The oil and gas industry could save $1 billion a year by using more environmental technologies, but needs government support to do so, says a report by Petroleum Technology Alliance Canada (PTAC).

Greater use of such technologies would reduce pollution and greenhouse gas emissions, and lower oil and gas production costs, says PTAC president Eric Lloyd.

"The oilpatch could save $1 billion every year by introducing up-to-the-minute technologies for reducing greenhouse gases, which have the happy side effect of slashing energy bills and the amount of wasted reserves," he says.

PTAC is a Calgary-based not-for-profit association that facilitates collaborative research and technology development to improve the financial, environmental and safety performance of the upstream conventional oil and gas industry - the sector that finds, drills for and produces oil and gas.

In a report released last week, PTAC looked at the barriers to the upstream industry deploying environmental technologies and ways to overcome these barriers. The report was done for PTAC's technology for emission reduction and eco-efficiency committee by Deep Blue consulting firm in Calgary.

It recommends that the federal and provincial governments encourage development of "best-practice" environmental technologies, by giving investors a refundable tax credit equal to 30 per cent of the funds they invest in companies that develop such technologies.

The federal government should also increase its scientific research and experimental development tax credit program for environmental technology developers, it says.

To encourage more demonstration projects of environmental technologies, governments need to provide greater funding for such projects and for independent evaluation of the technologies, PTAC's report says.

"To get more uptake on environmental technologies, there needs to be more incentives," says Denis Gaudet, PTAC's director of technology transfer.

Alberta Energy's $200- million innovative energy technologies program, which offers royalty credits to companies for developing novel technologies to recover more oil and gas, should be "greened" to benefit environmentally responsible recovery of the resources, the report recommends.

"We think there should be a similar incentive geared toward environmental technologies and greenhouse gases and emissions reductions," Gaudet says.

The industry has identified cost as a big barrier to using more environmental technologies, he adds. "In fact, in many cases, they save us money."

The savings have been confirmed in a three-year pilot program by Calgary-based CETAC-West, aimed at improving energy efficiency and reducing emissions at some of Alberta's largest natural gas-processing plants.

CETAC-West, or Canadian Environmental Technology Advancement Corp. West, is a private, not-for-profit group that helps small and medium-sized companies develop and commercialize new environmental technologies.

Its "eco-efficiency" program involved conducting comprehensive energy-use and operating-efficiency audits in 16 oil and gas plants.

Based on the audits' findings and subsequent improvements made at several of the plants, all such facilities in Alberta could save about $300 million a year on the cost of natural gas used as fuel to run the plants, says Joe Lukacs, president and CEO of CETAC-West.

They would also reduce their greenhouse gas emissions by a total of 2.8 million tonnes annually, he says.

The plants could save an additional $240 million a year on electricity costs and cut emissions even further, Lukacs says. "The beauty of this program is that it's all driven by economics, and the greenhouse gas benefits are going to be a byproduct - a bonus."

The audits involved a team of consulting specialists examining virtually every component in each oil and gas plant for ways to make the entire gas-processing operation as energy efficient as possible.

The audits found that operating costs and greenhouse gas reductions could be reduced by 10 to 30 per cent on average at each plant - some of which are more than 30 years old.

"We went away from some of the plants with significant realized benefits immediately," simply by adjusting and fixing equipment and modifying operating procedures, says Don Colley, a service industry consultant who co-ordinated the audits.

Companies haven't been interested in improving energy efficiency at their plants and other oilfield operations, because until the last couple of years the cost of natural gas and electricity has been relatively cheap, says Blaine Lee, a CETAC-West consultant.

"Part of it also is the fact that they've not had the time or the resources to be able to identify some of the issues that the audits brought out," he says.

Lukacs says CETAC-West is seeking additional funding from government and industry to continue the eco-efficiency program for at least another three years.

"I feel very strongly that if this program doesn't get continued, there isn't enough commitment yet in the industry to pick it up and carry it on," Lukacs says.

Gaudet says PTAC found that upstream oil and gas companies are more willing to deploy environmental technologies that provide a quick turnaround on the investment - typically within a year or two.

"It's not good enough to reduce environmental impact just for the sake of reducing the impact," he says. "There needs to be an economic payout."

PTAC's report recommends that a government-industry group be formed to identify best-practice environmental technologies, and establish a "one-window" access to resources to support their development and implementation.

Governments need to play an important role by "backstopping" greater use of environmental technologies through regulations, enforcement and communication to the public, PTAC recommends.

The oil and gas industry significantly cut spending on research and development in the early 1980s to mid-1990s, when in some years its return on investment was only two to three per cent, Gaudet notes.

Now that the industry is enjoying healthy profits, some companies are starting to boost spending on R&D and new technologies, he says.

Adds Gaudet: "If they can reduce their energy use and greenhouse gases and emissions, and if they can save money at it ... ultimately it's a win-win for the companies and for the environment overall."

(Mark Lowey can be reached at mark@businessedge.ca)