International Petroleum Corp. is leaning on Canada’s government to fund emission-reduction technology for the first oil sands project sanctioned in the country in a decade.

IPC announced in February it would proceed to build phase one of its US$850 million Blackrod oil sands project. Scheduled to start producing oil in 2026 and ramp up to 30,000 barrels a day by 2028, the project is facing a rising Canadian carbon tax and possible cap on oil sands emissions.

The project has room to include carbon capture and the company would like to see more government support for the technology, Mike Nicholson, CEO, said in a phone interview. “The big game-changer is carbon capture. That’s something that we would expect to implement in future phases,” he said.

The project is unusual in that it was announced at a time when international oil companies such as Shell Plc. and BP Plc. have sold stakes in oil sands projects to local companies amid concern about climate change and long-term oil demand. No new so-called greenfield projects have been fully sanctioned since before oil prices collapsed about a decade ago. Canada’s oil sands companies, whose crude oil includes some of the highest carbon emitting grades on Earth, are instead focusing investment on reducing their carbon footprint through the deployment of carbon capture technology.

The federal government has proposed a 50 per cent tax credit on carbon capture capital investment in the oil sands but royalty relief and additional tax support would help make “these projects economic,” Nicholson said. “It definitely needs to see a positive fiscal environment from, from the province and federal government and the technology to be more mature.”

The recent surge in oil prices after the invasion of Ukraine by Russia combined with OPEC’s willingness to defend higher prices has helped support Blackrod, which is economic to build at an oil price of $59 a barrel, Nicholson said. U.S. oil futures traded above $83 a barrel on Wednesday.

The start of new pipelines out of Alberta, long a problem for the landlocked province, has also helped support the decision to move ahead with the project. The Trans Mountain Expansion pipeline to the Pacific is scheduled to go into full operation early next year and comes after Enbridge Inc.’s Line 3 pipeline expansion started operating in late 2021.