Power for the future [Global Gas Perspectives]

The Canadian government released draft Clean Electricity Regulations (CER) in the summer of 2023 hoping to fast-track the decarbonisation of power systems in Canada by mandating strict emissions limits which all but ruled out new gas-fired power generation.

The goal was to make Canada’s power system net-zero by 2035, but the regulations were nearly universally condemned, not only by Alberta and Saskatchewan, where gas is the fuel of choice for power generation, but also in Ontario, where nuclear meets most electricity needs and natural gas contributes less than 10% to the province’s annual power supply.

Alberta Premier Danielle Smith said the planned regulations would create a national power system that was “massively unaffordable, dangerously unreliable and utterly unconstitutional.”

Toronto consultancy LFX Associates, meanwhile, released a report that said eliminating gas from the grid would yield “no measurable benefits” to Ontario’s air quality or the global climate. Instead, the new rules would push power prices in Ontario 60% higher and reduce grid reliability.

After consulting with the provinces, which hold constitutional authority over their power supply, and with generators, utilities, indigenous groups and environmental organisations, Ottawa is walking back some of the most contentious parts of the draft CER, including one that would require new gas-fired generation after 2035 to include carbon capture and storage (CCS) capabilities.

Now, Ottawa said, it will require new units built after 2035 to meet emissions intensity targets using “best available” technologies.

The power of CCS

But Mike Belenkie, CEO of Advantage Energy subsidiary Entropy, which is pursuing CCS opportunities in Alberta, Saskatchewan, Ontario and parts of the US, has already read the tea leaves and sees a strong future for CCS in power generation, whether or not it is mandated by government regulation.

“We see the baseload power market growing very rapidly and within that growth there will be material desire for that to be decarbonised power, and we will be the first in the world to have a decarbonised power plant built and operating,” Belenkie says.

He’s referring to Entropy’s plans at Advantage Energy’s Glacier gas plant in Alberta, where modular CCS technology is today capturing and storing 32,000 tonnes/year of CO₂ emissions and where a C$127mn second phase will capture another 160,000 tonnes/year – including 70,000 tonnes/year from a 15 MW gas-fired power generating turbine Entropy will install at Glacier.

Half the power from that turbine will be sold to Advantage Energy to meet gas plant power needs, with the rest sold into the provincial power grid, making Entropy not just a CCS developer but also a producer of decarbonised power, Belenkie says, adding that carbon credits generated will be sold to the Canada Growth Fund through a 15-year carbon capture offset agreement.

“This two-pronged revenue stream is fully, contractually underpinned and allows us to grow our company faster (and) also grow our emissions capture faster within our own control,” he says. “We are now willing to pursue more of this power generation type of investment, to be complemented by carbon capture. We can sell that decarbonised power to the consumer, with no green premium required.”

Entropy’s Glacier project represents the first deployment of both its modular carbon capture and storage (MCCS) technology, and its integrated CCS (iCCS) technology in which a gas-fired reciprocating engine fabricated with carbon capture capabilities was installed as part of Phase 1b at Glacier.

Phase 2 incorporates iCCS technology on nine gas-fired engines and the gas-fired power generating turbine. Modules are being fabricated now, Belenkie says, and on-site construction will likely start this winter.

“In total, Glacier will become a 200,000 tonnes/year capture project,” he says. “It remains the only natural gas-fired CCS project in the world and is going to become one of the biggest operational CCS projects in the world, of any type.”

Phase 2 of Entropy's Glacier CCS project will increase capture capabilities to 200,000 tonnes/year of CO₂. [Image: Entropy]

Advantage Energy, along with Allardyce Bower Consulting, formed Entropy in 2021 to monetise the MCCS technology they had developed, which can be retrofitted to most point-source CO₂ emission sources to decarbonise hard-to-abate sectors like power generation, blue hydrogen production, natural gas liquefaction and cement and steel production.

Think small

Unlike many larger CCS projects that launched with much fanfare – the C$1.5bn CCS project at the coal-fired Boundary Dam plant in Saskatchewan and the C$1.3bn coal-fired Petra Nova facility in Texas come to mind – Entropy started small, with a one tonne/day pilot plant at the University of Regina five years ago.

Boundary Dam, where capture rates have achieved only 65% of capacity, carries a capture efficiency cost of more than C$2,300/tonne/year, while Petra Nova in the three years it operated between 2017 and 2020, captured just 69% of design capacity at a capture efficiency cost of C$1,355/tonne/year.

Petra Nova, owned by NRG Energy and JX Nippon Oil, was shut down in 2020 but in 2022 JX Nippon Oil acquired NRG Energy’s share in the facility and restarted it in September 2023 as a “research project” to study CCS technology.

Entropy’s Phase 1 at Glacier, by comparison, has captured up to 98% of its design capacity at a capture efficiency cost of C$600/tonne/year, with Phase 2 expected to achieve a similar capture efficiency, Belenkie says, with the success so far achieved primarily because Entropy’s reach didn’t exceed its grasp.

“If people call us and say they want to look at a 2.5-3mn tonnes/year project we say we’re not interested,” Belenkie says. “We don’t believe those projects will get built and if they do get built they could be disastrous because you need practice at these things.”

Entropy proved its technology at the pilot plant in Regina before moving on to develop Phase 1a at Glacier, which captures 16,000 tonnes/year, followed by Phase 1b, which captures another 16,000 tonnes/year.

“This (is) fussy, nuanced, advanced technology and you have to practice running these things,” he says. “That is how you get good at it. Of all the different stuff in the world that is useful to us now, they didn’t start by building a rocket ship – they started by building a plane.”

Alongside its July final investment decision (FID) on Glacier Phase 2, Entropy said it had also signed an agreement to jointly develop a data centre powered by gas-fired turbines decarbonised with its iCCS Turbine™ technology. The project would involve the construction of baseload power generation and the capture and storage of CO₂ emissions at an Entropy-developed CO₂ storage hub, but beyond that, Belenkie isn’t in a position to provide further details.

“Our partners are very careful around publishing information because their clients are all very large brands that are brand-conscious, and each piece of information has to be very carefully brought out,” he says. “I hate being cagey but I was asked specifically to not publicise the specific location – we have been working with this provider on projects both in the US and Canada, but we think that the best place to invest in new baseload power for things like date centres is Alberta.”

Alberta is ground zero for CCS developments

Alberta has the most advanced regulatory framework in the world for CCS, Belenkie says, with the province’s Alberta Carbon Capture Incentive Program (ACCIP) offering a grant of 12% of new eligible capital costs. Additionally, CCS projects in Alberta will qualify for the federal CCS investment tax credit, which provides a refundable tax credit of 50% of qualified expenditures for CO₂ capture and 37.5% of qualified expenditures for CO₂ storage.

The business case for carbon capture in Alberta also moved methanol producer Methanex and Entropy to invest in a preliminary front-end engineering and design (pre-FEED) study for carbon capture, utilisation and storage (CCUS) at Methanex’s Medicine Hat facility in southern Alberta.

The C$100mn facility, if it moves ahead, would capture about 130,000 tonnes/year of CO₂ from the manufacture of methanol from natural gas, with a portion of the captured CO₂ used as feedstock to produce 50,000 tonnes/year of additional methanol. The remaining CO₂ would be sequestered.

The Methanex methanol production facility in Medicine Hat, Alberta. [Image: Methane]

“The business case here is to lock down the understanding of the revenue streams, including whatever ITCs are available, make the investment, build the investment and run it for a minimum of a decade or two,” Belenki says. “Some of the regulations dealing with carbon utilisation are not as well-advanced as for carbon capture and storage, and in particular the federal regulations are not as advanced – we don’t have total certainty on what the ITC offers for carbon utilisation.”

Elsewhere, Entropy is working on pre-FEED contracts for capture projects at a large industrial emitter in Ontario, a gas-fired boiler project in Alberta and a gas-fired steam generator in Saskatchewan. Together with Glacier Phase 2 and a project under development in the Athabasca oil sands of Alberta, the five projects would capture and utilise or store more than 4mn tonnes/year of CO₂.

And it is pursuing pore-space agreements with the government of Alberta that would underpin a pair of hub projects it is pursuing with partners: a 3.3mn tonnes/year hub near Grande Prairie, in northwestern Alberta, and a 5mn tonnes/year facility northwest of Calgary.

Entropy is also active in the US, where pre-FEED has been completed on a gas-fired steam generation facility in California and a gas-fired power generation project in Texas. Engineering is also underway for a third American project, to capture post-combustion CO₂ from gas-fired boilers at an ethanol facility in the US Midwest.

Together, the three projects are intended to capture and sequester more than 1.4mn tonnes/year of CO₂.

(Editor’s Note: Entropy CEO Mike Belenkie stepped down as president and CEO of Entropy effective September 23, 2024. He will remain as chair of Entropy and CEO of Advantage Energy, Entropy's parent company. Sanjay Bishnoi took over as Entropy’s CEO on September 23.)