13: Climate Action

UN SDG

Oil and gas production generates greenhouse gas (GHG) emissions and air pollutants, which can affect air quality and contribute to climate change. A key driver of Husky’s air emissions is the use of energy, such as natural gas, oil and electricity, in our operations.

Our air quality and carbon management programs achieve regulatory compliance and identify opportunities to reduce emissions. These programs are supported by our Environmental Performance Reporting System, which provides transparency and consistency of data.

Our carbon management approach and metrics are detailed in annual submissions to the CDP Climate Change Program, which are posted on huskyenergy.com. In 2018 we received a grade of B, which exceeds the sector average and is based on our disclosure of: governance, risks and opportunities, business strategy, targets and performance, emissions methodology, emissions data, emissions breakdown, energy, additional metrics, verification, carbon pricing and engagement. Our CDP response is reviewed by members of the executive team and signed by the Chief Operating Officer.

Energy Use

Total energy use dropped slightly in 2018, largely due to the turnaround at the Lima Refinery and the suspension of operations at the Superior Refinery after a fire in April 2018, offset by increases in production from our thermal facilities. Several methodology changes are identified in the Performance Data footnotes, including changes to the efficiency factor applied to our purchased electricity, the inclusion of gas used to operate incinerators and not double counting low-pressure steam used at our Lloydminster Ethanol Plant.

To improve the efficiency of our operations, we look at the most effective way to use energy. Over the last five years, using a new reservoir operating strategy, we have reduced the steam-to-oil ratio at our Tucker Thermal Project by about 35%. Using less steam lowers our energy use which reduces both operating costs and air emissions, including GHGs. In 2018 the Sunrise Energy Project used emission performance credits generated by Tucker in prior years to reduce its total compliance costs under Alberta’s Carbon Competitiveness Incentive Regulation. The credits were achieved through reducing Tucker’s greenhouse gas emissions below regulatory requirements.

Greenhouse Gas Emissions

Our Scope 1 and Scope 2 GHG emissions in 2018 decreased slightly compared to 2017, largely due to declines in conventional oil production and the turnaround at the Lima Refinery. Suspension of operations offshore Newfoundland and Labrador in November and December 2018, and at the Superior Refinery following a fire in April 2018, also resulted in reduced emissions. This was partially offset by an increase in emissions from our thermal operations.

Several methodology changes are identified in the Performance Data footnotes, including changes to the emission factor applied to our purchased electricity, the inclusion of gas used to operate incinerators and not double counting low-pressure steam used at our Lloydminster Ethanol Plant.

Husky recognizes the social, environmental and economic risks posed by climate change as outlined in the IPCC Special Report 15 on Global Warming of 1.5 C. The risks and opportunities inherent to a lower global emissions pathway are built into our Enterprise Risk Management process.

We believe there is a significant role for government to provide incentives and direct support in the development and commercialization of technologies that reduce industry emissions. Revenues generated through carbon policy and regulation should be made available to support industry research and the development and deployment of innovative practices and technology that improve efficiency and reduce carbon emissions.

Emission reduction regulations should apply a price on carbon and we support the development of a market for environmental attributes such as emission offset credits.

We incorporate carbon-related costs based on current and emerging policies in the jurisdictions where we operate, to help us understand the resilience of our existing and proposed assets to changes in carbon policy and regulation.

Our Carbon Management Critical Competency Network meets regularly to share knowledge and develop corporate strategies to manage Husky’s carbon-related risks and opportunities. The network provides updates and recommendations to the Executive Health, Safety and Environment Committee, which reports to the Board of Director’s Health, Safety and Environment Committee.

We monitor changing expectations related to carbon and climate performance and disclosure, including the Task Force on Climate Related Financial Disclosures. Through both voluntary and mandatory reporting mechanisms, we demonstrate how we manage environmental, social and governance risks, including climate change. We continue to talk to our investors and other stakeholders about their expectations related to climate change disclosure, to understand and address their priorities.

Renewable & Low Carbon Production

Renewable energy is a growing part of the energy mix and we assess opportunities to use renewable energy where it makes economic and operational sense, for example using solar pumps at our Western Canada conventional operations.

Husky helped pioneer ethanol production for use in ethanol-blended gasoline, starting almost 30 years ago. We currently operate two ethanol plants, one in Minnedosa, Manitoba and the other in Lloydminster, Saskatchewan. With total production of up to 300 million litres per year, we are Western Canada’s largest manufacturer and marketer of fuel-grade ethanol.

At the Lloydminster plant, we capture up to 250 tonnes a day of CO2 to aid in enhanced oil recovery, which involves CO2 being injected into reservoirs to increase oil production. The use of this carbon capture technology allows for the production of some of the lowest carbon intensity ethanol in Canada. From 2012 to 2018, 469,000 tonnes of CO2 was captured at our Lloydminster Ethanol Plant.

We continue to evaluate additional carbon capture technologies, including at our Pikes Peak South thermal project where we have been testing technology capturing CO2 from a once-through steam generator. One pilot underway since 2015 is capturing up to 30 tonnes per day, and a third-party demonstration pilot using different technology has been capturing 0.5 tonnes per day, with plans to increase capacity to 30 tonnes per day beginning in 2019. We believe these technologies have the potential to reduce carbon capture costs and reduce the carbon intensity of heavy oil production.

We evaluate various ways to reduce the carbon intensity of our upstream and downstream operations, using a Marginal Abatement Cost Curve (MACC) to catalogue options, including the size of emissions reduction possible and economic performance. This allows us to prioritize resources and achieve reductions at the most efficient cost per tonne of CO2e. The MACC also helps different areas of the company share information about emission reduction options.

Methane

We participated in the development of draft regulations to reduce methane emissions from oil and gas operations in Alberta and Saskatchewan, which assists in achieving reduction targets in support of the federal objective of a 45% reduction by 2025. We participate in initiatives to reduce methane emissions through the conversion of pneumatic devices, gas conservation and incineration technology.

In 2018 Husky was awarded more than 12,000 offset credits related to emissions avoided the year before at our Alberta conventional operations.

Gas Conservation

We conserve solution gas at our operations and reduce venting and flaring. Since 2014 Husky has installed 100 compressors in our Saskatchewan and Alberta operations which compress vented gas, so it can be used on-site or sold as fuel. Additional sites are planned for 2019.

Our total volume of flared and vented gas in Alberta declined by 77% between 2014 and 2018, coinciding with a 63% reduction in Alberta conventional oil production in the same period. In Saskatchewan, our total volume of flared and vented gas declined by 61% coinciding with a 49% decline in Saskatchewan conventional oil production. The reduction in flaring and venting can be attributed to the continued disposition of legacy assets, the decline in non-thermal heavy oil operations and venting reduction projects in Western Canada.

Criteria Air Contaminants

We measure and report emissions of criteria air contaminants, including sulphur dioxide (SO2), nitrogen oxides (NOX as NO2 equivalent), volatile organic compounds (VOCs) and particulate matter. This allows us to evaluate and manage emissions at the corporate and individual facility level, forecast emissions associated with future operations and achieve regulatory compliance.

The installation of a sulphur recovery unit (SRU) at the Rush Lake thermal project and increased up-time of the SRU at the Lloydminster Upgrader resulted in a decrease of more than 1,500 tonnes of SO2 emissions in 2018 from the year before. These were offset by a slight increase in SO2 emissions from our Saskatchewan thermal operations due to increased production. A decrease in NOX emissions of more than 1,100 tonnes was a result of using stack testing results for the Saskatchewan thermal projects, as required under Canada’s Multi-Sector Air Pollutants Regulation, instead of the default emission factor previously used. New regulations in Canada have changed the scope of reporting VOCs from venting sources, such as fugitive emissions from casing gas venting and tanks, resulting in higher reported VOC emissions of approximately 780 tonnes. This increase is offset by a decrease of more than 700 tonnes of VOC emissions from the Lima Refinery due to improvements in data availability through the use of our continuous emissions monitoring system, instead of using the default emission factor AP-42 provided by the U.S. Environmental Protection Agency.

Fugitive Emissions Management Program

Our Fugitive Emissions Management Program detects and ensures the timely repair of leaking equipment to reduce emissions. It improves our operating efficiency by tracking where and when leaks occur, minimizing the release of GHGs and VOCs.

Fugitive emissions, including methane and VOCs, are gas and vapour leaks from valves, piping connections, pumps and compressor seals, and other piping system components which occur as part of the normal operation of a facility or plant. We use several techniques to detect a leaking component, including highly specialized infrared cameras that provide a view of normally inaccessible locations such as tank seals and overhead piping from a distance, and ultrasonic detection, which identifies leaking components using sound. We use a third-party database to track all survey results and manage the repairs. These methods create an effective survey, repair and tracking system. Vapour analyzers and ultrasonic measurements can be used to quantify equipment leaks.

Our Downstream facilities conduct ongoing Leak Detection and Repair (LDAR) monitoring, checking applicable components and testing with a vapour analyzer. Since 2011 our LDAR program for Canadian facilities has tested more than 41,000 sources and this inventory will further expand with anticipated changes in regulations. The total number of leaks found in 2018 was 102, a more than 50% decrease from 2017, due to repairs to leaking equipment identified by the program. Overall emissions declined almost 60% year over year from 141,187 kilograms to 60,543 kilograms.

LDAR surveys are also conducted for the Upstream business. The reports are shared with facility staff, and maintenance is undertaken as needed to repair equipment leaks.