Oil and gas well drillers want federal funding to help industry decarbonize

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CALGARY — Canada’s oil and gasoline nicely drilling sector is lobbying for a bit of the tax credit score pie with regards to decarbonization.

The Canadian Affiliation of Power Contractors (CAOEC) — which represents drilling rig and repair rig firms throughout Western Canada, in addition to offshore drilling rigs in Atlantic Canada — says its business is being unfairly excluded from among the current applications rolled out by the federal authorities which are aimed toward serving to companies cut back emissions.

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“From our perspective, we now have not recognized a single federal program that we might have the ability to acquire entry to that might assist us decarbonize, right this moment,” CAOEC president Mark Scholz informed reporters at an business occasion in Calgary on Friday.

“We predict that actually must be reviewed, as a result of that is really a transition … We have to see the help from the federal authorities within the standard drilling rig house to assist us transfer ahead with decarbonization.”

Because the heaviest-emitting sector within the nation, the oil and gasoline business is below strain to quickly cut back its greenhouse gasoline emissions as a part of Canada’s dedication to reaching net-zero by 2050.

The federal authorities has already supplied help to the sector by way of a promised tax credit score for firms that deploy carbon seize — a expertise that permits for the protected underground sequestration of dangerous greenhouse gases from oil and gasoline manufacturing. Laws to implement that tax credit score is predicted to be tabled inside weeks.

As well as, Alberta Premier Danielle Smith mentioned Friday her authorities will unveil its personal funding help for carbon seize initiatives subsequent week.

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Whereas these developments are excellent news, Scholz mentioned, they’re aimed toward oil producers themselves — not on the firms who present contract drilling and nicely servicing throughout Western Canada’s oil-and-gas-producing areas.

The drilling sector’s emissions discount efforts haven’t been as high-profile as these of the oilsands business, which is proposing a $16.5-billion carbon seize and storage venture in northern Alberta that it says will assist it attain net-zero emissions from manufacturing by 2050.

However Scholz mentioned there are lots of issues oil and gasoline drillers can do to decrease their carbon footprint, from rig electrification to hydrogen gas mixing to investing in battery vitality storage techniques for oil nicely drilling websites.

“Now we have a plan. There are prepared applied sciences right this moment that don’t must be piloted, that we may introduce in a really brief time frame,” Scholz mentioned.

“All of those can have a significant affect on our emissions, however due to the character of our enterprise we’re excluded and aren’t in a position to entry these.”

Specifically, the sector needs to be included for eligibility within the Clear Know-how Manufacturing Tax Credit score, which was introduced by the federal authorities within the 2023 finances.

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That tax credit score, which has but to be legislated, is meant to cowl 30 per cent of an organization’s prices for brand spanking new equipment and tools used to fabricate or course of clear applied sciences or extract crucial minerals.

Scholz mentioned being concerned within the fossil gas sector shouldn’t exclude drillers from this program, notably as a result of the identical rigs that drill for oil and pure gasoline can be utilized to drill exploration wells for rising industries such because the lithium and helium sectors.

“Ottawa must be extra versatile and never select one sector over one other,” he mentioned.

The CAOEC mentioned it expects 6,229 wells to be drilled in Western Canada subsequent 12 months. That’s an 8.3 per cent enhance from the 5,7648 wells drilled in 2023, which Scholz described as “modest development.”

Oilpatch exercise is predicted to choose up in 2024 thanks partially to the current completion of the Coastal GasLink pipeline and the anticipated completion of the Trans Mountain oil pipeline enlargement.

With oil costs nonetheless at worthwhile ranges, the drilling sector will make use of greater than 39,000 folks in 2024, in response to the CAOEC forecast. Whereas that is still considerably beneath the growth instances of a decade in the past, the temper at Friday’s business occasion was constructive.

“The place the dial is altering and what individuals are actually beginning to perceive is that oil and gasoline are going to be round for a really, very very long time,” mentioned Grant Fagerheim, CEO of Whitecap Sources, in a panel dialogue.

“From my perspective, this subsequent 12 to 24 months feels very, excellent.”

This report by The Canadian Press was first revealed Nov. 24, 2023.

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