Late last week, the Government of Canada released a proposed methodology for estimating upstream
GHG emissions from proposed oil and gas projects undergoing federal
environmental assessment. This comes on the heels of the
Government's announcement in late January of its new guiding
principles for project review, one of which included assessment of
"direct and upstream greenhouse gas emissions linked to the
projects under review" (see our previous blog post
here). Interested parties have until April 18 to provide
comment to the Oil, Gas and Alternate Energy Division of
Environment and Climate Change Canada, following which a final
methodology will be developed.
What does "upstream" mean? The proposed methodology
defines upstream to include all industrial activities from the
point of extraction to the project under review. While the
specifics will vary by resource and project type, in general this
would include extraction, processing, handling and transportation.
The example provided in the proposed methodology is that an
upstream GHG assessment of a crude oil pipeline project would
include the following activities:
Extraction — crude oil and gas wells and oil sands mining
and in situ facilities;
Processing — field processing and upgrading, if
Handling — product transfer at terminals; and
Transportation — any pipeline operation in advance of the
Having defined the scope of what will be assessed, the proposed
methodology then sets out a two part assessment:
a quantitative estimation of the GHG emissions released as a
result of upstream production associated with the project, and
a discussion of the project's potential impact on Canadian
and global GHG emissions.
The first component, quantitative estimation, will take into
account emissions from the upstream activities "exclusively
linked to the project," such as emissions from combustion or
from fugitive, venting and flaring gas emissions. An example of a
quantitative estimate that Environment and Climate Change Canada
developed for the proposed Pacific Northwest LNG project can be
The second component is intended to assess the conditions under
which the Canadian upstream emissions estimated in the first
component could be expected to occur even if the project were not
built. The baseline for any such assessment under the proposal
would require an examination of current production levels and the
expected growth of resource production in Canada, as well as the
potential global markets for future resource production growth with
and without the proposed project.
Project proponents, opponents, and regulators that have been
through the EA process in the past will be familiar with the second
component of the methodology in particular, as uncertainty with
respect to whether upstream impacts will actually occur with or
without any particular project has frequently been relied on by
regulators in the past as a basis to deny consideration of upstream
effects. It remains to be seen whether this newly proposed
methodology, focussing not only on Canadian but also on global
market conditions for resource growth within which to benchmark a
project's emissions, will allow regulators to make the
assessments they have previously said they are unwilling or unable
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