New S&P Global Commodity Insights report finds continuing efficiency improvements, as well as new technologies, are poised to overtake slowing production growth and result in absolute emission reduction by middle of this decade

By the middle of this decade greenhouse gas (GHG) emissions from Canadian oil sands production should be in decline even as production continues to grow, according to a new comprehensive report by S&P Global Commodity Insights that takes into account current technology trends and production growth.

Entitled The Trajectory of Oil Sands GHG Emissions: 2009-2035, the report by the S&P Global Oil Sands Dialogue says that long-term trends of reductions to the GHG intensity of oil sands production are set to reach an inflection point around 2025. Immediate pressure on absolute emissions to rise is expected in the short-term prior to that point. Absolute emissions are then expected to begin to decline from a level between 87-89 MMtCO2e, even as production rises by more than 600,000 barrels per day during the same period (2020 to 2025).

The findings of the report confirm a preliminary analysis from the same team released earlier this year.

“GHG intensity improvements do add up,” said Kevin Birn, vice president, GHG estimation and coordination, S&P Global Commodity Insights. “Our latest analysis shows that, if existing trends continue, they will overtake pressure from a slowing growth profile leading to absolute emission declines within the next few years.”

From 2020 to 2035, S&P Global Commodity Insights projects GHG intensity of the Canadian oil sands could decline from 20-28% with some segments seeing much more dramatic reductions. Meanwhile, production growth in the study was projected to increase by more than 800,000 to 1.2 million barrels per day during this period. Most of that growth is expected to occur by 2025.

Efficiency improvements, including higher facility utilization rates as well as the roll-out and ramp-up of newer, less GHG-intensive operations have been leading contributors to past intensity reductions. These factors are expected to continue to play a role in future. However, carbon capture and storage as well as what S&P Global Commodity Insights is calling steam displacement technologies have the potential to result in more dramatic reductions.

“Although it can take time to be developed, carbon capture and storage is a wildcard when we look at technologies that can really make a difference for large industrial scale emitters like in the oil sands,” Birn said. “Another wild card is the increasing use of what we are calling steam displacements technologies in thermal oil sands operations. This category of technologies can materially reduce the steam, and thus emissions required to produce a barrel of oil.”

Steam displacement technologies physically replace steam required per barrel with solvents, or noncondensable gas like methane. These technologies can have large implications for oil sands thermal extraction emissions and can even result in increased productivity.

“We were struck by the some of the success of steam displacement technologies occurring in the field,” Birn said. “They show great potential to influence future oil sands GHG emissions and even enhance the level of future production.

“This new S&P Global Commodity Insights analysis is arguably the most rigorous examination of oil sands GHG emissions to date and the findings that, even if current trends continue, absolute emissions are set to decline within the next few years are profound,” Birn said. “This may yet prove to be a conservative estimate with both industry and governments in Canada vowing to take more material actions to lower the oil sands emissions profile and improve the long-term carbon competitiveness of the sector to better compete through the energy transition.”

S&P Global Commodity Insights estimates that the announced ambition of Oil Sands Pathways to Netzero—a consortium of major oil sands producers representing more than 95% of industry output—could result in oil sands GHG emissions falling by 19 MtCO2e by 2030 relative to 2020. That is 17 MMtCO2e lower than S&P Global Commodity Insights projection for 2035. Recently the government of Canada announced it could be seeking even greater reductions from the sector.

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