He likes to joke that his job is all about “putting lipstick on coal.”
But TransAlta executive vice-president Jim Dinning didn’t have to slap on any facepaint for a roomful of delegates at the Pacific NorthWest Economic Region summit in Calgary last week as he extolled what he calls the region’s most promising energy source.
Forget the Dickensian images of its sooty past, Dinning urged, and focus on coal’s budding potential as a “clean” source of power generation, including a source of carbon dioxide that can be injected into oil reservoirs to unlock hard-to-reach reserves.
“With new technology now in development, we will be able to do with coal what we now do with natural gas, and more – including fuelling the hydrogen economy. And we should be able to do it with virtually no air emissions, including greenhouse gas,” said Dinning.
“My dream is that we should become a closed-loop system, with virtually no emissions, or that any emissions we have would find their way back into geology from whence it came.”
The Pacific NorthWest Economic Region (PNWER) is a partnership composed of legislators, governments and businesses in the northwest states of Alaska, Idaho, Montana, Oregon and Washington, the provinces of British Columbia and Alberta, and Yukon Territory. With a combined population of more than 18 million and an annual gross regional product of more than $350 billion US, the region would rank 11th among the world’s leading industrial economies if it were a nation.
Dinning sees the PNWER association as a key ally in efforts to encourage a common resource development strategy that would help tap the region’s massive coal resources and promote more research and development into the technology to make it happen.
Too much time, he added, has been wasted debating the impact of the Kyoto Protocol, to the detriment of real progress on emissions reductions. “If we focus only on emissions and emission reductions . . . then we miss a golden opportunity to develop our resource riches in a way that benefits Canadians and Americans and curb emissions at the same time,” he told the conference.
Under Kyoto, Canada is obligated to cut emissions to six per cent below 1990 levels – a predicted actual reduction of about 240 million tonnes of greenhouse gases by 2012.
Dinning is also chairman of the Canadian Clean Power Coalition (CCPC), an association of major coal and coal-fired electricity producers including ATCO Power, EPCOR, TransAlta and California-based Electric Power Research Institute (EPRI).
The coalition is spearheading an initiative to retrofit an existing coal-burning plant by 2007, halving the amount of carbon dioxide emissions of a traditional plant, or to install new low-emissions technology on a new power plant by 2010, a project that could top $2 billion.
“We are now contemplating whether we should do a demonstration project, or try to design something that would be commercial and go straight from where we are today into a commercial operation,” Paul Clark, director of fuel supply for TransAlta, told conference delegates.
A feasibility study phase of the project has shown it could proceed using currently available technology – which might include gasification, which converts coal to “clean” synthetic gas through heat, sequestration of CO2 underground, the scrubbing of flue gas and CO2/O2 combustion.
Members of CCPC are discussing how to proceed, and David Lewin, senior vice-president, environment and sustainability for Edmonton-based utility EPCOR, says a recommendation could be made by the end of summer.
“The initial indications from the first phase of this work, which was a pretty comprehensive study, were extremely positive in showing that coal can be utilized in the future and be as clean, if not better, than natural-gas burning plants,” Lewin told Business Edge.
Proponents hope the byproducts from coal production can be resold for a variety of uses, including enhanced oil recovery efforts. Carbon dioxide offers potential to get some of Alberta’s estimated 70 per cent of conventional oil resources out of the ground, said Eddy Issacs, managing director for the Alberta Energy Research Institute. “There are a lot of resources that will stay in the ground if we stay only with the current technology,” Issacs told the conference, adding that the energy sector currently accounts directly or indirectly for about half of Alberta’s economy.
However, there is still lingering uncertainty in industry over yet-to-be-developed federal rules for emissions trading, nor have any rules been introduced limiting greenhouse gas emissions or granting credits for proactive measures. In Alberta, the provincial government’s own market for greenhouse gas trading isn’t expected to be operational until at least 2005.
Clark said a Syncrude-like partnership involving industry and government is needed to achieve the same success as that seen with oilsands.
“There’s a vision here that we’re trying to create a whole new energy world to the benefit of everybody involved,” Clark added. “But it’s like turning a supertanker.”
The report makes a number of recommendations including:
* Educate oil and gas leaders that current drilling cycles lead to idle equipment for long periods, oscillating labour requirements and a higher incidence of worker injuries.
* Offer fiscal incentives such as royalties and tax reductions to companies to drill in accessible areas during the summer months, and to jointly fund road systems into these regions. B.C. recently introduced a summer drilling royalty credit for wells spudded between April 1 and Nov. 20, and is providing up to $10 million annually in royalty credits to support road infrastructure development.
* Inter-industry road construction with costs shared between forestry, fishing and hunting and other recreational users in a “user-pay” system to reduce the financial burden on the exploration sector. By providing initial access to remote regions, the report says the costs to industry would be reduced, potentially spurring incremental activity over the entire season.
* Use road assessment studies to determine the technical rationale behind the length of the road ban period.This could potentially allow for the early lifting of road bans in some cases.
* Experiment with new technologies to reduce the disturbance of natural areas, such as using wooden mats across lease sites, a practice tried by EnCana in B.C.
Bill Gwozd, Ziff Energy Group’s VP of gas services, says the study encompassed all sectors of the industry. “We looked at the historical reasons for the drilling cycle, why it exists today, and how the industry has evolved and modernized. Based on our study, the current cycle may need to be adjusted to optimize industry operations.”
The CAGC’s Herring says the impetus for the study was to pique the interest of companies to re-examine longstanding practices, with an eye to saving money and stabilizing their labour demands. The environment would be one of many issues that would have to be examined, he said.
“You can’t just say, ‘We think you should move stuff out of the first quarter into the second quarter, because in Alberta there are issues of road bans and what the transportation authorities expect to protect their infrastructure – as well as it rains in the spring, and you can’t move a lot of equipment during the rainy season.”
But the AFN’s Semenchuk says implementing the report’s recommendations would fly in the face of what he terms recent acceptance by the Alberta government and industry of the cumulative effects of development on the environment.
“We’ve been working with the oil companies and forestry companies to leave less of a footprint, and they’ve sort of accepted that they’ll have to, because of this cumulative effects problem,” he says. “This is going to leave even a larger footprint.
“There’s a big push to get all the conventional oil and gas out of this province as quickly and as easily as they can, because I think they see the public is going to start demanding more care and attention as to what’s happening to their public lands.”
Alberta Energy spokesman Gordon Vincent told Business Edge that a decision on implementing the report’s recommendations has not yet been made. He adds the department will continue to analyse the study over the next several weeks and consult with the report’s co-sponsors.
“Issues such as environmental concerns would be carefully considered before making final decisions on implementing recommendations,” he says.
CAPP’s David Pryce says the report is simply an “idea-generating” study to help raise awareness among industry players of potential options.
“It should be clear that we wouldn’t look to do anything that would be contrary to or jeopardizing the appropriate environmental management requirements,” he says.
“And we wouldn’t be pursuing anything that would relax any environmental controls – if they’re warranted controls. If there’s any sort of constraints from an environmental perspective, we would honour them, but if there were ones that were considered (arbitrary), we’d look at the basis for that, and look to sharpen the regulatory controls.”
