From the Canadian Energy Centre

By Deborah Jaremko

Record oil production, more Indigenous ownership and inching closer to LNG

It’s likely 2024 will go down in history as a turning point for Canadian energy, despite challenging headwinds from federal government policy.   

Here’s some of the good news.

10. New carbon capture and storage (CCS) projects to proceed 

Photo courtesy Shell Canada

In June, Shell announced it will proceed with the Polaris and Atlas CCS projects, expanding emissions reduction at the company’s Scotford energy and chemicals park near Edmonton.  

Polaris is designed to capture approximately 650,000 tonnes of CO2 per year, or the equivalent annual emissions of about 150,000 gasoline-powered cars. The CO2 will be transported by a 22-kilometre pipeline to the Atlas underground storage hub.   

The projects build on Shell’s experience at the Quest CCS project, also located at the Scotford complex. Since 2015, Quest has stored more than eight million tonnes of CO2. Polaris and Atlas are targeted for startup in 2028.    

Meanwhile, Entropy Inc. announced in July it will proceed with its Glacier Phase 2 CCS project. Located at the Glacier gas plant near Grande Prairie, the project is expected onstream in mid-2026 and will capture 160,000 tonnes of emissions per year.  

Since 2015, CCS operations in Alberta have safely stored roughly 14 million tonnes of CO2, or the equivalent emissions of more than three million cars. 

9. Canada’s U.S. oil exports reach new record 

Expanded export capacity at the Trans Mountain Westridge Terminal. Photo courtesy Trans Mountain Corporation

Canada’s exports of oil and petroleum products to the United States averaged a record 4.6 million barrels per day in the first nine months of 2024, according to the U.S. Energy Information Administration.  

Demand from Midwest states increased, along with the U.S. Gulf Coast, the world’s largest refining hub. Canadian sales to the U.S. West Coast also increased, enabled by the newly completed Trans Mountain Pipeline Expansion. 

8. Alberta’s oil production never higher

A worker at Suncor Energy’s MacKay River oil sands project. CP Images photo

In early December, ATB Economics analyst Rob Roach reported that Alberta’s oil production has never been higher, averaging 3.9 million barrels per day in the first 10 months of the year.  

This is about 190,000 barrels per day higher than during the same period in 2023, enabled by the Trans Mountain expansion, Roach noted.  

7. Indigenous energy ownership spreads 

Communities of Wapiscanis Waseskwan Nipiy Limited Partnership in December 2023. Photo courtesy Alberta Indigenous Opportunities Corporation

In September, the Bigstone Cree Nation became the latest Indigenous community to acquire an ownership stake in an Alberta energy project.  

Bigstone joined 12 other First Nations and Métis settlements in the Wapiscanis Waseskwan Nipiy Holding Limited Partnership, which holds 85 per cent ownership of Tamarack Valley Energy’s Clearwater midstream oil and gas assets.  

The Alberta Indigenous Opportunities Corporation (AIOC) is backstopping the agreement with a total $195 million loan guarantee.   

In its five years of operations, the AIOC has supported more than 60 Indigenous communities taking ownership of energy projects, with loan guarantees valued at more than $725 million.  

6. Oil sands emissions intensity goes down 

Oil sands steam generators. Photo courtesy Cenovus Energy

A November report from S&P Global Commodity said that oil sands production growth is beginning to rise faster than emissions growth.  

While oil sands production in 2023 was nine per cent higher than in 2019, total emissions rose by just three per cent. 

“This is a notable, significant change in oil sands emissions,” said Kevin Birn, head of S&P Global’s Centre for Emissions Excellence. 

Average oil sands emissions per barrel, or so-called “emissions intensity” is now 28 per cent lower than it was in 2009. 

5. Oil and gas producers beat methane target, again 

Photo courtesy Tourmaline

Data released by the Alberta Energy Regulator in November 2024 confirmed that methane emissions from conventional oil and gas production in the province continue to go down, exceeding government targets. 

In 2022, producers reached the province’s target to reduce methane emissions by 45 per cent compared to 2014 levels by 2025 three years early.  

The new data shows that as of 2023, methane emissions have been reduced by 52 per cent.  

4. Cedar LNG gets the green light to proceed 

Haisla Nation Chief Councillor Crystal Smith and Pembina Pipeline Corporation CEO Scott Burrows announce the Cedar LNG positive final investment decision on June 25, 2024. Photo courtesy Cedar LNG

The world’s first Indigenous majority-owned liquefied natural gas (LNG) project is now under construction on the coast of Kitimat, B.C., following a positive final investment decision in June.  

Cedar LNG is a floating natural gas export terminal owned by the Haisla Nation and Pembina Pipeline Corporation. It will have capacity to produce 3.3 million tonnes of LNG per year for export overseas, primarily to meet growing demand in Asia.  

The $5.5-billion project will receive natural gas through the Coastal GasLink pipeline. Peak construction is expected in 2026, followed by startup in late 2028. 

3. Coastal GasLink Pipeline goes into service 

Workers celebrate completion of the Coastal GasLink Pipeline. Photo courtesy Coastal GasLink

The countdown is on to Canada’s first large-scale LNG exports, with the official startup of the $14.5-billion Coastal GasLink Pipeline in November.  

The 670-kilometre pipeline transports natural gas from near Dawson Creek, B.C. to the LNG Canada project at Kitimat, where it will be supercooled and transformed into LNG.  

LNG Canada will have capacity to export 14 million tonnes of LNG per year to overseas markets, primarily in Asia, where it is expected to help reduce emissions by displacing coal-fired power.  

The terminal’s owners – Shell, Petronas, PetroChina, Mitsubishi and Korea Gas Corporation – are ramping up natural gas production to record rates, according to RBN Energy. 

RBN analyst Martin King expects the first shipments to leave LNG Canada by early next year, setting up for commercial operations in mid-2025.  

2. Construction starts on $8.9 billion net zero petrochemical plant  

Dow’s manufacturing site in Fort Saskatchewan, Alberta. Photo courtesy Dow

In April, construction commenced near Edmonton on the world’s first plant designed to produce polyethylene — a widely used, recyclable plastic — with net zero scope 1 and 2 emissions. 

Dow Chemicals’ $8.9 billion Path2Zero project is an expansion of the company’s manufacturing site in Fort Saskatchewan. Using natural gas as a feedstock, it will incorporate CCS to reduce emissions.  

According to business development agency Edmonton Global, the project is spurring a boom in the region, with nearly 200 industrial projects worth about $96 billion now underway or nearing construction.  

Dow’s plant is scheduled for startup in 2027.  

1. Trans Mountain Pipeline Expansion completed 

The “Golden Weld” marked mechanical completion of construction for the Trans Mountain Expansion Project on April 11, 2024. Photo courtesy Trans Mountain Corporation

The long-awaited $34-billion Trans Mountain Pipeline Expansion officially went into service in May, in a game-changer for Canadian energy with ripple effects around the world.   

The 590,000 barrel-per-day expansion for the first time gives customers outside the United States access to large volumes of Canadian oil, with the benefits flowing to Canada’s economy.   

According to the Canada Energy Regulator, exports to non-U.S. locations more than doubled following the expansion startup, averaging 420,000 barrels per day compared to about 130,000 barrels per day in 2023.  

The value of Canadian oil exports to Asia has soared from effectively zero to a monthly average of $515 million between June and October, according to ATB Economics. 

From EnergyNow.ca

By Maureen McCall

It’s generally accepted that the launch of Artificial Intelligence (AI) occurred at Dartmouth College in a 1956 AI workshop that brought together leading thinkers in computer science, and information theory to map out future paths for investigation. Workshop participants John McCarthy, Marvin Minsky, Nathaniel Rochester and Claude E. Shannon coined the term “artificial intelligence” in a proposal that they wrote for that conference. It started AI as a field of study with John McCarthy generally considered as the father of AI.

AI was developed through the 1960s but in the 1970s-1980s, a period generally referred to as “the AI Winter”, development was stalled by a focus on the limitations of neural networks. In the late 1980s, advancements resumed with the emergence of connectionism and neural networks. The 1990s-2000s are considered to be the beginning of the AI/ Machine Learning Renaissance. In the 2010s, further growth was spurred by the expansion of Big Data and deep learning, computer power and large-scale data sets. In 2022 an AI venture capital frenzy took off (the “AI frenzy”), and AI plunged into the mainstream in 2023 according to Forbes which was already tracking applications of AI across various industries.

By early 2024, the implementation of AI across industries was well underway- in healthcare, finance, creative fields and business. In the energy industry, digitalization conferences were addressing digital transformation in the North American oil & gas industry with speakers and attendees from E&P majors, midstream, pipeline, LNG companies and more as well as multiple AI application providers and the companies speaking and attending already had AI implementations well underway.

So how did global leaders not perceive the sudden and rapid rise of AI and the power commitments it requires?

How has the 2022 “AI frenzy” of investment and subsequent industrial adoption been off the radar of global policymakers until just recently? Venture capital is widely recognized as a driver of innovation and new company formation and leaders should have foreseen the surge of AI improvement and implementation by “following the money” so to speak. Perhaps the incessant focus of “blaming and shaming” industry for climate change blinded leaders to the rapid escalation of AI development that was signaled by the 2022 AI frenzy

Just as an example of lack of foresight, in Canada, the grossly delayed 2024 Fall Economic Statement had a last-minute insertion of “up to $15 billion in aggregate loan and equity investments for AI data center projects”. This policy afterthought is 2 years behind the onset of the AI frenzy and 12+ months behind the industrial adoption of AI. In addition, the Trudeau/Guilbeault partnership is still miscalculating the enormous AI power requirements.

As an example of the size of the power requirements of AI, one can look at the Wonder Valley project- the world’s largest AI data center industrial park in the Greenview industrial gateway near Grande Prairie Alberta. It is planned to “generate and offer 7.5 GW of low-cost power to hyperscalers over the next 5-10 years.” The cost of just this one project is well beyond the funding offered in the 2024 Fall Economic Statement.

“We will engineer and build a redundant power solution that meets the modern AI compute reliability standard,” said Kevin O’Leary, Chairman of O’Leary Ventures. “The first phase of 1.4 GW will be approximately US$ 2 billion with subsequent annual rollout of redundant power in 1 GW increments. The total investment over the lifetime of the project will be over $70 billion.”

To further explore the huge power requirements of AI, one can look at the comparison of individual AI queries/searches vs traditional non-AI queries. As reported by Bloomberg, “Researchers have estimated that a single ChatGPT query requires almost 10 times as much electricity to process as a traditional Google search.” Multiply this electricity demand by the millions of industrial users as industrial AI implementation continues to expand worldwide. As in the same Bloomberg article- “By 2034, annual global energy consumption by data centers is expected to top 1,580 terawatt-hours—about as much as is used by all of India—from about 500 today.”

This is the exponential demand for electricity that North American & global leaders did not see coming – a 24/7 demand that cannot be satisfied by unreliable and costly green energy projects – it requires an “all energies” approach. Exponential AI demand threatens to gobble up supply and dramatically increase electricity prices for consumers. Likewise, leadership does not perceive that North American grids are vulnerable and outdated and would be unable to deliver reliable supply for AI data centers that cannot be exposed to even a few seconds of power outage. Grid interconnections are unreliable as mentioned in the following excerpt from a September 2024 article in cleanenergygrid.org.

“Our grid, for all of its faults, is now a single interconnected “machine” over a few very large regions of the country. Equipment failures in Arizona can shut the lights out in California, just as overloaded lines in Ohio blacked out 55 million people in eight states from Michigan to Boston – and the Canadian province of Ontario – in 2003.”

AI’s power demands are motivating tech companies to develop more efficient means of developing AI. Along with pressure to keep fossil fuels in the mix, billions are being invested in alternative energy solutions like nuclear power produced by Small Nuclear Reactors (SMRs).

Despite SMR optimism, the reality is that no European or North American SMRs are in operation yet. Only Russia & China have SMRs in operation and most data centers are focusing on affordable natural gas power as the reality sets in that nuclear energy cannot scale quickly enough to meet urgent electricity needs. New SMR plants could be built and operational possibly by 2034, but for 2025 Canada’s power grid is already strained, with electricity demand to grow significantly, driven by electric vehicles and data centers for AI applications.

AI has a huge appetite for other resources as well. For example, the most energy and cost-efficient ways to chill the air in data centers rely on huge quantities of potable water and the exponential amount of data AI produces will require dramatic increases in internet networks as well as demand for computer chips and the metals that they require. There is also an intense talent shortage creating AI recruitment competitions for the talent pool of individuals trained by companies like Alphabet, Microsoft and OpenAI.

AI development is now challenging the public focus on climate change. In Canada as well as in the U.S. and globally, left-leaning elected officials who focused keenly on policies to advance the elimination of fossil fuels were oblivious to the tsunami of AI energy demand about to swamp their boats. Canadian Member of Parliament Greg McLean, who has served on the House of Commons Standing Committees of Environment, Natural Resources, and Finance, and as the Natural Resources critic for His Majesty’s Loyal Opposition, has insight into the reason for the change in focus.

“Education about the role of all forms of energy in technology development and use has led to the logical erosion of the ‘rapid energy transition’ mantra and a practical questioning of the intents of some of its acolytes. The virtuous circle of technological development demanding more energy, and then delivering solutions for society that require less energy for defined tasks, could not be accomplished without the most critical input – more energy. This has been a five-year journey, swimming against the current — and sometimes people need to see the harm we are doing in order to objectively ask themselves ‘What are we accomplishing?’ … ‘What choices are being made, and why?’…. and ‘Am I getting the full picture presentation or just the part someone wants me to focus on?’”

With the election of Donald Trump, the “Trump Transition” now competes with the “Energy Transition” focus, changing the narrative in the U.S. to energy dominance. For example, as reported by Reuters, the U.S. solar industry is now downplaying climate change messaging.

“The U.S. solar industry unveiled its lobbying strategy for the incoming Trump administration, promoting itself as a domestic jobs engine that can help meet soaring power demand, without referencing its role in combating climate change.”

It’s important to note here that the future of AI is increasingly subject to societal considerations as well as technological advancements. Political, ethical, legal, and social frameworks will increasingly impact AI’s development, enabling or limiting its implementations. Since AI applications involve “human teaming” to curate and train AI tools, perceptions of the intent of AI implementations are key. In the rush to implementation, employees at many companies are experiencing changing roles with increased demand for workers to train AI tools and curate results. Will tech optimism be blunted by the weight of extra tasks placed on workers and by suspicions that those workers may ultimately be replaced? Will resistance develop as humans and AI are required to work together more closely?

Business analyst Professor Henrik von Scheel of the Arthur Lok Jack Global School of Business describes the importance of the human factor in AI adoption.

“It’s people who have to manage the evolving environment through these new tools,” von Scheel explains. “It’s been this way ever since the first caveperson shaped a flint, only now the tools are emerging from the fusion of the digital, physical and virtual worlds into cyber-physical systems.”

A conversation with a recent graduate who questioned the implementation of AI including the design of guardrails and regulations by members of an older generation in management made me wonder…Is there a generational conflict brewing from the lack of trust between the large proportion of baby boomers in the workforce- predominantly in management- and the younger generation in the workforce that may not have confidence in the ability of mature management to fully understand and embrace AI tech and influence informed decisions to regulate it?

It’s something to watch in 2025.

Maureen McCall is an energy professional who writes on issues affecting the energy industry.