The subsidiary of Royal Dutch Shell received conditional approval from the provincial environmental regulator in Alberta for its Quest underground carbon capture facility.
The project is meant to store more than 1 million tons annually of carbon emissions associated with developments in Athabasca oil sands, one of the largest sources of oil in the world.
"This is a really important and exciting milestone for the project and takes us one step closer to implementing the first CCS project for an oil-sands operation," John Abbott, Shell's executive vice president of heavy oil, said in the statement to Bloomberg News.
The provincial regulator, the Energy Resources Conservation Board, attached 23 provisions to its consent. The energy board said the bulk of the provisions relate to data collection, analysis and reporting. It said Shell needs to seek out separate approvals if it wants to make any additions to the CCS project.
The International Energy Agency said CCS technology could potentially cut CO2 emissions from the industrial sector by as much as 4 gigatons by the middle of the century.