Canada's largest oil sands producers have set a final investment decision window of late 2027 to early 2028 for the Pathways carbon capture and storage project, a multibillion-dollar scheme now scaled to handle 6 million tonnes of CO2 through a new pipeline and storage hub.

Kendall Dilling, president of the Oil Sands Alliance industry group, told Reuters the six-company partnership expects to conclude negotiations with the Alberta and federal governments on financial terms by mid-November, clearing one precondition for sanction.

"This, of course, depends on regulatory approvals and several other factors, but in my view, the window is from late 2027 to early 2028," Dilling said.

The alliance comprises Canadian Natural Resources, Imperial Oil, Suncor Energy, Cenovus Energy and ConocoPhillips Canada. The companies first tabled the project in 2021, but cost has blocked progress ever since. In June, Cenovus chief executive Jon McKenzie put the potential bill at C$30 billion and warned the figure could undermine the competitiveness of Canadian producers already paying the federal carbon tax.

Reshaped scope

The original 2021 concept targeted 22 million tonnes of emissions reductions by 2030. The revised design is staged: 6 million tonnes by the mid-2030s, with a further 10 million tonnes by 2045. The first phase covers the CO2 transport pipeline and the 6-million-tonne storage facility.

Environmental groups criticized the downsizing. Dilling defended the new parameters as a realistic response to construction complexity and cost control.

"The previous proposal had an incredibly ambitious scale and timeline that, in my view, would have been very difficult to manage while keeping costs under control," he said.

Government conditions

In July, the producers signed an agreement with both levels of government setting out conditions for advancing Pathways, covering the carbon price, public financial support and the permitting process. Some of the proposed policy changes have not yet passed into final legislation, and completing that regulatory work ranks among the decisive factors in the FID.

The project also sits inside a broader political bargain. Prime Minister Mark Carney has backed Alberta's vision for a new export pipeline to the Pacific coast with capacity of 1 million bpd, but he has tied federal support for that route to Pathways proceeding. Several oil and gas executives have publicly criticized that linkage.

Dilling acknowledged that competitiveness remains a live concern but rejected suggestions that industry enthusiasm for carbon capture has faded.

"Global attention to the climate issue has indeed weakened somewhat today, but the industry is taking a long-term view. If, in 10 years, emissions per barrel once again become important globally, we will not be playing catch-up. We will already be ahead of the curve," he said.

Pathways remains central to Canada's parallel effort to raise oil production while cutting greenhouse gas output, and it appears in cooperation agreements between Ottawa and Alberta on oil sector development.

What to watch

Three gates stand between the alliance and sanction: the mid-November close of financial-terms negotiations, passage of the outstanding policy changes into law, and regulatory approvals for the pipeline and storage complex. On an optimistic timeline, producers could reach FID in late 2027.