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Cenovus exec: Carbon capture to fuel Alberta 'construction boom'

Alex Pourbaix, CEO of Calgary-based Cenovus, says he's “not expecting anything earth-shattering” on carbon capture incentives from Thursday’s government update. (REUTERS/Todd Korol)
Alex Pourbaix, CEO of Calgary-based Cenovus, says he's “not expecting anything earth-shattering” on carbon capture incentives from Thursday’s government update. (REUTERS/Todd Korol)

Cenovus Energy (CVE.TO)(CVE) sees carbon capture and storage spurring a construction boom in the oil-rich province of Alberta. However, the CEO of the integrated oil and gas firm says talks must continue with Ottawa and the provinces to hash out stronger support for the emissions-absorbing technology.

Advancing Canada's deployment of carbon capture and storage has been a topic of discussion ahead of the federal government's fall economic statement, set to be released at 4 p.m. ET on Thursday.

Senior officials, including Finance Minister Chrystia Freeland, have signalled the update could include details about Canada's response to the hundreds of billions in climate and energy spending promised by the Biden administration. However, RBC predicted on Tuesday that high inflation and an uncertain economy may limit Ottawa's initial response.

Alex Pourbaix, CEO of Calgary-based Cenovus, says he's "not expecting anything earth-shattering" from Thursday's government update.

However, the company's chief sustainability officer Rhonda DelFrari says she sees the potential for tens of thousands of jobs resulting from the construction of projects like the $24.1-billion carbon capture and storage project announced by the Pathways Alliance last month.

"That will be a real next construction boom in Alberta," DelFrari said on a conference call with equity analysts on Wednesday.

The Pathways Alliance, which includes Cenovus and five other major oil sands producers, has not made a final investment decision on the hub, to be located near Cold Lake, Alta.

"We're not in a position to execute," Pourbaix said, referring to unresolved decisions, like a ruling on whether the province or the federal government has jurisdiction over environmental permits. That said, he characterized the process as "quite productive" on Wednesday.

At the same time, Pourbaix highlights one of the chief discrepancies between U.S. carbon capture incentives, and the investment tax credit the Trudeau government rolled out in the last federal budget.

"Right now, in the U.S. are getting support both for capital investment and for operating costs," he said. "I think there is more work to be done."

Pourbaix calls the decarbonization of the industry a massive task, noting that a "mad rush" by the industry to complete projects could create problems.

"You could very significantly see both capital cost escalation, but also project delays," he said. "There's only a finite amount of craft labour and trades, and frankly procurement and other issues. We are very acutely aware of this challenge."

Cenovus reported third-quarter financial results before the opening bell on Wednesday, booking a more than threefold profit increase from a year ago. The company says it earned $1.61 billion or 81 cents per diluted share for the quarter ended Sept. 30, up from $551 million or 27 cents per diluted share a year earlier. Revenue climbed nearly 38 per cent year-over-year to $17.47 billion in Q3.

Toronto-listed shares gained 2.61 per cent to $28.66 as at 2:37 p.m. ET, adding to a more than 80 per cent gain year-to-date.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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