CALGARY – Ottawa’s pending decision on Teck Resource Ltd.’s Frontier oilsands project has become a symbol of a larger debate about energy and climate change, according to Mark Little, chief executive officer of Suncor Energy Inc.
Frontier, a $20.6-billion oilsands mine proposed by Teck in an area north of Fort McMurray, is forcing a debate about the need for energy in a carbon-conscious world, Little said in an interview with the Financial Post last week. The 260,000-barrel-per-day project was approved by a Joint Review Panel last year and is awaiting a decision by the federal cabinet by the end of February.
Groups opposed to petroleum development are suggesting the world will need to cut oil production to rein in carbon emissions. “We don’t think that’s a solution,” Little said, adding that companies will need to raise energy production while at the same time reining in emissions.
“There are 700 million people on the face of the Earth, about 10 per cent, that are struggling with extreme poverty and they need more energy to change their standard of living,” Little said. “That’s why this is a quandary because the world really needs more energy and less emissions and that whole mantra is actually caught up in this (Frontier) … approval,” he said.
Suncor, Canada’s largest oilsands producer after Canadian Natural Resources Ltd., has an interest in seeing new bitumen projects approved as 95 per cent of its 7.8 billion barrels of probable oil reserves are in the oilsands. The company aims to increase its output by 5 per cent to as much as 840,000 bpd and spend around $6 billion in capital expenditure this year.
Contrary to the oilsands’ reputation as a high-emissions basin, Suncor’s new oilsands projects have full life-cycle emissions equivalent to the barrels being produced in the United States, Little said.
The world really needs more energy and less emissions and that whole mantra is actually caught up in this (Frontier) … approval,
Suncor CEO Mark Little
“I don’t want to overstate this — this isn’t the average performance of the industry. But our new developments are that way and we’re looking at all sorts of ideas to take it even further. I look at it and think, this could be one of the lowest emission sources of oil globally going forward and that’s the challenge that we’ve put to ourselves.”
The company is working on technologies that would reduce emissions in its in-situ projects by 50 to 80 per cent, for example.
“So it’s kind of like, ‘ok, is it zero?’ No it’s not zero, we need to deal with that and maybe we need to offset some of it,” Little said. “Technology is a huge card. Innovation is something that’s allowed us to continue and adapt as we go forward.”
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Teck president and CEO Don Lindsay made a similar argument at The Canadian Imperial Bank of Commerce investor conference in Banff, Alta. last week. “This will actually displace dirty oil,” Lindsay told investors at the event, adding that the project’s emissions per barrel will come in lower than the North American average.
On Monday, Teck said it is aiming to be carbon-neutral across all its operations and activities by 2050. The company plans to seek alternative ways of moving materials at its mines, using cleaner power sources, and implementing efficiency improvements.
But even if the federal government approves the Frontier project, Lindsay said that Teck will need to tick off “three Ps” on its checklist — oil prices, completed pipelines and joint-venture partners — before the company starts building the project.
Suncor has previously partnered with Teck to build the $17-billion Fort Hills oilsands mining project, which opened last year and is currently operating. Despite their prior collaboration, Little downplayed a potential future partnership with Teck on Frontier.
“This isn’t something that we’ve approved and it’s not something we are considering at this time,” he said.
With files from Kevin Carmichael