bring on incremental barrels in a row in a relatively short timeframe.”

Rallying to Rail

On Thursday, Reuters reported that Canada was studying ways to boost pipeline exports to the US.

Pourbaix said the recent start-up of Enbridge's Line 3 has relieved some capacity constraints, and he expects the Trans Mountain Expansion to be completed, although the timing remains unclear.

"We really have one last construction season to go on that project," he said. "I just think it's a question of when it's in service."

In addition, Pourbaix expects rail to be able to ramp up capacity quickly for increased crude shipments to the US.

In the not very recent past, Alberta was shipping up to 350,000 barrels of oil per day via rail,” he said. “That kind of ramped down as egress was improved, but I think that ability to move via rail still exists and can be ramped up in relatively short order, in kind of in the time frame of weeks or months, to get to get back up to those high levels.”

Oil Sands, Oil Supply, Corporate Strategy , Regional Integrateds
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