TC Energy Corp. is set to develop a new carbon transportation and sequestration system (CCUS) jointly with Pembina Pipeline Corp., which the company said will become the backbone of the Alberta carbon capture industry.

The announcement made June 17 comes on the heels of the formally announced Oil Sands Pathways to Net Zero initiative by a group of Canadian oil and gas producers, which analysts with Tudor, Pickering, Holt & Co. (TPH) said screens favorably for the project as support from upstream customers will be critical for it to ultimately cross the finish line.

“We view this announcement constructively for both parties as it provides a critical industry solution for helping achieve emission reduction targets, while also potentially adding green infrastructure to the growth backlogs,” TPH analysts wrote in a research note on June 18.

On June 9, Canadian oil sands producers formed an alliance targeting net-zero greenhouse gas emissions from their operations by 2050. The alliance includes Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., MEG Energy Corp. and Suncor Energy Inc. working together with federal and Alberta governments.

Commenting on the proposed carbon capture project on June 17, Alberta’s Minister of Energy Sonya Savage said: “Our province’s energy industry is vital to achieving Canada’s GHG (greenhouse gas) reduction goals and Alberta companies are global leaders in reducing emissions. By working together to bring forward world-class solutions, innovative companies like Pembina and TC Energy are leading the way to our lower-carbon future.”

Together, TC Energy and Pembina plan to jointly develop a CCUS system, named the Alberta Carbon Grid, capable of handling more than 20 million tonnes of CO₂ annually. The system will connect the Fort McMurray region, the Alberta Industrial Heartland and the Drayton Valley region to key sequestration locations and delivery points across the province, and serving multiple industries.

According to the companies, the development of the Alberta Carbon Grid will include redeployment, retrofits using proven technology, recapitalization and optimization of surplus capacity across our collective pipeline systems, including, subject to closing of the transaction, through Pembina’s proposed acquisition of Inter Pipeline Ltd.

“Industry players collaborating to leverage our existing energy infrastructure and expertise to support meaningful emission reductions and reduce our carbon footprint is a great example of how we can secure meaningful new investment opportunities, serve current and future customers and achieve operational excellence while continuing to safely and responsibly deliver the energy people need,” added TC Energy CEO François Poirier.

The first phase of the Alberta Carbon Grid project is expected to enter service in 2025 with full in-service to follow in 2027.