From the lack of available pipeline capacity to the potential adoption of electric cars, there is no shortage of threats facing the Canadian oilsands. But the latest menace lies in a seemingly innocuous and highly common element: sulphur.
Long a byproduct of the heavy oil industry, sulphur is so common that it’s become a part of the general landscape at mining sites such as Syncrude Canada Ltd.’s Mildred Lake facility (now majority owned by Suncor Energy Inc.), where massive blocks of sulphur byproduct are stacked several storeys high, kind of like a yellow-stained low-rise apartment complex.
Global regulators are trying to stem sulphur-dioxide emissions, which will potentially shrink the market for heavy crude, but new marine regulations targeting the sulphur content used in shipping fuel could soon force Canadian oilsands companies to stomach an even steeper discount.
“This is a very straightforward issue,” said Allan Fogwill, president of the Canadian Energy Research Institute (CERI). “What we’re facing is a devaluation of oilsands assets in the marketplace.”
Fogwill and the industry’s concern is a result of new International Maritime Organization (IMO) regulations that aim to dramatically lower sulphur content levels in bunker fuels that propel marine vessels to 0.5 per cent from 3.5 per cent. The changes come into effect January 2020.