Alberta Gets Tax Credits for Enhanced Oil Recovery

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Enhanced oil recovery uses carbon dioxide to increase well pressures to stimulate production. Alberta's government called tax credits for the practice a win-win.

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An Investment Opportunity, Alberta Says

The provincial government of Alberta praised a memorandum of understanding that extends federal tax credits for enhanced oil recovery (EOR) projects, while the nation's central bank stood pat on lending rates.

An economic update spelled out by the federal government in Ottawa extends a tax credit for enhanced oil recovery. EOR utilizes the injection of carbon dioxide into a well to increase the pressure for production stimulation, leaving the greenhouse gas stored underground. Alberta Premier Danielle Smith said the measure is a win-win because it enhances production while at the same time lowering emissions.

"EOR offers a more cost-effective and accessible pathway for companies to adopt CCUS (carbon capture, utilization and storage) technology, which is essential to Alberta's goal of producing some of the most responsible oil in the world," she said. "It also improves recovery rates and encourages further investment in the province's energy sector."

According to Industrial Info Resources, production from Enhance Energy's Clive facility in Alberta already is utilizing EOR. Enhance Energy said in a statement that operations there have permanently stored more than 7 million tons of CO2 emitted from the Alberta industrial sector since 2020.

"This project sequesters CO2 that is captured from industrial facilities that report greenhouse gases under Alberta provincial greenhouse gas regulation for large emitters and results in the sequestration of CO2 that would otherwise have been released to the atmosphere," the Alberta Energy Regulator explained.

Yves-François Blanchet, the leader of the separatist Bloc Québécois party, was quoted by The Canadian Press as expressing frustration over what he said were more subsidies for the oil and gas sector.

"What will be extracted from the ground will be, in time, conveyed through new pipelines, which will be paid by public money," he said.

Canadian Prime Minister Mark Carney has included energy programs as part of a nation-building strategy meant to encourage non-U.S. exports. Bellicose rhetoric from U.S. President Donald Trump has prompted national revival and a boycott of U.S. good and travel.

Economy Holding Up

Earlier this week, Carney unveiled the first-ever sovereign wealth fund. Around 20 projects, from critical minerals to liquefied natural gas (LNG), have been slated as national priorities. And on Wednesday, the Bank of Canada said that financial conditions were volatile because of the conflict in the Middle East, though it left its key lending rate stable at 2.25%.

Gross domestic product (GDP) is expected to expand by 1.2% annually in 2026, moving up to 1.6% by next year. Inflation is running at around 3% annually, above the 2% target rate. Carney's administration has waived a fuels tax in response to ongoing pressure from commodity prices.

"The conflict in the Middle East will affect the composition of growth, but the impact on overall growth is expected to be small because higher global oil prices increase the value of our energy exports even as they squeeze consumers and many businesses," Bank Governor Tiff Macklem said.

By the Numbers

• 7 million tons of CO2 captured by Enhance Energy's EOR operation in Clive
• 1.2% expansion for the Canadian economy this year

Key Takeaways

• Memorandum gives tax credits for EOR
• Canada wants to become an energy superpower

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).