[NGW Magazine] Canada will Need Fossil Fuels

Addressing the World Gas Conference in June, Canada’s energy minister promised that fossil fuels – and especially LNG – will aid the nation’s move to a sustainable energy future.

Canada may not yet be a major player on the global LNG stage, but its minister of natural resources Jim Carr is convinced fossil fuels, and especially liquefied natural gas, will be a key component of the next, sustainable, generation of its energy industry.

Delivering a keynote address to the triennial World Gas Conference 2018 (WGC2018) in Washington DC on June 26, Carr outlined a process that began in 2017 with online submissions from 350,000 Canadians and culminated two days after his address with the release of Canada's Energy Transition: Getting to Our Energy Future, Together, a report prepared by the Generation Energy Council that synthesised discussions held during a two-day Generation Energy Forum in Winnipeg. 

The Generation Energy Forum brought together more than 600 experts and industry representatives from traditional and emerging energy sectors, alongside indigenous and community leaders from across the country and around the globe. The forum was the culmination of a six-month engagement process that touched more than 380,000 people through online participation, as well as in-person panels and workshops. 

The report, Carr said, addresses Canada’s transition to a low-carbon economy and the role fossil fuels – and especially natural gas – will play in helping to finance that transition.

“There is no fuel that is going to facilitate that transition more powerfully or affordably than natural gas and LNG,” Carr said. “As a Canadian I am very excited to talk about our LNG potential, on both coasts, and to understand that Canada is poised to be a world leader in the export of LNG to economies in Asia and in Europe that so badly need our cleaner fuel, our cleaner, affordable fuel.”

But before Canada can truly take advantage of its abundant fossil fuel resources, it needs to get past the barriers that stand in the way of resource development. Lately, and quite effectively, the biggest barrier has been getting new infrastructure – primarily pipelines – into the ground so western Canada’s land-locked natural gas and oil reserves can access global markets. 

“There is no consensus in Canada about whether or not to build a pipeline, who should build a pipeline, what should be in that pipeline, who has equity stakes in that pipeline,” Carr said. “We have very deeply held views, but they are often in contradiction to each other, and it can be very tense.”

The Generation Energy conference saw some of those views discussed and debated, leaving all the participants – environmentalists, indigenous leaders, academics who specialize in renewable energy, people who produce oil and gas – feeling somewhat uncomfortable, because they’d never spent time discussing those issues outside their own circles of influence. 

“But I told them that that discomfort is a very good thing, because if we are too comfortable, we aren’t learning; if we’re always in the safe zone, then there’s not much room to grow,” Carr said.

The council’s report outlines four transition pathways – energy efficiency, clean power, renewable fuels and cleaner oil and gas – to a low-carbon economy. “Within a generation, countries like Canada will be using less fossil fuels, and renewable power and other non-emitting sources of energy will command a much larger share of the world’s energy supply,” the report notes.

But oil and gas will continue to be a part of the global energy mix, it continues, and Canada needs to innovate to lower the carbon footprint of its conventional fossil fuel resources and compete for that demand. 

“Alongside reducing energy demand and boosting the use of clean electricity, we will continue to require liquid and gas fuels in transportation, heating and cooling, and some industrial processes,” the report says. “We must reduce the impact of those fuels by expanding Canada’s capacity to produce and use cleaner fuels – biofuels and biogas from plants and waste, for example – that can heat homes, power vehicles and support manufacturing with much less carbon pollution.” 

One path that Canada can travel is the continued development of carbon capture, use and storage technologies – which have been rolled out in the past but which are not yet in wide use.

“The next generation of these technologies has potential to be employed at a smaller scale and at a broader range of industrial facilities than is economically viable with current technology,” the report says. “There is also potential further out to employ this technology to remove carbon dioxide directly from the air.”

One of those technologies is being developed by Calgary-based CleanO2, whose CARBiNX appliance – the world’s first aggregated commercial carbon capture device – is being tested at five commercial sites across Canada, with more deployment imminent.

The device, which Paul Cheliak, vice-president, government and regulatory affairs with the Canadian Gas Association, discussed in a WGC2018 panel presentation, saves up to 20% in energy costs by increasing hot water efficiency, reduces up to 20% of greenhouse gas emissions from heating water, and captures carbon in the form of soda ash, which is then used to produce carbonate, used extensively to make soap, textiles, drilling fluids and other products. 

But reducing the carbon footprint of conventional production, the Generation Energy report says, will remain at the forefront of Canada’s move to a more sustainable economy. And while the country is the world’s fourth largest producer of natural gas and is home to the world’s third largest oil reserves, simply having the resource won’t be enough to compete in rapidly evolving global energy markets.

“Canada’s oil and gas production must be both cost and carbon competitive in domestic and international markets as the world seeks the most affordable and least polluting supplies in a carbon constrained economy,” the report says.

That means significantly reducing methane emissions at oil and gas extraction and processing sites and reducing the cost of and improving access to clean power grids for natural gas extraction and LNG delivery, so that lower carbon Canadian LNG – touted by both Carr and the BC government as the greenest in the world – can displace higher-carbon supplies.

To achieve those goals, Canada needs to set its sights on a few key priorities, the council adds, including:

• reducing emissions per unit of oil or natural gas produced;
• improving the cost competitiveness of Canadian oil and gas; and
• expanding the scope of value-added oil and gas products and services for both domestic and export markets.

The evolving global energy market will be tumultuous for oil and gas producers, the council’s report said, and competition will come not only from within the sector, but from new energy sources being developed outside it. For producers, pursuing this path begins with making their own energy use more efficient, which reduces not only their production costs but also their carbon pollution.

“This is not a new challenge for Canadian oil and gas producers – the pursuit of lower costs and less energy use has been a focus of the business for years,” the report said.

Dale Lunan