Output sting from Alberta GHG cap delayed

“Terrible market conditions” will delay the sting of Alberta’s pending 100 million-tonne cap on greenhouse-gas emissions from oil sands work, says a Fraser Institute analyst.

In a blog post, Kenneth Green says newly lowered forecasts for production, based on lower oil prices and unrelated environmental policies, indicate the GHG cap won’t restrict oil sands production before 2040.

Green and a colleague earlier predicted that the emissions cap would start affecting production in 2025 if emissions intensity didn’t improve, lowering cumulative output by 3.34 billion through 2040 and costing the province $254.74 billion (Can.).

In that earlier analysis, emissions-intensity improvement delayed the production effect to 2027 and lowered the expected cumulative loss through 2040 to 2.03 billion bbl and the financial loss to $153.41 billion (OGJ Online, Aug. 17, 2016).

New projections from Canada’s National Energy Board change the outlook, according to Green.

The NEB has lowered base-case oil-price assumptions by $17/bbl from expectations underlying the forecast on which the Fraser Institute analysts based their earlier outlook.

And NEB now projects oil production in Canada will rise 41% through 2040, indicating output unaffected by an emissions cap that allows a 50% increase from recent levels. Technical improvements will keep the emissions increase below the production gain.

“While terrible market conditions may have made Alberta’s carbon cap temporarily moot…we should remember that market conditions can equally make it unmoot and dampen regrowth of the oil sector when, as is widely assumed, the price of oil rebounds in the future,” Green writes.

Calling the carbon cap “arbitrary,” he charges, “The government seemingly failed to do any meaningful analysis of the potential costs and benefits of the action.”

Legislation recently filed in Alberta to impose the oil-sands emissions cap also sets a $30/tonne carbon price (OGJ Online, Nov. 2, 2016).

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...