U.S. startup partners with Canadian producer on carbon capture study in Alberta oil sands

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A Boston-based startup, whose technology can cut the cost of carbon capture in half, is targeting Alberta’s oil sands, launching an engineering study for a commercial-scale project with an unnamed Canadian producer.

Mantel Capture Inc.’s foray into the oil and gas sector comes at a time of renewed interest in carbon capture and storage. The technology received a significant boost under the energy accord signed last month by Ottawa and Alberta that included a plan for construction of the Pathways Project. The massive CCS effort would create a 400-kilometre pipeline to transport carbon emissions to an underground storage hub. The accord aims to have the project built by 2040.

Mantel chief executive officer Cameron Halliday said while federal and provincial policy changes are still in flux, “they’re all pointing in the right direction, which is that carbon capture is the pragmatic solution people can align on and rally around.”

Mantel already has a demonstration CCS project at Kruger Inc.’s Wayagamack pulp and paper mill in Quebec, which aims to capture 2,000 tonnes of carbon dioxide each year. The company’s new partnership in the oil and gas sector is a significant step-up in scale, designed to capture roughly 60,000 tonnes of CO2 annually.

While that represents only a fraction of the 70 megatonnes of emissions produced by Alberta’s oil sands each year, it would, if successful, demonstrate how CCS could be used in the sector.

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Traditional carbon capture consumes large amounts of energy in the form of steam, making them expensive to run. But Mantel’s CCS technology instead creates steam as an end-product, which can then be used in on-site industrial processes.

Along with capturing carbon, the oil sands project aims to generate 150,000 tonnes of high-pressure steam per year.

Mr. Halliday was tight-lipped about the name of its oil producer partner, but confirmed it is a steam-assisted gravity drainage (SAG-D) operator in the Cold Lake basin, which is roughly 300 kilometres northeast of Edmonton. (The vast majority of oil sands production comes from the Athabasca basin, which is more than 400 kilometres north of Cold Lake, near Fort McMurray.)

Most oil sands are buried too deep below the surface for open pit mining, and use techniques like SAG-D to extract crude. Those sites use steam to heat and thin the heavy oil so it can flow into a well and be pumped out.

“That’s one of the reasons we’re super-excited about this project, because these folks use steam directly,” Mr. Halliday said.

Instead of CCS being a waste management tool to reduce emissions, he said, “we can start to be value creators.” That makes the economics of CCS more compelling – and, ultimately, more investable, he said.

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Clean Prosperity, a climate policy think tank, has said the memorandum of understanding struck between Alberta and Ottawa earlier this month has the potential to attract more than $90-billion in low-carbon capital investment to the province, the vast majority of which would be in the CCS space.

But to get there, projects have to be financially attractive and in a policy environment that encourages investment, Mr. Halliday said.

Unlike the United States or Europe – which mostly use only incentives or penalties, respectively – Canada takes “both a carrot and a stick” approach that couples a CCS investment tax credit with a price on carbon to motivate companies to reduce their emissions.

“Then it’s on the technology providers and the projects to be able to deliver something that actually makes sense. What we’re able to do is, by and large, cut the cost by about 50 per cent. That’s a radical change.”

While Mantel’s partner for the venture is not one of the companies involved in the Pathways project, Mr. Halliday said his company is already working with other oil sands producers.

The ultimate goal is to provide CCS technology to sites that are further north, leveraging the Pathways project to decarbonize the oil sands, he said.

“The vast majority of Canada’s CO2 emissions are coming from these industries. It would be a massive win to be able to do that in a way that doesn’t break the bank.”

Mr. Halliday said the project is being supported in part by Alberta Innovates, a Crown corporation that provides funding for research, innovation and entrepreneurship across various economic sectors.

Alberta-based oil and gas companies are particularly sophisticated on CCS, he said, owing to the deep technical expertise they have developed over years of trying to find emissions-reducing solutions for industry.

Mantel’s oil sands engineering-design study will likely be finished toward the end of 2026, Mr. Halliday said, with project execution roughly two years after a final investment decision.