Canada Growth Fund Inc. and Strathcona Resources Ltd. announced a new carbon capture partnership.
In a press release Wednesday, Canada Growth Fund said the partnership will build carbon capture and sequestration infrastructure at Strathcona’s oilsands facilities in Saskatchewan and Alberta. Each organization will contribute $1 billion in funding to the joint venture that will look to capture and store up to two million tonnes of carbon dioxide each year.
Patrick Charbonneau, the president and CEO of CGF Investment Management, said in the press release that the partnership represents a “breakthrough” in Canada’s efforts to decarbonize its oil and gas sector.
Under the new agreement, Strathcona will build, own and operate the carbon capture and storage project while receiving investment tax credits.
Meanwhile, the press release said Canada Growth Fund will earn a target return “with the annual cash flows generated by each CCS project based on actual captured volumes, actual operating costs, and a fixed carbon price guaranteed by Strathcona”
“We hope this innovative partnership with CGF will serve as a template for other producers and serve notice to the global oil and gas industry that Canada not only has one of the largest and most profitable oil resources in the world, but soon through these CCS projects, on a path toward becoming the least carbon-intensive,” Adam Waterous, the executive chairman of Strathcona, said in the release.
According to the release the partnership takes a novel approach to risk-sharing for carbon capture and storage projects. Under the approach, the emitter retains carbon pricing risk and Canada Growth Fund shares in the risk for the project’s efficiencies in cost and carbon capture.
“The SAGD CCS Partnership is expected to enhance the long-term competitiveness of one of Canada’s most carbon-intensive industries by advancing large-scale commercial CCS projects over time and demonstrating decarbonization outcomes in a fiscally prudent manner,” the release said.
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