CALGARY – February 1, 2022 (Investorideas.com Newswire) Despite significant COVID-19 led market disruptions the greenhouse gas (GHG) intensity of the Canadian oil sands declined again in 2020, confirming a long-term trend, according to a new analysis by IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions.
The IHS Markit Oil Sands Dialogue analysis finds that GHG intensity fell to 69 kilograms of “carbon dioxide equivalent” per barrel (kgCO2e/bbl) in 2020, the most recent year that IHS Markit estimates are available. Since 2009 (the earliest year that IHS Markit records) the GHG intensity of oil sands production has declined 17 kgCO2e/bbl or 20%-an average decline of just over 1.5 kgCO2e/bbl per year.
These latest findings, which are drawn from a forthcoming IHS Markit report, indicate that should the pace of reductions in GHG intensity continue, they are poised to overtake a slowing production growth profile and contribute to an absolute reduction in emissions within the next half decade. The forthcoming report, a comprehensive review of past and future oil sands GHG intensity and absolute emissions, will be completed in the coming weeks.
“The fact that oil sands GHG intensity continued to decline in 2020 is particularly noteworthy in that it occurred despite the industry undergoing the single largest production contraction in its history due to the COVID-19 demand shock,” said Kevin Birn, vice president, GHG estimation and chief Canadian oil market analyst, IHS Markit. “Such a disruption would be expected to put upward pressure on GHG intensity by driving down facility utilization-using similar levels of energy but with fewer units produced. Yet GHG intensity still declined, and indications are that greater levels of reduction should be anticipated in the future.”
The IHS Markit analysis notes that the Canadian oil sands industry has increasingly begun to focus on not only GHG intensity but on absolute GHG emissions. A consortium of major oil sands producers-representing more than 95% of industry output-have announced ambitions to get to net-zero emissions by 2050. The consortium, known as the Oil Sands Pathways to Net Zero has an interim target of lowering absolute GHG emissions by 22 MMtCO2e by 2030 relative to 2018.
The Government of Canada has also announced its intention to cap upstream oil and gas GHG emissions, which would include the Canadian oil sands. Accelerated deployment of carbon capture and storage could result is larger, more material reductions in the longer term, the analysis says.
“For the past decade the Canadian oil sands have demonstrated a consistent trend of GHG intensity reductions,” Birn said. “However, this has often been overlooked because absolute emissions continued to rise as the pace of production growth outpaced those improvements. But our pending analysis will show that GHG intensity reductions are increasingly important and, if trends continue, they will overtake a slowing growth profile leading to absolute emission reductions.”
Additional findings from the analysis:
Changes in production between different types of extraction had the most impact on oil sands GHG intensity decline in 2020. The share of comparatively more GHG-intensive legacy mining operations declined relative to comparatively lower GHG-intensive thermal in situ production (principally stream-assisted gravity drainage projects), which is more akin to conventional drilling.
IHS Markit estimates that the average GHG intensity of marketable oil sands produced in 2020 was 69 kgCO2e/bbl.
The variation in the GHG intensity of Canadian oil sands projects was the greatest that it has been in many years-ranging from 41 kgCO2e/bbl to 175 kgCO2e/bbl-as the ramping down of some operations did have the expected result of causing temporary spikes in GHG intensity for some production. The volumes impacted were relatively limited which muted the impact on the overall average.
Note: IHS Markit estimates of oil sands GHG intensity are made consistent with the marketable products of the upstream stage of a life-cycle analysis, inclusive of upstream GHG intensity of production of fuels used in the oil sands and any electrical trade.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners (C) 2022 IHS Markit Ltd. All rights reserved.
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