May 11 (Reuters) - Canada's Suncor Energy (SU.TO) will partner with utility ATCO Ltd (ACOx.TO) to develop a clean hydrogen project near Fort Saskatchewan, Alberta, in one of the most significant steps taken by an oil sands producer to cut greenhouse gas emissions.
Canada's cash-rich oil sands firms are facing mounting pressure to spend on transitioning towards cleaner energy at a time when Prime Minister Justin Trudeau has pledged to cut carbon emissions 45% below 2005 levels by 2030.
Suncor and ATCO expect to make a sanctioning decision in 2024 and, if finalized, the project could be operational by 2028.
The hydrogen project would be the biggest in Canada and among the top quartile globally. It would produce more than 300,000 tonnes per year of clean hydrogen, and cut carbon emissions in Alberta by more than 2 million tonnes per year.
Canada emits 729 million tonnes of greenhouse gases annually.
The country already produces 'grey' hydrogen using emissions-intensive industrial processes. The Fort Saskatchewan project would produce 'blue' hydrogen, which uses the same process but captures and stores the resulting carbon dioxide.
"One of the opportunities for the journey to net zero for the country is to convert grey hydrogen to clean hydrogen," Suncor Chief Executive Mark Little said in an interview.
Around 90% of the emissions in the hydrogen production process would be captured, the companies said. Roughly 65% of the produced hydrogen would be used in refining processes at the Suncor Edmonton refinery in Alberta, while another 20% could be used in the Alberta natural gas grid.
Suncor will construct and operate the hydrogen production and carbon sequestration facilities, while ATCO will construct and operate associated pipeline and hydrogen storage facilities.
The multi-billion dollar project requires further regulatory certainty and financial support from government to go ahead, said ATCO CEO Nancy Southern.
"We need to get on with it if we want to achieve that 45% (emissions reduction) by 2030," Southern said.
Our Standards: The Thomson Reuters Trust Principles.