Suncor was one of the first major energy companies to adopt a climate change action plan to better manage our greenhouse gas (GHG) emissions. We continue to adapt
and refine that plan to target continuous improvement in reducing the carbon intensity of our operations.
Suncor has voluntarily reported its progress in managing GHG emissions since 1995 — and progress has been made. We have invested in technology, improved energy efficiency and reduced GHG emissions intensity at our oil sands plant by 50% compared to 1990 levels — during a period where average daily production levels tripled. But we know that much more can — and must — be done as both production volumes and the corresponding level of absolute emissions continue to grow.
"Even though we are using a lot less energy per barrel than we did 20 years ago, we're producing a lot more barrels," observes Stephen Kaufman, Suncor's Director, Climate Change Management and Solutions. "As a major oil sands operator, we recognize our responsibility in helping meet the climate change challenge. But at the same time, the oil sands industry will have an increasing role to play in meeting growing energy demands — especially at a time when conventional oil supplies are drying up. A constant focus on minimizing emissions through investment in technology innovation and maximizing production efficiency through what we call operational excellence is the surest way we can contribute to achieving both important goals."
Suncor believes our largest and most cost-effective near-term opportunity to reduce GHG emissions is through improved reliability and energy efficiency across our operations. We had further success in this area in 2010 and we continue to implement corporate-wide operational reliability and energy management programs aimed at achieving our commitment to improve our overall energy efficiency by another 10% by 2015 (as compared to 2007).
The investment in energy management, in particular, is not a single point project or set of activities, but is the development of a more comprehensive approach to our own energy use from design, construction, and ongoing operations to ensure we are as efficient as we can be given the physical and economic constraints of our facilities.
Suncor continues to invest in high-efficiency co-generation facilities and renewable energy sources, to collaboratively advance new emissions-reducing technologies, including carbon capture and storage. As a responsible energy developer, we also continue to work with governments and other stakeholders on emerging public policy solutions aimed at finding the most effective ways to reduce global GHG emissions.
What follows is an overview of Suncor's performance in 2010 as well as our major challenges and priorities going forward.
In our 2010 Annual Report, total upstream production averaged 615,000 barrels of oil equivalent (boe) through the course of 2010, compared to 456,000 boe in 2009. This reflects the fact that the 2009 volume only includes production from legacy Petro-Canada assets after the merger with Suncor closed on August 1, 2009. However, the GHG volumes that follow are for the combined company's full-year emissions in both 2009 and 2010. Intensity calculations use full-year net production and carbon dioxide equivalent (CO2e) from both predecessor companies. All numbers included here are for operated facilities and properties only, and represent 100% of the direct and indirect emissions at these facilities. (Data is not broken down by working interest and does not include non-operated facilities.)
Production numbers in Suncor's Annual Report are for upstream volumes only, and include production from non-operated assets. This differs from production numbers used in Suncor's Report on Sustainability, which include only operated facilities, but also include downstream volumes. Sustainability reports gross production on a facility basis, which is a measure of total throughput. Financial reporting is concerned with saleable products.
Absolute full-year CO2 emissions in 2010 totaled 19.2 million tonnes, compared to 19.9 million tonnes in 2009 — a 3% or 626 kilotonne decrease, mainly due to asset dispositions in Exploration and Production, improved performance at several Refining and Marketing sites, and a 230 kilotonne reduction in reported flaring volumes mainly at Oil Sands and the Edmonton Refinery. Using globally accepted GRI protocols, Suncor's reported absolute corporate GHG emissions intensity remained the same in 2009 and 2010. The emissions intensity at Suncor's mineable Oil Sands operations in 2010 was approximately 6.25% higher than in 2009, and our in situ operations (Firebag and MacKay River combined) posted a 0.5% increase in emissions intensity. Refining and Marketing experienced a 6% decrease in emissions intensity and a 4% drop in absolute emissions. For example, the Edmonton Refinery was able to reduce both absolute GHG emissions and emissions intensity by 10% and 15% respectively.
The Sarnia and Montreal refineries and the Lubricants facility in Mississauga all posted lower absolute GHG emissions and emissions intensities, as well. The intensity decreases were mainly due to improved reliability and productivity. For example, if a plant runs well below its capacity, it continues to use significant levels of energy without producing as much finished product, thus boosting per-barrel emissions rates. The Edmonton, Sarnia and Commerce City refineries have all recently completed major upgrade projects and are now looking to optimize operations using energy management and operational excellence initiatives.
At Terra Nova, our floating production, storage and offloading vessel in the Jeanne d'Arc Basin of Newfoundland and Labrador, emissions increased by 35 kilotonnes over 2009, mainly due to additional flaring and increased fuel use to counter reservoir declines. Even though production dropped by 14%, CO2e emissions only increased by 6%. At our Hanlan Robb Gas Plant near Edson, Alberta, combustion emissions dropped by nearly 40 kilotonnes or 22% due to amine train optimization, process cycle optimization and shutting down of excess equipment.
Please note: the sum of the Suncor facilities production will not equal the reported net corporate production. Inter- and intra-business unit product transfers (hydrocarbon streams that pass through more than one Suncor facility) are removed from the corporate and business unit totals to give the net production. This is done to prevent double-counting of hydrocarbon streams sent for further processing within the company. Individual facility intensities are calculated based on gross facility production; business unit intensities are calculated based on gross production totals minus intra-business unit material transfers, and the corporate GHG intensity is calculated based on net corporate production., which also removes inter business unit transfers.
Looking Ahead: The Challenge of Growth
In December 2010, Suncor announced a 10-year growth strategy to increase total production to more than one million barrels of oil equivalent per day by 2020. Of that planned production increase, it's expected approximately four of every five barrels will flow from the oil sands.
Suncor's growth strategy is in its oil sands business. That means, in the immediate term at least, absolute GHG emissions will increase. We believe we can make continued progress on reducing emissions intensity, while working towards long-term solutions to deal with absolute GHG emissions.
In terms of emissions intensity, there are reasons for optimism.
- There is significant room to improve the reliability and productivity of existing oil sands facilities — further reducing energy use and GHG emissions.
- Suncor is targeting a corporate-wide 10% improvement in energy efficiency by 2015 (as compared to 2007) in part through a significant new energy management system. That system is now in place at our Commerce City Refinery, with encouraging results. It is being deployed at our Montreal and Edmonton refineries in 2011, and continuing at other sites in 2012.
- While we believe energy savings can be achieved in all our operations, the biggest potential volume gains remain in Oil Sands.
Suncor continues to be guided by the seven-point climate change action plan we first adopted in 1997, which calls on us to:
- Manage our own GHG emissions
- Develop renewable sources of energy
- Invest in environmental and economic research
- Use domestic and international offsets
- Collaborate on policy development
- Educate employees and the public
- Measure and report our progress
Suncor expects existing and planned investments in renewables to total approximately $750 million in 2012. In 2011, Suncor completed a $120 million expansion of its ethanol production plant near Sarnia, Ontario, that doubled its capacity to 400 million litres per year. We currently participate in four wind power farms with two more scheduled for completion in 2011. Our renewable energy projects in some jurisdictions create partial offsets for GHG emissions in our operations, while opening up new business opportunities and helping Canada to begin the necessary shift to a greener energy system.
Suncor is not alone in expanding its operations; the entire oil sands industry is on a renewed growth footing. That means greater industry-wide efforts must be made to address the cumulative impacts of development — including escalating greenhouse gas emissions.
Suncor is moving on several fronts to advance potential carbon-reducing technologies, including carbon capture and storage (CCS). We continue to work with both ICO2N and the Carbon Capture Project. These groups include some of the world's leading energy companies working with both domestic and international governments — on research and development aimed at making CCS more affordable and on studies to guide future policy and regulations that will enable CCS to proceed.
As a member of the Carbon Capture Project, Suncor is leading a collaborative research and development project that would make it easier and more affordable to capture CO2 emissions at in situ oil sands plants. Favorable findings from this pilot project could advance the timetable for commercial implementation of CCS across the oil sands industry.
Suncor is also a founding member of two organizations that are bringing expertise — and investment capital — to bear on the climate change challenge.
Carbon Management Canada (CMC) is a national Centre of Excellence funded by federal and provincial governments and industry. Through work at more than 20 universities across Canada, its key mandate is to investigate cost-effective, carbon-efficient techniques for extracting fossil fuels.
The Oil Sands Leadership Initiative (OSLI), comprised of Suncor and four other oil sands companies, is focused on real solutions that lead to improved environmental performance, including carbon-reduction initiatives. OSLI's technology working group is investigating several aspects of in situ reservoir technology where member companies could make oil recovery more energy efficient — an essential step to better managing the additional greenhouse gas emissions associated with industry growth.
Visit these websites for more information:
Public Policy Participation
As Canada's largest energy company — and the fifth largest in North America — Suncor is increasingly active in public policy discussions on energy and the environment. The following provides some of our thoughts.
Suncor continues to be a strong advocate of a national sustainable energy strategy for Canada. We believe that, as a nation, we should assess our likely energy requirements 10, 20 and even 50 years down the road, determine the mix of proven and potential energy resources that can best meet those requirements, and draw up a roadmap for achieving our energy objectives in a responsible and timely manner.
Targets and goals for reducing greenhouse gas emissions would be an integral part of such a national strategy — and it would need to look at how energy is both produced and used (for example, over 70% of the greenhouse gas emissions from a barrel of oil result not from the production phase, but rather, when that oil is combusted in transportation vehicles). Improved vehicle efficiency, better building construction standards and more mass transit could all be key elements. In this way, a sound national energy strategy would also serve as a national climate change strategy.
When it comes to climate change regulations, Suncor continues to press for:
- clarity, certainty and fairness as our investors want to know what the rules are up front
- fairness (nationally and internationally) so no one industry or region is unfairly targeted or punished
- harmonization occurs across jurisdictions to avoid overlap and inefficiencies
Suncor sees GHG emissions trading and other carbon pricing mechanisms as useful tools. But we also believe that, to be effective, climate change policy must encourage the development and deployment of new technologies that will transform how we produce and use energy. Cap and trade or carbon pricing policies alone will not accomplish this; there needs to be a willingness to direct industry and public funds toward innovation as well.
Suncor continues to monitor initiatives by California, Europe and others to establish low carbon fuel standards (LCFS). We believe these initiatives may not have the desired impact of reducing overall GHG emissions. In particular, approximately 70-80 % of the life cycle emissions of petroleum-sourced fuel occur when the fuel is combusted in vehicles, and so these emissions are highly dependent on engine fuel efficiency and total miles driven — factors a California-style LCFS doesn't influence. For that reason, Suncor advocates for a "low carbon transportation framework" that would deal with reducing GHG emissions released in both the production and consumption of energy products, as well as a "smart" Renewable Fuels Standard that accelerates the development of advanced biofuels. Visit the California Energy Commission website to learn more.
Finally, recent crude oil life cycle assessment studies indicate that, on a "wells-to-wheels" basis, the carbon intensity of oil sands crude is not significantly different from other sources of petroleum supply needed to handle the world's energy demand. This includes heavy crudes produced in California and many offshore imports. Displacing GHG emissions to other jurisdictions by limiting oil sands production and importing more crude oil will not create a net benefit for the atmosphere and could compound energy security and social concerns linked with reliance on foreign imports.