- $2 billion investment: CGF and Strathcona each contribute $1 billion to build CCS infrastructure.
- 2 million tonnes CO2 capture: The project aims to capture and store up to 2 million tonnes of CO2 annually.
- First-of-its-kind risk-sharing: Unique approach with emitter retaining carbon pricing risk.
Canada Growth Fund Inc. (CGF) has announced a strategic partnership with Strathcona Resources Ltd. to develop carbon capture and sequestration (CCS) infrastructure at Strathcona’s oil sands facilities in Saskatchewan and Alberta. This collaboration, named the SAGD CCS Partnership, will capture and permanently store up to 2 million tonnes of CO2 annually, with each party contributing up to $1 billion in funding.
Strathcona, the fifth largest oil producer in Canada, will build, own, and operate the CCS projects, receiving all investment tax credits. CGF’s initial commitment is $500 million, with the option to increase to $1 billion. The projects will be funded equally by CGF and Strathcona, enhancing long-term competitiveness in one of Canada’s most carbon-intensive industries.
Strategic Vision
Patrick Charbonneau, President & CEO of CGF Investment Management, highlighted the significance of this partnership:
“This partnership is a breakthrough in Canada’s journey towards decarbonizing the oil and gas sector.“
Adam Waterous, Executive Chairman of Strathcona, emphasized the project’s potential impact:
“We hope this innovative partnership with CGF will serve as a template for other producers and serve notice to the global oil and gas industry that Canada not only has one of the largest and most profitable oil resources in the world, but soon through these CCS projects, on a path toward becoming the least carbon-intensive.“
Project Details
Strathcona’s oil sands facilities in Lloydminster and Cold Lake are strategically located near suitable CO2 storage reservoirs, allowing for direct on-site CO2 injection. With significant progress made over the past three years, Strathcona secured subsurface CO2 injection rights from the Government of Saskatchewan, making it the first oil sands producer in Canada with approval to capture and store CO2 permanently.
Timeline and Financials
The first commercial CCS project is expected to reach final investment decision (FID) by mid-2025, targeting Saskatchewan. Strathcona is also in discussions with Alberta for approval of dedicated sequestration pore space beneath its Cold Lake properties.
CGF aims for a 10-year payback period, depending on the actual performance of the projects. CGF will earn returns based on actual captured volumes, operating costs, and a fixed carbon price guaranteed by Strathcona. This partnership demonstrates a novel risk-sharing approach, with CGF sharing in project costs and capture efficiency risks, while Strathcona retains carbon pricing risk.
Related Article: EU Commission Approves €3 Billion Swedish Scheme for Carbon Capture and Storage to Reduce Biogenic CO2 Emissions
Transaction Highlights
- Initial $500 million financing by CGF to build CCS infrastructure on Strathcona’s SAGD assets.
- Equal funding split between CGF and Strathcona for CCS projects.
- Strathcona to receive all investment tax credits and will build, own, and operate the CCS projects.
- Targeted FID by mid-2025 for the first CCS project in Saskatchewan.
- CGF’s oversight rights on construction and operations, with information and audit rights related to the partnership.
This partnership not only supports Canada’s environmental goals but also sets a precedent for future CCS projects, promoting a path towards reduced carbon intensity in the oil and gas sector.