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Western Canada Finding Uses For ‘Waste’ NatGas

Government moves to crack down on methane emissions are fueling an environmental energy business niche developing in the western heartland of Canadian natural gas and oil production.

Calgary industry newcomer Kineticor Resources Corp. has stepped forward with the biggest project yet in the emerging field: a 100 MW power station to burn gas collected by producers taking action to capture fugitive leaks.

Kineticor set a target of late 2017 to complete the plant for more than C$100 million (US$77 million) at Peace Rive, in northwestern Alberta, where production continues to rise from large reserves and growing use of advancing technology.

The three-year-old firm made a smaller start early this year in Saskatchewan, by installing a generator that supplies the province’s SaskPower utility by burning waste gas that would otherwise be flared and cause greenhouse gas emissions.

The prime target of the effort to put polluting waste to economic use is associated gas that comes up from heavy oil wells as an unwanted byproduct. The volumes are too small to justify long pipelines or other expensive additions to the natural gas network, but big enough to be identified as an environmental headache.

In northern Alberta, gas leaks from heavy crude production and storage facilities have emerged as a sore spot in industry relations with communities because they have a strong oily odor. Public complaints in an oil-rich area near Peace River, known as Three Creeks, have triggered inquiries and cleanup actions by the Alberta Energy Regulator (AER).

Another Calgary pioneer in the emerging environmental energy niche, Genalta Power Inc., has a five-generator program to make up to 20 MW of electricity by burning gas captured at oil facilities in the Three Creeks region.

Kineticor said its jumbo waste gas-fired power station project is supported by supply commitments from multiple oil producers. Greenhouse gas emissions reductions over the 20 year-plus lifespan of the plant are forecast to exceed three million tonnes.

A leading driller that has signed a waste gas supply contract with Kineticor, Baytex Energy Corp., described the arrangement as a revenue-producing addition to an emissions management program of vapor recovery, pipelines, compressors, gas storage and air monitoring that has cost more than C$100 million (US$77 million).

In statements on the project, Kineticor chief executive officer Andrew Plaunt has described the emerging industrial cleanup specialty as a partnership with “forward thinking oil and gas producers, who are determined to think outside the box for solutions that benefit our environment in today's economy."

Although the green oilfield energy niche is too new for projections of its eventual size to be calculated reliably, the field is forecast to grow due to stiffening environmental regulation.

In Saskatchewan, SaskPower is committed to reducing the province’s traditional reliance on coal-fired generation and has set a target of as much as doubling the contribution of renewable energy sources to 50% by 2030.

In Alberta, where gas waste has been subjected to increasingly strict resource conservation rules since the 1930s, the provincial government has declared methane emissions to be a prime target of forthcoming greenhouse gas reduction programs. Regulations to implement the environmental policy are currently in development at AER.

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