The Alberta government must invest more of its windfall profits from oil and gas royalties into research and development to transform the province into the clean-energy powerhouse of the world, says a top energy executive.
Jim Dinning, executive vice-president of TransAlta Corp. and chairman of the Canadian Clean Power Coalition (CCPC), is leading the charge to construct a multi-billion- dollar clean-burning coal facility that will reduce the province’s reliance on natural gas, a commodity that is subject to price volatility and increasingly constrained by supply in North America.
Dinning’s vision for Alberta’s future prosperity involves moving beyond a simple oil and gas economy to integrating less attractive or marginalized carbon fuels such as coal, coke, asphaltenes and biomass into the energy pyramid.
“If you put all your eggs into another basket, especially one like natural gas, you can get hooked,” says Dinning. “The last thing that we want to do is to shut down those carbons that are marginal.”
|Larry MacDougal, Business Edge|
|Jim Dinning is pushing the Alberta government to reduce its dependence on natural gas with major R&D expenditures.|
Dinning’s goal is to “put the margin back into marginal carbons,” and to take advantage of the BTUs locked up in less elegant carbons such as coal and coke, the byproduct of heavy oil upgrading.
Dinning, Alberta’s provincial treasurer from 1992 to 1997, makes no bones about the fact that he’s got his eye on Premier Ralph Klein’s job.
With a passion reminiscent of a premier-in-waiting, Dinning’s vision for Alberta involves the gasification of marginalized carbons – sometimes referred to as “dirty” fuels – to produce energy that, he says, will enable the province to meet its expanding energy needs and exceed emissions reductions under the Kyoto protocol by up to five times.
“We want to be on the leading edge of design technology and eliminate emissions through the technologies that we develop, rather than through regulation,” he says. “An international protocol (Kyoto) shouldn’t dictate what should happen in Canada and, in so doing, hobble a carbon asset.”
Adds Dinning: “Kyoto can’t match a made-in-Canada solution.”
The TransAlta Corp. VP is calling on the provincial government to increase research and development spending to levels enjoyed during the heyday of AOSTRA (Alberta Oil Sands Technology and Research Authority).
During a 25-year period, Dinning says AOSTRA received nearly $1 billion in government support for R&D studies that are widely credited in the development of a commercial oilsands industry.
“In energy research, the Alberta government is doing more than any other province,” says Dinning. “Is it enough? The answer is no.”
Gasification technology offers an elegant solution to the natural gas crunch that Alberta’s heavy-oil producers will face during the next decade, says Dinning.
In a report released earlier this year by the Canadian Energy Research Institute (CERI), natural gas consumption for oilsands extraction and refining – now sitting 0.7 billion cubic feet per day – could climb to between 2.2 and 3.7 billion cubic feet per day by 2017.
According to CERI, even the proposed Mackenzie Valley pipeline – scheduled to ship 1.8 billion cubic feet per day south – would not feed the oilsands producers’ growing appetite for natural gas.
“Injecting natural gas into the oilsands to produce oil is like turning gold into lead,” notes Dinning, in a familiar refrain.
Derivatives of the gasification process include value-added products for Alberta’s energy economy: Hydrogen needed to upgrade heavy oil; synthesis or “syngas” used to generate electrical power and steam; carbon dioxide to inject into subsurface reservoirs for enhanced oil recovery projects; and ammonia and urea, feedstocks of the petrochemical industry.
“Alberta is the sweet spot where geology meets geography,” says Dinning of the plans for a clean-coal facility in Alberta’s industrial heartland outside Edmonton. “Virtually no other place in the world has all of the elements where they come together in such an integrated fashion.”
While environmentalists often describe clean coal as an oxymoron, proponents point out that the gasification process generates emissions comparable to those produced by natural gas power plants.
The ability to “fix” carbon dioxide (the main greenhouse gas), nitrogen and sulphur, into feedstocks for the petrochemical industry means that emissions can be further reduced.
Gasification technology has been successfully used in the refining, petrochemical and power industries since the late 1940s. The two global leaders in the technology are the Royal Dutch/Shell Group of Companies and ChevronTexaco, which was recently acquired by General Electric Co.
OPTI Canada Inc.’s Long Lake project, situated 40 kilometres southeast of Fort McMurray, will employ Shell’s gasification technology to produce syngas, power and hydrogen from asphaltenes, the bottom or heavy ends of the oil barrel.
OPTI’s project represents the first commercial gasification project in Canada. Operated as a 50-50 joint venture with Nexen Petroleum Canada Ltd., the $3.4-billion Long Lake project is also the first SAGD (steam assisted gravity drainage) operation to include onsite upgrading capabilities.
GE Energy, a subsidiary of General Electric Co., employs its integrated gasification combined-cycle (IGCC) technology around the world. GE Energy operates 16 facilities in the United States, 22 in Europe and 27 in Asia.
According to Houston-based Bill Preston, director of IGCC commercialization, GE Energy produces more than five billion cubic feet per day of syngas globally.
Preston says that GE is looking at China, the United States and Alberta for new business opportunities.
“We have a very high level of interest in the tarsands themselves and in Edmonton where they refine heavy oil,” he says. “It’s just a perfect fit.
“We like the kind of stuff that nobody wants,” adds Preston. “Asphaltenes and coke have a very high energy value.”
Preston notes GE can use Alberta’s low-grade coal in conjunction with a high-grade bottoms product. GE Energy’s IGCC technology can also augment its carbon diet with biomass. “A lot of people think in terms of 100-per-cent carbon (source),” says Preston. “But, we can take a little bit of this, and a little bit of that.”
Meanwhile, the CCPC, a national association of coal and coal-fired electricity producers, recently released the results of a two-year study on clean coal. The study contemplates the construction of a demonstration plant, by 2010, that will cost on the order of $2-$3 billion.
“Gasification is the right technology for coal in the future,” says CCPC chairman Dinning.
His comments are echoed by Duke du Plessis, a senior advisor with Alberta Economic Development and the Alberta Energy Research Institute (AERI), AOSTRA’s successor agency. AERI is one of three Canadian government agencies participating in the CCPC.
“I think the conditions are right for this technology to come into commercial use,” says du Plessis. “Coal is the bridge to the hydrogen economy that everyone talks about. Hydrogen is a clean fuel and is increasingly being viewed as a fuel of the future.”
However, says du Plessis, it is unclear who will pay for the demonstration plant. “The barrier is going to be getting the funding in place.”
According to CCPC, North America’s hydrocarbon reserves are skewed by coal, which comprises 92 per cent of the reserves. Oil and gas total the remaining eight per cent of the continent’s hydrocarbon reserves. Alberta’s coal reserves – often described as infinite – are immune to the price fluctuations seen in natural gas, says Dinning. “Coal is not a carbon that should be shelved,” he says. “Coal is not only cheap – it’s not volatile.”
According to Dinning, 70 per cent of Alberta’s electricity is generated through conventional coal-fired facilities. Accordingly, TransAlta is the No. 2 greenhouse gas emitter in Canada, after Ontario Power Generation Inc.
“Why hasn’t the coal utility business done this before? Because we haven’t had to,” adds Dinning. However, he observes, market forces and the need to reduce greenhouse gas emissions under the Kyoto Protocol are powerful agents of change and energy integration.
(Susan Eaton is a Calgary-based geologist, geophysicist and freelance writer. She can be reached at firstname.lastname@example.org)