Canada's largest oil sands producers signed an agreement with the Alberta government allowing them to assess the geology of an underground carbon storage site, a step in their plan to tackle greenhouse gas emissions, the companies said on Wednesday.

The Pathways Alliance, consisting of six companies representing 95% of Canada's oil sands production, is proposing a carbon capture and storage (CCS) hub that will gather and store emissions from 14 oil sands projects in northern Alberta by 2030.

The oil and gas sector is Canada's highest-polluting industry and CCS is an important plank in Pathways' plan to reach net-zero emissions by 2050. But the costly technology takes years to build, and proposed Canadian projects are relying on government support to move forward.

The CCS plan is expected to cost about CA$16.5 billion (US$12.22 billion) by 2030. Last year the Canadian government unveiled a CCS investment tax credit, but the oil industry is asking federal and provincial governments for further financial support.

The agreement announced on Jan. 4 enables the alliance to immediately start a detailed evaluation of its proposed storage hub in the Cold Lake region, which will help with field development plans to support the final application to the Alberta government.

“This agreement marks another significant milestone on the road to finalizing plans for our proposed CCS project in northeastern Alberta,” Pathways Alliance President Kendall Dilling said in a statement.

Pathways has not yet made a final investment decision on the CCS project. The alliance plans to file a regulatory application in the fourth quarter of 2023 for a proposed carbon transportation pipeline and storage network.

If the project proceeds, some facilities that do not need a carbon pipeline to reach the hub could be injecting as a early as 2026.

The Pathways Alliance includes Canadian Natural Resources Ltd , Suncor Energy, Cenovus Energy, Imperial Oil, ConocoPhillips Canada and Meg Energy.

($1 = 1.3505 Canadian dollars)

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