October 10, 2022 [S&PGlobal] – Suncor Energy, Canada’s largest oil sands producer, is ditching its wind and solar investments and shifting its focus to hydrogen and renewable fuels in pursuit of its commitment to net-zero by 2050, the company said April 4.

According to its announcement, the shift focuses the company’s net-zero efforts on “areas that are complementary to its base business,” which is extracting and refining crude oil from its oil sands operations.

“While Suncor is in the fortunate position of being long on opportunities, we are adjusting our portfolio for fit and focus,” said Suncor CEO Mark Little. “By doing so, we use our strengths, competitive advantages, and resources to drive shareholder returns and value over the long term and help us meet our emissions reduction targets.”

Part of the company’s new hydrogen strategy includes a project it announced last year, in partnership with ATCO, which would produce more than 300,000 mt/year of clean hydrogen produced using carbon capture technologies with a 90% capture rate. Most of that hydrogen, 65%, would be used to power and reduce emissions of Suncor’s existing refinery operations in Alberta. Another 20% could be used in Alberta’s natural gas grid, the company said.

Last year, incumbent hydrogen demand in oil refining, chemicals production, and ammonia synthesis contributed 2.5%-3% of global CO2 emissions, according to S&P Global Commodity Insights.

“It is especially exciting that an oil refinery has signed up to off-take this low carbon hydrogen,” said Brian Murphy, hydrogen analyst at S&P Global. “Producing low carbon hydrogen in these incumbent sectors reduces current emissions while also advancing technologies and industry knowledge that may be used for expansion into new sectors.”

Suncor’s shift to renewable fuels includes two new partnerships aimed at deploying renewable fuel technologies, with LanzaJet’s sustainable aviation fuel and Enerkem’s waste-to-fuel technology.

Suncor’s initial involvement in Enerkem occurred in 2019 when it obtained equity interest in the company, then invested another $50 million later that year. Enerkem’s two Canadian projects include a first-of-a-kind facility that turns non-recyclable and non-compostable municipal waste from the city of Edmonton into cellulosic ethanol at commercial scale and one in Varennes that will turn diverted landfill waste and wood waste into renewable chemicals and biofuels.

Suncor’s partnership with LanzaJet will help the Chicago-based company advance its renewable fuel technology, which produces sustainable aviation fuel using an alcohol-to-jet process.

LanzaJet is currently building the first alcohol-to-jet SAF production facility in Soperton, Georgia, that will use ethanol waste as a feedstock. The facility is expected to open sometime this year and will produce 10 million gal/year of SAF beginning in 2023. LanzaJet also has plans to build another 120 million gal/year plant in Hennepin, Illinois, using its alcohol-to-jet process.

Last year, LanzaJet received an investment from British Airways, which says it will power a number of its flights using LanzaJet’s SAF by the end of 2022.

Wind, solar divestments

Within the last two decades, Suncor has developed eight wind power projects within three Canadian provinces—Saskatchewan, Alberta, and Ontario, but under this new direction, these assets will be sold.

Divested wind assets include the 30-MW Magrath and Chin Chute wind farms in Alberta and the 40-MW Adelaide Wind Power Project in Ontario. The company is also divesting from two projects that are currently under construction—the 200-MW Forty Mile Wind Power Project and the 220-MW Forty Mile Solar Power Project in Alberta. Both projects are slated to begin operations later this year, and a company spokesperson said it will continue to work with contractors and suppliers to see the projects through to completion.

The company’s divestments also include “all leases, meteorological towers, wind data, and studies,” the spokesperson said.

Oil sands producers aim for net-zero

Long considered one of the world’s dirtiest oil fields, the Canadian oil sands have been producing at a rapid clip since the Russian invasion of Ukraine renewed emphasis on North American energy security. According to S&P Global, Canadian crude is forecasted to grow from 4.8 million b/d at the end of 2021 to 5.24 million b/d by the end of 2022.

But the oil field’s largest producers have said that the oil sands’ increased production of carbon-intensive crude must be coupled with emission-reduction efforts if production is to continue ramping up. Last year, Suncor and five other leading Canadian oil producers formed the Oil Sands Pathways to Net Zero Alliance for net-zero emissions by 2050. That ambition will largely rely on carbon capture and storage technology and the Alberta CCS hub within which all emissions from oil sands production could be stored.

The project, financed by public and private investment, would collect about 22 mt/year by 2030 from more than 20 oil sands operations for sequestration.

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