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Alberta Releases Second RFP for Carbon Sequestration Hubs Across Entire Province

On March 3, 2022, Alberta Energy released a second Request for Full Project Proposals for Carbon Sequestration Tenure Management (RFPP 2) seeking carbon sequestration solutions across Alberta.

RFPP 2 is highly relevant to companies interested in building, owning, and operating a carbon sequestration hub in Alberta. A carbon sequestration hub is an area of pore space overseen by a company that can effectively plan and enable carbon sequestration of captured carbon dioxide from various emissions sources as a service to industrial clients.

Carbon sequestration, specifically, the permanent disposal of carbon dioxide in dedicated geologic formations, presents a strategic opportunity for both the Government of Alberta and industry to achieve economic and environmental objectives. Well-managed carbon capture is critical for a clean hydrogen economy, petrochemical development, and enhancing environmental performance in the oil sands.

To help manage the growth in interest with respect to carbon capture and storage, the Government of Alberta (Province) is issuing sequestration rights through a competitive process and has opted to take a phased geographical approach.

RFPP 2 comes after Alberta Energy released a Request for Expressions of Interest for Carbon Sequestration Hub Proposals (REOI) in Fall 2021 and the first RFPP for the Heartland Region in Alberta in December of 2021 (RRFP 1), the results of which are expected to be announced at the end of the month. See our previous posts for overviews of the REOI process and RRFP 1.


In Fall 2021, the Province received a large number of voluntary expressions of interest which informed the carbon sequestration project. To meet the demand in a manageable manner, the Province initially requested proposals that would primarily enable sequestration of carbon emissions near northeast Edmonton through a now-closed RFPP 1. RFPP 1 sought proposals for sequestration in a region including Sherwood Park, Fort Saskatchewan, Gibbons, Redwater, Bruderheim and Lamont (known as the Industrial Heartland).

RFPP 2, instead, covers the rest of Alberta, enabling carbon sequestration of emissions primarily outside of the Industrial Heartland.

Only subsurface formations deeper than 1,000 meters with no associated hydrocarbon recovery (i.e. injection into a saline aquifer) are eligible. However, Alberta Energy expressly states within RFPP 2 that it “will continue to engage with industry in exploring the potential for other forms of sequestration including the use of mature fields … . Current practices for enhanced oil recovery and injection of formation acid gas will remain in place”. The use of mature fields and other sequestration options could further broaden the technologies and projects available for future carbon sequestration in the province.

It is not a requirement to have participated in the 2021 Request for Expression of Interest to apply for RFPP 2. The submission guidelines for RFPP 2 can be found here.

Eligibility and Exclusions

As set out in detail within Section 1.4 and Appendix A of RFPP 2, requirements for eligible projects and proponents include:

  • the eligible project must service and enable the sequestration of carbon dioxide from multiple facilities;
  • proposals should primarily target emissions that are outside of the Industrial Heartland region;
  • proponents must work with the Province to establish terms and conditions of a “hub manager” role;
  • the eligible project must capture carbon dioxide from facilities located within Alberta; and
  • proponents must provide open access to parties subject to fair and reasonable cost recovery in providing: (i) carbon sequestration services; and (ii) access by a third party to sequestration pore space to undertake injection.

Notable exclusions from RFPP 2 eligibility include:

  • rights to pore space within rights owned by the Federal government on behalf of First Nations or in National Parks, the process will only grant rights to use pore space owned by the Crown in Right of Alberta; and
  • projects that inject carbon dioxide as part of enhanced oil recovery (i.e., carbon dioxide EOR), or formation acid gas injection, will continue to operate under current mineral rights tenure systems.

Agreement under the MMA

The Crown owns all pore space in Alberta, regardless of who owns the surface or mineral rights. To gain access or rights to pore space to sequester carbon, successful projects must agree to enter into a carbon sequestration agreement (an Agreement) in accordance with Section 9 and Part 9 of the Mines and Minerals Act (MMA) as well as the Carbon Sequestration Tenure Regulation.

Per Section 9(a)(iii) of the MMA, the Ministry has the power to enter into a carbon sequestration agreement; this power is reiterated in Section 15.1(1)(3) of the MMA with respect to the use of pore space.

Per Part 9 of the MMA, there are two specific types of surface and subsurface agreements required to acquire pore space rights:

  1. Evaluation Permit: This agreement will allow the proponent to evaluate the geological or geophysical properties of a subsurface reservoir in a location to determine its suitability for use for the sequestration of captured carbon dioxide. An evaluation permit does not grant the proponent the right to recover any minerals found within the location of the permit. The term of an evaluation permit is 5 years and may be renewed.
  2. Carbon Sequestration Lease: This agreement grants the rights and sets out the terms under which a proponent can inject captured carbon dioxide into a subsurface reservoir for sequestration. As noted within Appendix A of the RFPP, the term of a carbon sequestration lease or “agreement” is 15 years with no automatic rights of renewal. However, it may be renewed for a successive 15-year term through application.

Additional key provisions found within Part 9 of the MMA include:

    1. measurement, monitoring and verification planning and reporting (see Section 116(3));
    2. an initial and updated closure plan (see Section 116(3));
    3. continuous monitoring of all facilities and performance of any closure activities (see Section 119); and
    4. obligations to pay into the Post-closure Stewardship Fund (for all carbon dioxide injected including by third parties) (see Section 122).

RFPP 2 makes it clear that the evaluation permit is intended only to offer the successful proponent the right to conduct diligence and does not guarantee that the proponent will be issued an Agreement for sequestration (i.e. a carbon sequestration lease pursuant to Section 116 of the MMA). Instead, proponents must approach the Province for an Agreement to sequester carbon supported by evidence that the proposed location is suitable.

Next Steps

The Province is accepting confidential proposals between April 25, 2022 and May 2, 2022. The Province intends to announce successful proponents by the end of October 2022. Although a step forward, we anticipate industry remains anxious for additional certainty from both provincial and federal governments. McCarthy Tétrault will continue to monitor the developments related to carbon capture and storage, including the pending release of details regarding the Federal government’s proposed investment tax credit for capital invested in certain carbon, capture and storage projects.

To discuss any questions about RFPP 2 process or for assistance with RFPP 2 submissions, please contact your trusted McCarthy Tétrault advisor or one of the authors.



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