Backgrounder: Emissions Reduction Fund Onshore Program

The Government of Canada launched the $750-million Emissions Reduction Fund (ERF) as a COVID-19 response measure to support oil and gas workers by supporting investments that reduce or eliminate methane and other GHG emissions from oil and gas operations.

The ERF comprises three streams:

• Onshore Deployment Program ($675 million): Supports the deployment of infrastructure and  clean solutions to reduce or eliminate methane and other GHG emissions from venting and flaring in upstream and midstream oil and gas operations. Provides a 75 percent/25 percent mix of repayable and non-repayable funding. 
• Offshore Deployment Program ($42 million): Supports the deployment of technologies to reduce GHG emissions from Newfoundland and Labrador’s offshore oil and gas industry and to improve the environmental performance of oil spill-related activities. Provides fully repayable funding.
• Offshore RD&D Program ($33 million): Supports research, development and demonstration of technologies and solutions that reduce GHG emissions in Newfoundland and Labrador’s offshore oil and gas industry. Provides fully non-repayable funding.

The ERF is administered by Natural Resources Canada. The Onshore Program will operate over eight fiscal years, with primarily repayable contributions disbursed between 2020–21 and 2022–23, followed by a five-year repayment period ending in 2027–28. The fund will complement current federal regulations addressing major sources of emissions in the oil and gas sector.

Projects that incinerate, combust or flare previously vented natural gas or those that exchange high-bleed to low-bleed pneumatic devices are eligible for fully repayable contributions, similar to interest-free loans.

Gas gathering or conservation projects that eliminate routine flaring and venting and exchanging high-bleed or low-bleed pneumatic devices to zero bleed are eligible for partially repayable contributions, where a portion of the funding is non-repayable, similar to a grant. The non-repayable portion is determined on a sliding cost per tonne basis.

The ERF Onshore Program is supporting the deployment of much-needed methane gas conservation infrastructure, especially in under-serviced regions, where the methane would otherwise be released into the atmosphere.

The most recent outcomes of the ERF Onshore Program are encouraging. They include:

• 30 contribution agreements totalling almost $134 million in funding supporting 81 projects across British Columbia, Alberta, Saskatchewan and Manitoba. Almost all companies are small and medium-sized enterprises.
• Twelve months after project completion, 4.6 megatonnes of carbon dioxide equivalent of emissions reductions are expected. Over 97 percent of these reductions are from companies opting to fully eliminate methane emissions from targeted sources.
• Over a period of 10 years, it is expected that these projects will reduce 29 megatonnes of carbon dioxide equivalent of emissions reductions, 97 percent of which will be achieved at a cost below $20 per tonne. Approved projects have some of the lowest costs per tonne in the industry compared with other decarbonization pathways.

Below is a list of the companies that signed agreements under the first two application periods:

Intake 1

• Proponent: Astra Oil Corp.

        ERF funding of up to $9,056,223

• Proponent: Danzig Resources Ltd.

        ERF funding of up to $188,625

• Proponent: Deltastream Energy Corp.

        ERF funding of up to $17,681,587

• Proponent: Goose Creek Resources Ltd.

        ERF funding of up to $514,875

• Proponent: Journey Energy Inc.

        ERF funding of up to $190,668

• Proponent: Mcland Resources Ltd.

        ERF funding of up to $1,162,500

• Proponent: NuVista Energy Ltd.

        ERF funding of up to $548,809

• Proponent: Rising Star Resources Ltd.

        ERF funding of up to $437,856

• Proponent: Spur Petroleum Ltd.

        ERF funding of up to $7,059,851

• Proponent: Steel Reef Infrastructure Corp.

        ERF funding of up to $12,761,466

• Proponent: Teine Energy Inc.

        ERF funding of up to $11,272,533

• Proponent: Tidewater Midstream and Infrastructure Ltd.

        ERF funding of up to $627,036

• Proponent: Todd Energy Canada Ltd.

        ERF funding of up to $577,653

• Proponent: Tundra Oil and Gas Ltd.

        ERF funding of up to $8,747,000

• Proponent: Yangarra Resources Ltd.

        ERF funding of up to $464,253

Intake 2

• Proponent: Cor4 Oil Corp

        ERF funding of up to $178,917

• Proponent: Crescent Point Energy Corp.

        ERF funding of up to $7,865,275

• Proponent: Halo Exploration Ltd.

        ERF funding of up to $9,316,981

• Proponent: Hammerhead Resources Inc.

        ERF funding of up to $194,964

• Proponent: Headwater Exploration Inc.

        ERF funding of up to $18,474,564

• Proponent: IPC Canada Ltd.

        ERF funding of up to $1,192,498

• Proponent: NuVista Energy Ltd.

        ERF funding of up to $232,350

• Proponent: Ridgeback Resources Inc.

        ERF funding of up to $2,016,135

• Proponent: Rising Star Resources Ltd.

        ERF funding of up to $668,000

• Proponent: Spur Petroleum Ltd.

        ERF funding of up to $5,634,509

• Proponent: Steel Reef Infrastructure Corp.

        ERF funding of up to $7,140,976

• Proponent: Surge Energy Inc.

        ERF funding of up to $2,140,583

• Proponent: Tamarack Acquisition Corp.

        ERF funding of up to $8,902,456

• Proponent: Tourmaline Oil Corp.

        ERF funding of up to $4,141,500

• Proponent: West Lake Energy Corp.

        ERF funding of up to $636,844

• Proponent: Whitecap Resources Ltd.

        ERF funding of up to $1,104,266

• Proponent: Yangarra Resources Ltd.

        ERF funding of up to $915,750