Brian Zinchuk is editor and owner of Pipeline Online
A new incentive for carbon dioxide pipeline construction was announced on Nov. 4. Such a pipeline would look very similar to this one, built by Ironside Energy this past summer, near Lampman. Photo by Brian Zinchuk
As part of its push its efforts to support a carbon dioxide hub and distribution systems in Saskatchewan, particularly in the Regina and Lloydminster regions, the Government of Saskatchewan announced on Nov. 4 that pipelines transporting carbon dioxide (CO2), whether for carbon capture utilization and storage (CCUS) or enhanced oil recovery (EOR), are now eligible for the provincial Oil Infrastructure Investment Program (OIIP).
The OIIP was introduced by the Ministry of Energy and Resources in 2020 and offers transferable oil and gas royalty/freehold production tax credits, at a rate of 20 per cent of eligible costs, for qualified infrastructure projects that significantly increase provincial pipeline capacity. Government investment follows up front private investment and so far, has successfully attracted over $76 million in private investment in Saskatchewan, the ministry noted in a release.
“Today’s announcement delivers on a key commitment made in our provincial CCUS priorities, announced in September, which will strengthen Saskatchewan’s position as a global CCUS leader,” Energy and Resources Minister Bronwyn Eyre said. “This will lead to significant investments in new energy projects that contribute to a strong, sustainable Saskatchewan, as the energy sector achieves its emissions goals.”
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The announcement comes as part of a broad effort to support carbon capture, utilization and storage. In September, Eyre announced Saskatchewan’s strategy will see the government work with the energy sector to evaluate the EOR royalty regime to ensure that CO2 injection projects remain highly competitive. It will amend and clarify regulations to support investment and provide certainty around pore space ownership, access, unitization of high-potential EOR plays, and long-term obligations and accountability for CO2 storage. This effort continues that.
A new incentive for carbon dioxide pipeline construction was announced on Nov. 4. Such a pipeline would look very similar to this one, built by Ironside Energy this past summer, near Lampman. Photo by Brian Zinchuk
It also follows a recent announcement by Federated Co-operatives Limited (FCL) and Whitecap Resources for CCUS. On Oct. 21, the two organizations signed a memorandum of understanding which, if carried through, will see FCL capture up to 500,000 tonnes of CO2 per year at its Regina Refinery Complex, and Belle Plaine ethanol plant. Whitecap, in turn, will pipeline that captured CO2 to the Weyburn Unit, south of Weyburn, where it will be utilized in enhanced oil recovery and ultimately permanently stored deep underground.
At the time of that $810 million announcement, Whitecap CEO Grant Fagerheim indicated they were working with up to three other companies who had expressed interest in taking part. If they all signed on, the total volume of CO2 coming from the Regina and Moose Jaw areas could reach as high as two million tonnes per year, effectively doubling the amount of CO2 already flowing into the Weyburn Unit.
This announcement is clearly in support of those efforts.
When the Boundary Dam Unit 3 project was initially advertised, SaskPower said at the time that capturing one million tonnes of CO2 per year was the equivalent of taking 250,000 cars off the road. Thus, if those numbers are applicable, capturing an additional two million tonnes of CO2 per year would approximate removing roughly a half million cars off the road.
Saskatchewan is already a world leader in CCUS, particularly with EOR, the government noted. Saskatchewan has experienced significant success in applying CO2 for EOR, which produces approximately 82 per cent fewer net emissions than traditional oil and gas extraction methods. Over the last 25 years, provincial EOR projects have sequestered more than 40 million tonnes of CO2 and resulted in over 100 million barrels of incremental oil production.
The Government of Saskatchewan anticipates that CCUS projects will attract provincial investment of more than $2 billion and sequester over two million tonnes of CO2 annually.
OIIP, when fully applied, will assist in generating a total investment impact of at least $500 million in new and expanded pipeline capacity in Saskatchewan, while allowing for further industry adoption of CCUS for reduction of greenhouse gas emissions and CO2 deployment in EOR.
Applications under OIIP will be accepted until March 31, 2025, and credits earned will expire on March 31, 2035.
For additional information on OIIP, visit https://www.saskatchewan.ca/business/agriculture-natural-resources-and-industry/oil-and-gas/oil-and-gas-incentives-crown-royalties-and-taxes/oil-infrastructure-investment-program.
Editor’s note: If you want to see the difference between this story, which provides context, and just running a press release, you can check out SaskToday.ca’s story here.
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