Canada and Alberta, along with five major oil sands producers including Canadian Natural Resources, Suncor Energy, Cenovus Energy, Imperial Oil, and ConocoPhillips Canada, have signed a non-binding agreement linking future production growth to the Pathways carbon storage project. This agreement was signed on July 2 and aims to achieve binding agreements by November 15, 2026.
Details of the Agreement and Carbon Reduction Goals
Under this agreement, producers intend to advance the Pathways carbon storage project, which aims to reduce 6 million tons of carbon dioxide per year (MMtpa) by 2035. Shared infrastructure for CO₂ transport and storage is expected to be operational by 2032.
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Additionally, the agreement sets a goal to reduce another 10 million tons of carbon dioxide by 2045. This reduction could be achieved through the expansion of carbon storage projects or the use of other technologies and production methods, bringing the total carbon dioxide reduction target to 16 million tons per year.
Financial and Legal Conditions for Production Growth
Meanwhile, Canada and Alberta are working to provide the necessary financial and legal conditions to support increased oil sands production. This agreement links production growth to expanded market access, including a proposed oil pipeline to the west coast designed to transport over 1 million barrels per day (bpd) to global markets.
Alberta has committed to providing financial support to encourage production growth under necessary conditions and to extend the carbon storage incentive program until 2035. A 120-day timeline will also be established for the approval of eligible projects. Canada also intends to pursue measures to support the operational costs of carbon storage and address industry concerns regarding the federal CCUS investment tax credit.
However, this agreement does not represent final investment decisions on proposed projects. Commitments still depend on definitive agreements between governments and oil sands producers, making the targeted agreements for November 15 a key step for production growth and carbon storage plans.
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