Canadian Oil Sands GHG Intensity Down 23% Since 2009: ANALYSIS

Key Points:

· Canada's oil sands GHG intensity average is down 23% since 2009

· Despite a rise in production, absolute oil sands emissions stayed flat in 2022

· The "decoupling" of oil sands production and emissions is making progress


Canadian oil sands GHG intensity down 23 percent since 2009


Canada’s oil sands producers are well known for their decades-long performance in reducing environmental impacts, whether it be via emissions intensities reductions, water use reductions, or land reclamation efforts to name a few examples.

It should be no surprise then that a new analysis by S&P Global Commodity Insights shows yet another reduction in emissions intensities; since 2009, the average intensity of Canadian oil sands dropped 23%, or nearly 20 kilograms of carbon dioxide equivalent per barrel (kgCO2e/b) of synthetic crude oil (SCO) or diluted bitumen (dilbit) produced [1].

Additionally, the cumulate GHG intensity reductions over the past two years were among the highest over the past five, exceeding expectations and showing the long-term commitment oil sands producers have to making operations more environmentally friendly. Also see:

Analysis Highlights

global oil demand to grow by 2 million bpd in 2023 and 1 million bpd in 2024, says BP

· Despite a rise in production, absolute oil sands emissions stayed flat in 2022

· The overall GHG intensity of Canada’s oil sands was 2% lower year-over-year in 2022, equating to a drop of about 1.5 kgCO2e/b

· Integrated mining operations that market mined SCO saw the largest drop over the past 13 years, with the GHG intensity of mined SCO falling 28%, or 33 kgCO2e/b, to average 86 kgCO2e/b in 2022

· Mined SCO saw the largest year-on-year GHG intensity reduction in 2022, which fell 4%, or nearly 4 kgCO2e/b – consistent with longer-term trends where mining operations have seen the largest reductions

· Mined dilbit saw a 10% decrease in GHG intensity between 2015 and 2022

· SAGD dilbit operations saw a 5% overall drop in GHG intensity between 2009 and 2022, with a very modest year-over-year reduction between 2021 and 2022

· Newer unintegrated mines (mined dilbit) saw a 15% rise in GHG intensity since 2009 to 44 kgCO2e/b in 2022, but remained the least emissions-intensive form of oil sands production

· Between 2009 and 2022, the growth of less GHG-intensive steam-assisted gravity drainage (SAGD) operations that market dilbit, plus newer unintegrated mines that market mined dilbit also aided in pulling the overall oil sands average downward

Absolute GHG Emissions Did Not Rise

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Despite a 50,000 barrels per day (bpd) year-over-year production increase in 2022, absolute GHG oil sands emissions did not rise. According to S&P Global, it is the first time since 2009 that oil sands emissions did not increase without a significant market disruption and an associated drop in production.

"The Canadian oil sands have demonstrated a consistent trend of reductions in GHG intensity for the past decade," said Kevin Birn, Vice President, Canadian Oil Markets Chief Analyst, S&P Global Commodity Insights [7].

"The pace of production growth has historically outstripped the intensity improvements. That emissions held steady even as production grew is a significant first."

This is huge news, given that emissions in Canada’s oil and gas industry now seem to be “decoupling” from production.

A few months prior, The Globe and Mail reported on one of the biggest news stories in Canada you probably haven’t heard about, stating [2]:

Greenhouse gas emissions from the oil and gas industry peaked eight years ago. They have since fallen 7 per cent. But emissions didn’t fall because the production of oil and gas fell. It rose 16 per cent, to record levels, as emissions declined.

According to official climate data, Canadian oil and gas emissions peaked in 2015 at 203 megatonnes (MT), dropping to 189 MT in 2021. During the same time, oil output grew to nearly five million bpd from less than four, while natural gas production also increased while setting a new record high production level in 2022 [3].

The Globe and Mail credits the drop to a push by Canada and the U.S. to reduce methane emissions from oil and gas production back in 2016, labelling the gas as especially potent.

Oil Sands a Go-To Supply Source

The proof is in the pudding.

For the oil sands, the progress on decoupling emissions from production is proof that Canada should be a go-to choice for the world’s future energy needs.

News of reduced oil and gas emissions in Canada despite increased production comes not long after multi-billion dollar net zero commitments from oil sands companies. Oil sands producers, which account for more than 95% of production, plan on achieving this goal by a variety of methods including (but not limited to):

> The deployment of existing and emerging GHG reduction technologies

> Development of an extensive carbon capture, utilization and storage network

> Collaboration between industry and government to support emission-reducing projects and infrastructure

> Development and deployment of new cleantech and innovations such as small modular nuclear reactors, direct air capture and next-gen recovery technologies

Global Oil Demand is Rising

global oil demand hits record levels in june 2023 at 103 million barrels per day

All this effort by oil sands producers comes amid growing worldwide consumption, positioning Canada’s oil and natural gas industry as a preferred supply source for its allies and trade partners.

According to the International Energy Agency’s (IEA) latest oil report, world oil demand reached a record high of 103 million bpd in June 2023 and could yet see another peak in August [4].

The IEA also said a few months prior that global oil demand would rise 6% to 105.7 million bpd through 2022-2028, with a final peak in sight this decade [5].

With several false “peak oil” predictions in the past and present, it is difficult to say just when the world will finally stop using oil. But what is abundantly clear is that demand will not just drop off a cliff, but gradually drop to zero over many decades.

Production declines should be yet another concern for global energy security.

Every barrel of oil produced must be replaced just to keep production flat. And, considering average annual depletion rates of 5% to 7%, massive new investment is required to counteract the current decline seen in existing mature oil fields [6].

The world needs more oil, and for decades to come. Where would you choose to source it from?

The World Needs More Canadian Oil & Gas

fossil fuel subsidies in Canada are very little, despite oil and gas providing so much for governments

Continued GHG intensity reductions, the decoupling of emissions from production levels, and a sustained commitment to improving environmental impacts are just a few reasons why the world needs more responsible Canadian energy.

We invite you to join us online to learn more about how Canadian oil and natural gas is the best choice for local families, Indigenous communities, global energy security and climate action today!

SOURCES:

1. S&P Global. (2023, August 8). Canadian oil sands continue their trend of GHG Intensity. Retrieved from https://www.spglobal.com/commodityinsights/en/ci/research-analysis/canadian-oil-sands-continue-their-trend-of-ghg-intensity.html. Date Accessed: August 2023

2. The Globe and Mail. (2023, May 7). How Canada's oil production rose and emissions fell, and what it means. Retrieved from https://www.theglobeandmail.com/opinion/editorials/article-how-canadas-oil-production-rose-and-emissions-fell-and-what-it-means/. Date Accessed: August 2023

3. Canada Energy Regulator. (2023, March 1). Market Snapshot: Western Canadian natural gas production reaches a record high in 2022. Retrieved from https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2023/market-snapshot-western-canadian-natural-gas-production-reaches-a-record-high-in-2022.html. Date Accessed: August 2023

4. International Energy Agency. (August 2023). Oil Market Report - August 2023. Retrieved from https://www.iea.org/reports/oil-market-report-august-2023. Date Accessed: August 2023

5. S&P Global. (2023, June 14). IEA raises 2023 demand growth forecast by 200,000 b/d; sees demand peak this decade. Retrieved from https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/061423-iea-raises-2023-demand-growth-forecast-by-200000-bd-sees-demand-peak-this-decade. Date Accessed: August 2023

6. Twitter. (2023, August). @energy_tidbits. Retrieved from https://twitter.com/energy_tidbits/status/1688517666498351106?s=12&t=Act9QPUigWotLffoxqV2cA. Date Accessed: August 2023

7. S&P Global. (2023, August 9). Absolute greenhouse gas emissions from Canadian oil sands did not increase in 2022, even as production grew. Retrieved from https://www.spglobal.com/commodityinsights/en/about-commodityinsights/media-center/press-releases/2023/080923-absolute-greenhouse-gas-emissions-from-canadian-oil-sands-did-not-increase-in-2022-even-as-production-grew. Date Accessed: August 2023