Can you future-proof a refinery against climate change concerns? Shell thinks so - Action News
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Can you future-proof a refinery against climate change concerns? Shell thinks so

An Alberta refinery is one of five in the world that Shell has selected globally to transform into a low-carbon energy production facility, which it intends to keep operating for decades to come, even as it aims to reach a 2050 goal of net-zero emissions.

Shell is selling off most refineries, but doubling down on Alberta

A company's sign is displayed in front of some evergreen trees.
Shell's Scotford facility has operated for about 40 years near Fort Saskatchewan, Alta. It's seen here on April 13, 2023. (Kyle Bakx/CBC)

On a sunny spring afternoon, Shell's massive Scotford industrial complex northeast of Edmonton heaves with activity.

There are dozens of smokestacks in every direction of the plant,which churns out not only gasoline and jet fuel, but propane and other materials, on a site that's larger than downtown Edmonton.

Grey and brown steel pipes snake from one building to another and back again, like a spaghetti buffet. About 50 different tanks hold a variety of oils, fuelsand gases.

At a glance, it's not the kind of facility people might imagine as part of the company's efforts to reduce its carbon emissions. But it is.

The refinery is one of five in the world that Shell has selected globally to transform into a low-carbon energy production facility, which the company says itintends to keep operating for decades to come, even as it aims to reach a 2050 goal of net-zero emissions.

"It's the ambition to be here for many decades to come," said Mark Pattenden, a senior vice-president with Shell Canada, during an interview at the Scotford facility.

A large oil or fuel tank is shown in front of an industrial facility.
The Scotford facility employs 1,500 workers, 500 long-term contractors, and thousands of short-term contractors. (Kyle Bakx/CBC)

'Top of the policyagenda'

Achieving those climate targets now less than three decades away while operating such a massive refining operation may seem far-fetched, but the company has begun to take steps toward transforming the facility.

It's a common dilemma facing many companies throughout Canada's industrial sector: finding ways to future-proof their business amid increasing concerns about the environment and the harmful effects of climate change around the globe.

"As the pandemic recedes, climate change and the transition to a low-carbon economy will move to the top of the policy agenda," said the Canadian Manufacturers and Exporters in a report, noting the transition will be difficult, but has the potential to be rewarding as "global demand for clean technology is increasing at an explosive rate."

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Canadian companies are taking different approaches in the face of environmental pressure.

Oilsands companies in Alberta are proposing to reach net-zero emissions by 2050 largely through using carbon capture and storage facilities. Last year, Suncor Energy sold its wind and solar business, but wants to expand its biofuel and hydrogen production.

Meanwhile, pipeline firm Enbridge is expanding the number of its renewable energy projects including offshore wind, while TC Energy is developing projects like pumped-hydro electricity storage

A large red and grey industrial facility is shown.
A hydrogen production facility is shown at Shell's Scotford complex. This plant uses water and natural gas to produce hydrogen that is used at the nearby oil refinery. Shell's proposed Polaris project would capture the majority of the carbon dioxide emissions from this hydrogen facility and store the gases in an underground reservoir. (Kyle Bakx/CBC)

Shell's Scotfordfacility was first built in 1984 as a refinery, and later expandedto add an upgrader to process oilsands bitumen into different types of crude oil.The two plants work together to produce gasoline, diesel and jet fuel, in addition to some gasses such as propane and butane.

A petrochemical plant on the site pumps out styrene monomer and ethylene glycol, used in products like food containers, home insulation and antifreeze.

The refinery, upgrader and petrochemical plants are all connected, and that level of integration is part of the reason why Scotford was one of the handful of refineries around the world that Shell wants to keep, the company told CBC News.It's also one of its most profitable, they added.

Changes underway

There is a general plan for Scotford to be re-invented by cutting down on pollution and by producing new types of low-carbon products. There is a specific roadmap to reduce emissions, although company officials are more vague about diversifying its product mix.

The first step in cutting emissions came in 2015, when the Quest carbon capture and storage began operating. Annually, it collects about one million tonnes of emissions and pumps the gases into a reservoir several kilometres underground.

Recently, a five megawatt solar field was built on site, and Shell has signed a long-term deal to purchase 50 megawatts of electricity from a newly-built nearby wind farm. Construction of a second solar field is underway, officials say, which will produce about 58 megawatts of electricity.

Combined, executives say the three projects are expected to cut the amount of pollution produced to power the entire Scotford facility in half.

Solar panels are shown with an industrial facility in the background.
A five megawatt solar field is located near Shell's petrochemical plant. (Kyle Bakx/CBC)

Within the next year, officials say the company will make a final decision on whether to proceed with the Polaris carbon capture and storage project, which would be much larger than the existing Quest facility. For now, the company continues developing the project,such as the detailed designs.

The carbon capture projects help cut down on pollution, but considering the size of the facility, they will only put a dent into overall emissions.

For now, the Scotford facility will continue to focus on producing oil, fuels and chemicals as there are no specific plans to change the formula. However, Pattenden said the company is exploring whether to branch out into producing other types of low-carbon energy like biofuels, hydrogen, and sustainable aviation fuel.

"They're all in play and they're all things that we're going to be considering," said Pattenden. "There's going to be other opportunities we're going to develop."

Climate concerns

Last month, scientists delivered a "final warning" on the climate crisis, calling for immediate action as rising greenhouse gas emissions push the world to the brink of irrevocable damage. At the same time, consumption of oil and gas continues to rise around the globe every year. Since Russia's invasion of Ukraine, there has been an increased focus on energy security and affordability.

Previously, Shell has sold refineries in different parts of the world and much of its Alberta oilsands operations, in part, to reduce its emissions. While Shell's divestments help the company reach its climate goals, the facilities are still in operation, just under a different ownership.

While some environmental groups want the oilpatch to stop fossil fuel development altogether, others are a bit more nuanced. The world is beginning to move through an energy transition, experts say, as there is a shift from fossil fuels to cleaner sources of fuel and power.

For a company to achieve a net-zero emission target, there is no specific game plan to follow as it can be a complex goal to achieve, said Jan Gorski with the Pembina Institute, a clean energy think-tank.

Generally, oilpatch producers should invest money toward reducing emissions from existing operations while also diversifying their business such as expanding into renewable energy and hydrogen production, he said.

To determine whether companies could be greenwashing or are earnest in their efforts, Gorski said, he looks at the size of a company's investments.

Pipes at a refinery are shown as well as a sign saying 'crude heater.'
Crude oil is refined into gasoline, diesel, jet fuel, propane and butane at the Scotford complex. (Kyle Bakx/CBC)

"The key thing to look at is how are they using their money? How are they investing their capital? What percentage of their capital is going toward reducing emissions? What per cent is going towarddiversification?" said Gorski.

"I don't have any hard and fast rules for what's good and what a company should be striving for, but those are the kind of metrics to look at."

Despite the industry's record profits last year, only about five per cent of worldwide investment by the oilpatch went to wind, solar and other renewable energies in 2022, according to theInternational Energy Agency, up from one per cent in 2019.

Last year, Shell invested about $3.5 billion globally on its renewables and energy-solutions business, which includes a variety of technologies from wind and solar farms, to carbon offsets, carbon capture and biofuels. The level of spending made up about 14 per cent of total capital expenditureslast yearand executives have said that level of spending will remain steady in 2023.

At Scotford, the refinery, upgrader and petrochemicals plant will remain the centrepieces of the facility, even as renewable energy and other additions are made. How quickly Shell offers new products at the site, like biofuels, will depend on demand from their customers, executives say.

"This is how we will move through the energy transition," said Pattenden. "Affordable energy, available energy, but also a decarbonised energy are all going to be really important aspects."

Two aerial photos of an industrial facility.
An aerial view of the Scotford facility in 1984, top, and a more recent photo of the site. (Supplied by Shell Canada)