Canada Growth Fund has announced a strategic partnership with Strathcona Resources to build carbon capture and sequestration (CCS) infrastructure on Strathcona’s steam-assisted gravity drainage (SAGD) oil sands facilities across Saskatchewan and Alberta.
Through the SAGD CCS Partnership, Strathcona will seek to capture and permanently store up to two million tonnes of carbon dioxide annually, with CGF and Strathcona each contributing up to $1.0 billion in project funding.
Strathcona is the fifth largest oil producer in Canada, with production-related emissions of approximately 3 million tonnes of CO2 per annum from seven major oil sands facilities.
Under the terms of the SAGD CCS Partnership, CGF and Strathcona will each fund 50% of the capital costs to build CCS infrastructure on Strathcona’s oil sands facilities. CGF will initially commit $500 million in project funding, with the option to upsize its commitment to $1.0 billion.
Strathcona will build, own and operate all CCS projects and receive all investment tax credits. CGF will earn a targeted return over time 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.
Each CCS project’s fixed price per tonne will be set at the time of final investment decision.
The SAGD CCS Partnership represents a first-of-its-kind approach to CCS risk-sharing, with the emitter retaining carbon pricing risk and CGF sharing in the risk for the project’s cost and capture efficiency. 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.