Environment and Climate Change Canada (ECCC) released its proposed methodology for estimating upstream GHG emissions associated with major oil and gas projects undergoing federal environmental assessments. This follows the federal government’s announcement earlier this year of its intention to update the federal environmental review process for major pipelines (previously discussed here).

The methodology will consist of two parts: (1) a quantitative estimation of the GHG emissions released as a result of upstream production associated with the project; and (2) a discussion of the project’s potential impact on Canadian and global GHG emissions.

Quantitative Estimation of GHG Emissions

Under the methodology, “upstream emissions” will include all industrial activities from the point of resource extraction through processing, handling, and transport up to the project under review. The quantitative estimate will not include estimates of indirect emissions, such as those associated with the manufacture of equipment used for the project or grid electricity.

The quantitative estimation will involve four steps:

  1. Determine the expected throughput and distinct components of the product for the project, such as, conventional light oil, in situ heavy oils, mined heavy oil, synthetic crude oil, sweet gas or acid gas.
  2. Determine the GHG emission factor for each component of the product using ECCC’s and other publically available data.
  3. Calculate the upstream GHG emission contribution from each component of the value chain.
  4. Determine the upstream GHG emissions associated with the project by summing the calculated GHG emissions from each component of the project.

Impacts on Canadian and Global GHG Emissions

The second part of proposed methodology considers the conditions under which the Canadian upstream emissions calculated pursuant to the quantitative estimation could be expected to occur even if the project were not built. The ECCC expects to consider the following factors in its analysis and acknowledges that proponents may wish to supplement these:

  1. The current production levels and expected growth of resource production in Canada as well as the potential markets for future resource production growth with and without the proposed project;
  2. The technical and economic potential for alternative modes of transportation to be used in the absence of the proposed project; and
  3. The potential implications for Canadian and global upstream GHG emissions from the alternative modes of transport, including an analysis of the financial considerations for upstream production, and a discussion of the conditions under which the proposed project could enable upstream emissions in Canada and, where possible, outside of Canada.

Interested parties have until April 18, 2016 to provide comment on the proposed approach.