ENERGY TRANSITION
Companies eye green plans
Another day, another step forward in the energy transition marathon.
Some days, however, can deliver two or three quick steps.
And for an energy-fuelled province like Alberta, the pace can feel a bit dizzying.
A trio of announcements Thursday signalled what the future holds for the industry, including plans by pipeline heavyweights TC Energy and Pembina Pipeline to create what it calls the Alberta Carbon Grid.
It comes in the wake of Canadian oilsands producers and energy companies moving to develop the architecture and infrastructure needed for the country to reach net-zero greenhouse gas emissions by 2050.
“We are seeing a huge mobilization of companies and commercial interests to try and get an early start on this,” Energy Minister Sonya Savage said Thursday.
“You are going to see a lot more announcements come forward.”
In one of the most significant steps, TC Energy and Pembina Pipeline Corp. have joined forces to create what it calls “a worldscale carbon transportation and sequestration system” in the province.
Together, the companies will use existing pipelines and augment them with new lines to build a provincial grid.
The two Calgary-based firms would connect their new network, which would be open to companies in various industries, to key carbon sequestration points in Alberta.
Once completed, it would be capable of shipping more than 20 million tonnes of carbon dioxide annually within the province.
By using existing infrastructure, it will “support meaningful emission reductions and … is a great example of how we can secure meaningful new investment opportunities,” TC Energy's chief executive, Francois Poirier, said in a statement.
The grid would have several routes across the province to move CO2, such as linking to the Alberta Industrial Heartland region and the oilsands. The companies say they've selected a reservoir near Fort Saskatchewan to sequester the CO2 underground, while third-party locations could also be accessed.
The project's first phase could begin operating by 2025.
No price tag was disclosed for the initiative, although a news release said the entire grid would represent “the potential for a multibillion-dollar incremental investment” by the companies.
Tolls to use the system would be “materially less than the current price of carbon in Alberta,” currently set at $40 a tonne.
“This will help form a backbone — or at least a proposal for a backbone — of infrastructure,” said Matthew Taylor, an analyst with Tudor, Pickering, Holt & Co.
“It's basically like building a highway. Once it's in place, you can transfer goods from Point A to Point B.”
Industry analysts say the project would help Canada's oilsands producers reach their goal of net-zero emissions by 2050 through the wide-scale application of carbon capture utilization and storage (CCUS) technology, burying emissions deep underground.
“It makes a lot of sense,” said analyst Elias Foscolos of Industrial Alliance Securities. “This is the low-hanging fruit that we should approach first.”
The partnership comes about a week after five major producers, representing about 90 per cent of all oilsands emissions, formed an alliance to collaborate on working toward net-zero emissions by 2050.
The group, which includes Suncor Energy and Canadian Natural Resources, also proposed the development of a CO2 trunk line that would connect oilsands operations near Fort Mcmurray — and other industries — to a carbon sequestration hub near Cold Lake.
“We are not big fans of carbon capture and storage, but what we are seeing here is serious money moving into energy transition and that's a good sign,” said Keith Stewart, Greenpeace Canada's senior energy strategist.
Some existing infrastructure is already in place. More than a million tonnes of carbon dioxide have already been shipped through the existing Alberta Carbon Trunk Line, which opened last summer.
Savage expects to see ongoing competition to build the necessary infrastructure for a low-carbon world. The inclusion in the recent federal budget of a tax credit for new CCUS projects has drawn strong corporate interest, although it needs to be more ambitious, she said.
New plans could also come with requests for provincial and federal financial help.
“We want to see federal dollars be the first dollars in and industry is going to have to fund a portion of it,” Savage said.
Companies are also studying or moving forward on hydrogen projects in Alberta.
In May, Suncor Energy and ATCO Ltd. unveiled a proposal to build a new hydrogen project near Fort Saskatchewan. Last week, Pennsylvania-based Air Products signalled it intends to construct a $1.3-billion net-zero hydrogen production and liquefaction complex in northeast Edmonton.
All of these plans potentially represent billions of dollars of new investment that would create jobs and position Alberta to be a leader in lowering emissions from oil and gas production, but it will be expensive and take time.
Other energy transition plans are also moving ahead.
ARC Financial Corp. said Thursday it's diversifying the investment mandate of its newest fund to add companies that are active in the energy transition business.
“We see tremendous opportunity in both oil and gas and energy transition,” said ARC Financial CEO Brian Boulanger.
“This is not a move away from oil and gas. But it is a growing market and there are a lot of exciting things happening.”
Finally, Avatar Innovations announced Thursday it has launched the country's first carbon-tech accelerator and selected six decarbonization ideas from energy sector workers for additional development.
Eight companies are supporting their employees through a three-month development process. They will work on projects in areas such as methane capture systems and smart grid monitoring for oil and gas infrastructure.
“Every day there is a major announcement on energy transition,” said Kevin Krausert, CEO of Avatar Innovations, which launched the clean energy accelerator, training program and a venture fund.
“It means the energy industry is changing — and it's exciting.”