Executive Summary 

Pathways Alliance proposes $16.5 billion CAD carbon capture network connecting 13+ oil sands facilities to Cold Lake storage hub via 400-kilometre pipeline, targeting 10-12 million tonnes annual CO2 capture by 2030. The project represents the oil sands sector's primary emissions reduction strategy to achieve net-zero by 2050. Eight First Nations requested a federal impact assessment (November 2024), citing consultation concerns. Independent financial analysis (IEEFA) questions project viability without permanent government subsidies exceeding $12 billion CAD. Final investment decision contingent on federal Canada Growth Fund support. 

Project Overview 

Location: Northeastern Alberta (Fort McMurray, Christina Lake, Cold Lake regions; Treaty 6, 7, 8 territories) 

Proponent: Pathways Alliance 

Members: Canadian Natural Resources, Cenovus Energy, ConocoPhillips, Imperial Oil, MEG Energy, Suncor Energy (representing 95% of oil sands production) 

Project Type: Carbon capture, compression, transportation, and geological storage 

Status: Engineering and environmental fieldwork phase; regulatory applications pending; FID expected 2025 

Project Description 

Integrated carbon capture network capturing CO2 from oil sands processing facilities, compressing to liquid state, transporting via pipeline to a centralised hub, and permanently storing in a deep saline aquifer (1,000-2,000 metres below surface). Represents one of the world's largest proposed carbon capture projects by volume. 

Phase 1 Scope: 

• CO2 capture facilities at 14 oil sands operations 

• 400 km CO2 pipeline network 

• Compression stations 

• Cold Lake storage hub with injection wells 

• Monitoring and verification systems 

Capture Technology: 

• Post-combustion capture at processing facilities 

• Amine-based or other proven technologies 

• Integration with existing operations minimising production disruption 

Investment Value & Financing 

Phase 1 CCS Network: $16.5 billion CAD (by 2030) 

Additional Emissions Tech: $7.6 billion CAD (other technologies) 

Total First Phase Investment: $24 billion CAD by 2030 

Wood Engineering Contract: $10 million for detailed pipeline design (awarded 2023) 

Financing Structure Expectation: 

• Proponent Equity: Minimal (CNRL 2025 budget shows limited capital commitment) 

• Federal Canada Growth Fund: $12+ billion CAD requested (carbon contracts for revenue certainty) 

• Alberta Support: Carbon Capture Incentive Program (12% grant on eligible capital); carbon sequestration pore space agreement 

• Private Debt: Project finance contingent on government revenue support 

Financial Analysis Concern (IEEFA Report): "CNRL's 2025 budget reveals that the Pathways Alliance has no plans to invest their own funds into carbon capture and storage, instead insisting the public cover over $12 billion of their costs." - Julia Levin, Environmental Defence 

Timeline & Milestones 

2022: Project announced 

2023: Wood engineering contract for pipeline design 

2024: Engineering and environmental fieldwork 

November 2024: Eight First Nations request federal impact assessment 

2025: Final investment decision target (contingent on government co-investment) 

2025-2030: Phased construction if FID proceeds 

2030: Phase 1 operational target (10-12 mtpa CO2 captured) 

Critical Path Dependencies: 

• Federal Canada Growth Fund carbon contracts 

• Alberta Carbon Sequestration Pore Space Agreement 

• Federal impact assessment outcome (if designated) 

• Treaty First Nations consultation resolution 

• Engineering feasibility confirmation 

• Market conditions for Emission Performance Credits 

Indigenous Partnerships & Consultation 

Treaty Context 

Territory: Oil sands operations span Treaty 6, 7, and 8 territories 

Historic Treaties: Signed 1876-1921; create evolving consultation obligations 

Rights Impact: Potential effects on hunting, fishing, and traditional land use 

Accommodation: Benefit agreements, employment, monitoring, and participation required 

Current Status: Eight Nations Request Impact Assessment 

November 2024 Action: Eight First Nations submitted a request to the federal government for an impact assessment designation 

 Grounds: Consultation concerns; potential rights impacts 

 Federal Review: Impact Assessment Agency considering designation request 

 Timeline Impact: Federal impact assessment would add 2-3 years minimum to the regulatory process 

First Nations Concerns: 

• Consultation adequacy to date 

• Long-term storage safety and monitoring 

• Cumulative effects of oil sands development 

• Pipeline route impacts on traditional territories 

• Environmental justice considerations 

Alberta's Position 

Provincial Stance: Alberta government denied provincial impact assessment request 

Rationale: Project falls within existing regulatory frameworks; consultation ongoing 

Federal Tension: Provincial-federal disagreement on impact assessment necessity 

Consultation Requirements 

• Treaty First Nations across the pipeline route 

• Communities near the Cold Lake storage site 

• Nations potentially affected by pipeline construction 

• Ongoing engagement throughout project life 

• Environmental monitoring participation offers 

Regulatory Status & Approval Pathway 

Current Regulatory Phase 

Status: Pre-application; preparing regulatory submissions 

Alberta Energy Regulator: Primary approval authority for pipeline and storage 

Federal Role: Potential impact assessment; interprovincial aspects 

Environmental Assessment: Required at the federal or provincial level 

If Federal Impact Assessment Designated 

Process: 

• 180-day initial assessment phase 

• Full impact assessment (18-24 months) 

• Public hearings and submissions 

• Indigenous consultation integrated 

• Cabinet decision on project approval 

Timeline: 2-4 years from designation to final decision 

Alberta Regulatory Approvals Required 

• Pipeline construction and operation permit 

• CO2 injection well licences 

• Pore space agreement for geological storage 

• Environmental protection permits 

• Ongoing monitoring and reporting 

Key Regulatory Considerations 

Storage Permanence: Long-term liability for stored CO2; monitoring requirements 

Pipeline Safety: High-pressure CO2 pipeline regulations; emergency response 

Cumulative Effects: Assessment alongside existing oil sands development 

Indigenous Rights: Section 35 consultation adequacy 

Technical Specifications 

Carbon Capture Facilities 

Source Facilities: 14 oil sands processing facilities (Phase 1) 

Capture Volume: 10-12 million tonnes per year CO2 by 2030 

Long-Term Target: 22 million tonnes per year by 2030s (Pathways Alliance goal) 

Technology: Post-combustion capture; amine scrubbing or equivalent proven technologies 

CO2 Transportation Pipeline 

Length: 400 kilometres 

Capacity: Designed for 10-12 mtpa initial; expandable 

Pressure: High-pressure transmission (supercritical CO2) 

Route: Fort McMurray, Christina Lake, Cold Lake regions to storage hub 

Diameter: Large-diameter pipe; exact specifications pending detailed engineering 

Geological Storage Hub 

Location: Cold Lake area, Alberta 

Formation: Deep saline aquifer (non-potable water) 

Depth: 1,000-2,000 metres below surface 

Capacity: Sufficient for decades of CO2 storage 

Monitoring: Seismic monitoring; well integrity; groundwater monitoring 

Storage Safety: 

• Proven technology (Quest CCS facility operating since 2012 in Alberta) 

• Geological characterization confirming storage integrity 

• Injection well design and construction standards 

• Long-term monitoring and verification 

Additional Technologies (Pathways Alliance) 

Small Modular Reactors: Pilot for oil sands operations 

Hydrogen Fuel Switching: Converting natural gas to hydrogen 

 Process Optimization: Energy efficiency improvements 

Economic Analysis & Revenue Model 

Revenue Sources 

Primary: Alberta TIER (Technology Innovation and Emissions Reduction) system Emission Performance Credits (EPCs) 

EPC Price Cap: $170 CAD per tonne (effective ceiling) 

Clean Fuel Regulation: Credits potentially available but not currently applicable to Pathways (unlike Alberta Carbon Trunk Line) 

Cost Structure (IEEFA Analysis) 

Capital Costs: $16.5 billion Phase 1 

Operating Costs: Substantial ongoing expenses (capture, compression, transport, injection, monitoring) 

Cost per Tonne: Analysis suggests costs likely exceed revenues without efficiency improvements 

IEEFA Findings: 

• Operating costs growing twice as fast as CO2 capture volumes (based on existing Alberta CCS facilities) 

• Total costs approaching profitability thresholds 

• Without substantial efficiency improvements, the cost per tonne captured exceeds revenue per tonne 

Financial Viability Questions 

IEEFA Report Conclusions: "The growing realization that carbon capture and storage projects are likely to require permanent government subsidies resets the discussion about the viability of CCS as a tool to effectively reduce carbon emissions." - Mark Kalegha, IEEFA Energy Finance Analyst 

Key Financial Risks: 

1. EPC Price Cap: $170/tonne limits upside revenue potential 

1. EPC Oversupply: Growing supply of emission credits threatens market prices 

1. Cost Escalation: Construction and operating costs increasing 

1. Revenue Certainty: Carbon pricing frameworks subject to policy changes 

1. Permanent Subsidies: Project may require ongoing government support for viability 

Environmental Defence Position: "If these companies seriously believed in carbon capture as a waste management solution for their operations and were intent on moving these projects forward, they would be willing to invest more of their own funds." - Julia Levin 

Proponent Investment Commitment 

2025 Budgets: Oil sands company capital budgets show minimal CCS allocation 

 Example: CNRL (Canadian Natural Resources) 2025 budget allocates limited funds to Pathways 

 Interpretation: Companies seeking government funding before committing substantial equity 

Employment & Economic Impact (Proponent Estimates) 

Construction Phase 

Jobs: Hundreds of thousands claimed (proponent estimate) 

Duration: Multi-year construction through 2030 

Trades: Pipeline construction, facility installation, compression station builds 

Alberta Focus: Significant Alberta workforce and contractor activity 

Operations Phase 

Permanent Jobs: Hundreds of operations, maintenance, monitoring positions 

Specialized Skills: CCS operations expertise; geological monitoring; pipeline operations 

Indigenous Employment: Commitments expected in benefit agreements 

Fiscal Impact (Proponent Claims) 

Government Revenue: Tens of billions CAD claimed over project life 

Economic Activity: Supporting oil sands production continuation 

Counter-Analysis: If project requires $12+ billion in government subsidies, net fiscal impact calculation must account for upfront public investment versus long-term revenue projections. 

Key Investment Risks 

Material Execution Risks (Highest Category) 

1. Indigenous Consultation Adequacy

• Critical Issue: Eight First Nations requested federal impact assessment (November 2024) 

• Legal Risk: Project could be designated for federal impact assessment adding 2-4 years 

• Consultation Status: Proponent claims engagement ongoing; First Nations citing concerns 

• Precedent: Energy projects frequently face consultation challenges in treaty territories 

2. Financial Viability Without Permanent Subsidies

• IEEFA Analysis: Questions project economics; suggests permanent government subsidies required 

• Cost-Benefit: Public investment in CCS versus renewable alternatives 

• Proponent Commitment: Minimal company capital allocation in 2025 budgets 

• Policy Risk: Future governments may reconsider subsidy commitments 

3. Federal Canada Growth Fund Negotiations

• Status: Over one year of negotiations (as of late 2024) 

• Request: Carbon contracts to guarantee revenues and mitigate financial risk 

• Uncertainty: Decision timeline unclear; terms unknown 

• Contingency: FID contingent on CGF support 

4. Revenue Model Uncertainty

• EPC Price Cap: $170/tonne limits revenue potential regardless of costs 

• Market Oversupply: Growing EPC supply threatens prices below cap 

• Policy Changes: Carbon pricing frameworks subject to political shifts 

• Clean Fuel Credits: Not currently available to Pathways (unlike Alberta Carbon Trunk Line) 

5. Technology Scale-Up

• Existing CCS Context: Quest facility (Alberta) captures 1+ mtpa successfully since 2012 

• Scale Challenge: Pathways targets 10-12 mtpa (10x larger) 

• Operating Experience: Existing facilities show cost challenges 

• Performance Risk: Capture rates, downtime, maintenance costs at scale 

Moderate Risks 

6. Regulatory Approval Timeline

• Federal impact assessment potential (if designated) 

• Alberta Energy Regulator approval process 

• Multiple permit streams 

• Public opposition and environmental group challenges 

7. Storage Long-Term Liability

• Monitoring requirements over decades/centuries 

• Liability framework for CO2 migration 

• Insurance and bonding requirements 

• Public acceptance of geological storage 

8. Oil Sands Production Context

• CCS economics tied to continued oil sands production 

• Energy transition impacts on oil demand 

• Carbon pricing evolution affecting oil sands viability 

9. Construction Coordination

• Multiple facilities (14 capture sites, 400 km pipeline, storage hub) 

• Integrated commissioning requirements 

• Minimizing oil sands production disruption during integration 

Investment Opportunities & Strategic Positioning (Proponent Perspective) 

Emissions Reduction Pathway 

Oil Sands Strategy: CCS positioned as primary emissions reduction tool enabling continued production 

 Net-Zero Goal: Pathways Alliance 2050 net-zero target depends on CCS success 

 Industry Narrative: Technology enables lower-carbon oil production versus abandoning resource 

Federal Climate Policy Alignment 

Canada's Plan: Federal 2050 net-zero strategy includes CCS as pillar 

 Carbon Pricing: Rising carbon costs create incentive for capture 

 Policy Support: Government CCS support signals policy alignment 

International CCS Development 

Global Examples: Norway Northern Lights; UK clusters; US 45Q tax credit projects 

Learning Opportunity: Pathways scale would provide operational experience for sector 

Export Potential: Canadian CCS expertise and technology export 

Economic Development (Alberta Perspective) 

Job Creation: Construction and operations employment 

 Supply Chain: Supporting services and contractor opportunities 

 Oil Sands Longevity: Extends viable production timeline 

Government Revenue: Continued royalties and taxes from oil sands production 

Critical Assessment & Alternative Perspectives 

Independent Analysis (IEEFA) 

Conclusion: "Public funding of CCS is a costly gamble that may not yield tangible returns on Canada's journey towards achieving net-zero emissions." 

Key Points: 

• Cost per tonne likely exceeds revenue per tonne without efficiency improvements 

• Permanent government subsidies likely required 

• Existing Alberta CCS facilities show cost challenges 

• Operating costs growing faster than capture volumes 

• Alternative: Invest in renewable energy versus subsidizing fossil fuel emissions management 

Environmental Perspective 

Criticism: CCS extends fossil fuel production rather than accelerating energy transition 

Emissions: Upstream and downstream emissions not addressed by CCS 

Efficiency: Energy penalty of capture reduces oil sands energy efficiency 

Alternatives: Renewable energy investments versus fossil fuel subsidies 

Economic Development Perspective 

Proponent View: CCS enables continued oil sands operations supporting economic activity 

Jobs: Employment in oil sands sector and CCS operations 

Government Revenue: Royalties and taxes from continued production 

Energy Security: Reliable oil supply for North American markets 

Investment Intelligence Summary 

Risk Profile: Extreme (Indigenous consultation challenges, questionable economics, government subsidy dependency) 

Timeline: FID 2025 target unrealistic given Indigenous assessment request; 2027-2028 more probable if proceeding 

Probability: Low to Moderate (30-40%) - substantial barriers including Indigenous consultation, financial viability concerns, government funding uncertainty 

Investment Thesis (If Proceeding): 

 Pathways CCS represents high-risk investment dependent on permanent government subsidies and resolution of Indigenous consultation concerns. Independent financial analysis questions viability. Eight First Nations' impact assessment request signals substantial Indigenous opposition. Project economics rely on carbon pricing frameworks remaining favorable and government providing multi-billion dollar support. 

UK/European Investor Considerations: 

• ESG Concerns: CCS for oil sands raises questions about transition strategy versus prolonging fossil fuel production 

• Public Subsidy Dependency: $12+ billion government support expected; fiscal risk if policy changes 

• Indigenous Rights: Consultation challenges create regulatory uncertainty 

• Technology Risk: Scale-up from existing facilities; operating cost concerns 

• Policy Risk: Carbon pricing frameworks and CCS support subject to political changes 

Due Diligence Priorities: 

• Monitor federal impact assessment designation decision 
• Track Canada Growth Fund negotiations and carbon contract terms 
• Assess Treaty First Nations consultation progress 
• Review independent financial analysis (IEEFA and others) 
• Evaluate oil sands production outlook and carbon pricing trajectory 
• Compare investment returns to renewable energy alternatives 
• Understand long-term liability framework for stored CO2 

Critical Questions for Investors: 

• Why are oil sands companies not committing substantial equity if project is commercially viable? 

• Can project achieve financial viability without permanent government subsidies? 

• What happens if future government reduces/eliminates subsidy support? 

• How does consultation adequacy compare to legal standards given eight Nations' concerns? 
  
  
• Does CCS for oil sands align with investor ESG commitments?