TC Energy, Pembina Pipeline team up for 'Alberta Carbon Grid' project

TC Energy (TRP.TO)(TRP) and Pembina Pipeline (PPL.TO)(PBA) have announced a plan to build a carbon transportation and sequestration system able to move the equivalent of 10 per cent of Alberta's annual industrial emissions to storage sites every year.

The two Calgary-based companies said in a news release on Thursday that they will leverage their existing pipeline networks in the construction of the project. The "Alberta Carbon Grid" is meant to connect regions including Fort McMurray to sequestration locations and delivery points across the province. The project is expected to be capable of transporting more than 60,000 tonnes of carbon dioxide capacity per day, or 20 million tonnes annually.

"It is innovative partnerships like this that excite me about our collective energy future," TC Energy president and chief executive officer François Poirier stated in the release. "Industry players collaborating to leverage our existing energy infrastructure and expertise to support meaningful emission reductions and reduce our carbon footprint is a great example of how we can secure meaningful new investment opportunities."

The rise of environmental, social and corporate governance-focused (ESG) investing has put pressure on Canada's oil patch to clean up its act. Major pension funds and foreign energy firms have divested from the region, citing climate impact concerns.

TC Energy and Pembina are targeting the first phase of the project to be operational by 2025, with the fully scaled solution complete in 2027, subject to regulatory and environmental approvals.

The companies did not provide a specific price tag for the project, noting the Alberta Carbon Grid "represents the potential for a multi-billion-dollar incremental investment by Pembina and TC Energy over time." Those investments are expected to be backed by "long-term fee-for-service contracts, plus a marketing and trading pool to facilitate CO2 and carbon offset transactions."

TC Energy and Pembina say they have selected a reservoir near Fort Saskatchewan to store large volumes of carbon dioxide. The companies also plan to deliver carbon dioxide to third-party locations.

Natural Resources Minister Seamus O'Regan, Minister of Environment and Parks Jason Nixon, and Alberta Energy Minister Sonya Savage expressed support for the project in Thursday's news release.

The announcement follows a plan last week by major players in Canada's oil sands industry to build out carbon-capture infrastructure. The Oil Sands Pathways to Net Zero initiative is backed by five of the country's biggest energy producers, representing 90 per cent of oil sands output.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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