Cenovus Vitality Inc. says Ottawa’s forthcoming launch of particulars about its proposed tax credit score for carbon seize, utilization and storage initiatives (CCUS) needs to be adopted by “vital authorities assist” so the trade can broadly undertake the know-how.
The Calgary-based oil producer has been concerned in ongoing discussions with Ottawa over the tax credit score, which was introduced on this yr’s federal finances. On Wednesday, Rhona DelFrari, the corporate’s chief sustainability officer, stated the talks have been going nicely.
“Everyone seems to be in a really collaborative temper,” DelFrari informed reporters following Cenovus’ annual investor day occasion. “We proceed to have loads of ongoing dialogue with them as the federal government works towards its funding tax credit score that they intend to supply extra element about quickly.”
READ MORE: Calgary-based oilsands producer Cenovus goals for ‘web zero’ GHG emissions by 2050
CCUS is a know-how that captures greenhouse fuel emissions from industrial sources and shops them deep within the floor to stop them from being launched into the environment.
Proponents say vastly scaling up CCUS throughout the oil and fuel trade will likely be essential if Canada is to have a shot at assembly its local weather targets. Nonetheless, some environmentalists are essential of the know-how that does nothing to curb total manufacturing of fossil gasoline merchandise.
In its five-year plan launched Wednesday, Cenovus contains smaller, near-term CCUS initiatives within the works at its Lloydminster Upgrader, Minnedosa Ethanol Plant, and Elmworth fuel plant.
Longer-term, Cenovus is a part of the Oil Sands Pathways to Internet Zero Alliance, a bunch of Canadian oilsands producers whose imaginative and prescient of getting the trade to web zero greenhouse fuel emissions by 2050 is anchored by a proposed main CCUS transportation line that will seize CO2 from oilsands amenities and transport it to a storage facility close to Chilly Lake, Alta.
READ MORE: New Alberta carbon seize venture now totally operational
Cenovus itself has set a goal to cut back emissions by 35 per cent by 2035 from 2019 ranges.
Nonetheless, Cenovus chief govt Alex Pourbaix stated he reminds individuals on a regular basis that CCUS know-how continues to be in its infancy.
“Proper now, by itself, CCUS just isn’t an financial know-how by itself. It’s a fairly vital incremental value to any power producer,” Pourbaix stated.
“Anyplace you could have seen CCUS undertaken at scale, it’s nearly inevitably undertaken with vital authorities collaboration and assist.”
READ MORE: Oil corporations ask Canada to pay for 75% of carbon seize amenities
Cenovus declined to see what particularly the corporate needs to see in a CCUS tax credit score, however DelFrari stated that initiatives in different elements of the world which have been profitable have been anyplace from two-thirds to three-quarters supported by authorities.
The corporate has additionally been encouraging Ottawa to make enhanced oil restoration initiatives eligible for the tax credit score, one thing the federal government had initially dominated out. Enhanced oil restoration, or EOR, is a course of that may considerably improve a web site’s oil manufacturing by the method of injecting carbon dioxide underground to extract extra oil from older wells.
“We might be very massive proponents and would encourage the federal government, as these consultations across the investor tax credit score go on, to actually contemplate having an open thoughts concerning the inclusion of EOR,” Pourbaix stated.
Cenovus introduced a capital spending finances Wednesday between $2.6 billion and $3 billion for subsequent yr, up from its steering for between $2.3 billion and $2.7 billion this yr.
The corporate additionally stated it plans to allocate about 50 per cent of its extra money move in 2022 to shareholder returns. Remaining extra money move will likely be put towards the objective of lowering the corporate’s web debt to under $8 billion.
READ MORE: Cenovus retires $1 billion in debt as oil worth surge lifts Canadian power sector
Cenovus stated capital spending on its upstream property subsequent yr is anticipated to be between $1.7 billion and $2 billion, together with $1.35 billion to $1.55 billion for its oilsands operations.
Downstream capital investments in 2022 are anticipated to complete between $850 million and $950 million, together with $200 million to $250 million for its Superior Refinery rebuild venture, which Cenovus expects will likely be largely offset by insurance coverage.
In its steering for 2022, the corporate says it expects complete manufacturing of between 780,000 and 820,000 barrels of oil equal per day and downstream throughput between 530,000 and 580,000 barrels per day.
Cenovus stated its capital packages and present base dividend are sustainable at a West Texas Intermediate crude worth of US$45 per barrel. WTI closed at US$72.05 on Tuesday.
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