This report serves as a brief update to our September 2022 publication, Waiting to Launch: The gap between Canadian oilsands companies’ climate pledges and actions.
Broad trends remain the same. While profits in Q3 were not as exceptionally high as in Q2 (due to slightly diminished global oil prices), 2022 remains on track to be a historic year for the oilsands companies in terms of revenues, profits and free cashflow. The rate at which these windfall profits are being returned to shareholders in share buybacks and dividend payments also remains extremely high. Meanwhile, despite some announcements in recent weeks from Pathways on the “advancement” of their emissions reduction plans, it remains the case that most details of these plans — including project specifics, timelines for projects, capital allocations, or timelines for final investment decisions — remain undisclosed. Conversely, one Pathways member, Suncor, has recently announced it will invest $1 billion to increase its share in the Fort Hills mining project — demonstrating that companies remain willing to invest in assets.
While much of the focus surrounding the Pathways Alliance has been on multi-year carbon capture projects and investments, other measures could be implemented much more quickly and with less capital investment. For example, there remains a significant opportunity for Pathways members that also operate conventional (non-oilsands) oil and gas assets to invest in proven, affordable methane reduction technology and projects to reduce emissions over and above current methane regulatory requirements. In doing so, they can make real, measurable emissions reductions across their entire portfolios. This is work that could be started today.
In the coming months, individual companies are expected to outline capital spending plans for 2023. It remains to be seen if details on decarbonization investments, as well as timelines for the expected absolute emissions reductions associated with those investments, will be disclosed.
Key graphs
1. Profits slightly down overall, but net cashflow of four largest members of the Pathways Alliance continued to grow in Q3.
*Suncor’s Q3 2022 profits included a one-time non-cash asset impairment of $3.4 billion due to a lower expected value of future revenues from the Fort Hills mine. This is the main driver for net profits to be negative. Operating earnings in Q3 2022 for Suncor was approximately $2.6 billion compared to approximately $1.0 billion for the same period in 2021.
2. Cash returned to shareholders from four largest Pathways Alliance companies remains exceptionally high.
3. Research shows that using existing, proven technology to cut methane emissions from Canada’s oil and gas sector would result in 50% more emissions reductions than the Pathways plan, at a fraction of the cost.
