Alberta, Ottawa and oilsands companies reach Pathways agreement

CALGARY — A multibillion-dollar plan to transport and store oilsands greenhouse gas emissions is one step closer to reality after the Alberta government, Ottawa and five oil majors agreed to advance the Pathways Project while working to increase Canada’s bitumen production.

Pathways is a condition for a new West Coast oilsands pipeline moving ahead, and would serve to offset some of the carbon dioxide emissions that infrastructure would enable.

The governments have agreed to pursue regulatory and fiscal policies that would spur oilsands growth, which in turn would ensure the pipeline from Alberta to a tanker port in southern British Columbia can be filled.

The Pathways agreement was announced Monday, but signed on July 2 — the same day Alberta filed its pipeline proposal to the federal major projects office.

“The biggest nation-building projects in Canada’s history have succeeded through partnership. This agreement shows what can be achieved when governments and industry work together to grow our economy, strengthen our energy security and unlock new opportunities for people across Canada,” Alberta Premier Danielle Smith said in a news release.

The Pathways-pipeline quid pro quo was part of a sweeping accord Ottawa and Alberta signed in November on a wide array of energy matters.

“Over the last eight months, we have been steadily delivering on each commitment in the Canada-Alberta MOU, working with Alberta and the energy industry to build major energy infrastructure, reduce emissions, create jobs and prosperity, and secure energy sovereignty,” said Tim Hodgson, the federal energy and natural resources minister.

The federal government has committed to extending investment tax credits of 50 per cent on eligible carbon capture equipment and 37.5 per cent for associated transportation, storage and use equipment. Those rates, now valid until 2035, were previously to have been in effect until 2030.

Ottawa is to also introduce legislation enabling investment tax credits for enhanced oil recovery — 25 per cent on carbon capture equipment and 18.75 per cent for transportation, storage and use. Enhanced oil recovery involves injecting carbon dioxide into mature oil fields to boost production.

For its part, Alberta committed to finalize its own incentive program for carbon capture. The province also agreed to “implement financial supports to encourage the oil production growth required to underpin” the new West Coast oil pipeline and expansions planned for other pipelines.

The agreement announced Monday also includes incentives for the companies under Alberta’s carbon pricing regime if they meet certain milestones.

It says the Pathways Project would proceed in stages, with infrastructure in service by Jan. 1, 2032, and the project completed three years later.

The members of the consortium behind the Pathways Project are Canadian Natural Resources, Imperial Oil, Suncor, Cenovus Energy and ConocoPhillips. Collectively, they’re known as the Oil Sands Alliance.

“We believe we’ve achieved a framework that is positive for the oilsands industry and provides a step forward to help enable production growth and to advance the Pathways Project,” said Kendall Dilling, president of the Oil Sands Alliance.

The project involves a pipeline network that would carry carbon dioxide captured from various oilsands site in northern Alberta to an underground storage hub near Cold Lake, Alta.

The project had initially been estimated to cost $16.5 billion. At an energy conference in June, Cenovus CEO Jon McKenzie said it would likely be between $20 billion and $30 billion.

The alliance said that the Pathways Project will have the capacity to transport and store about six million tonnes per year of captured CO2 by the mid-2030s. The parties are aiming for another 10 million tonnes of reductions by 2045.

The Oil Sands Alliance had earlier targeted 22 million tonnes of emissions by 2030.

Oilsands and thermal heavy oil production contributed 92 million tonnes of CO2 emissions in 2024, according to the federal government’s latest national inventory report released this year.

“Imagine the smallest of fig leaves, but the leaf is actually made of plastic,” said Keith Stewart, senior energy strategist at Greenpeace Canada.

“This is a master class in greenwash, as the pollution reductions committed to in this agreement are only seven per cent of current carbon pollution from the oilsands and would be dwarfed by the additional pollution enabled by a new, taxpayer-financed pipeline.”

The agreement includes a commitment for Pathways to make “reasonable” efforts to use Canadian construction materials.

Future binding agreements between the federal and Alberta governments and each of the Oil Sands Alliance partners are to be signed on or before Nov. 15.

This story was first published by The Canadian Press on July 13, 2026.

Companies in this story: (TSX:CVE) (TSX:IMO) (TSX:SU) (TSX:CNQ)

Lauren Krugel, The Canadian Press