Projects by Canada’s second largest oilsands producer Suncor Energy Inc. and MEG Energy Corp. are supporting growth for Canadian natural gas use and driving pipeline additions by TC Energy Corp.’s gathering and delivery grid in Alberta and British Columbia, Nova Gas Transmission Ltd. (NGTL).
Gas-burning oilsands and power generation advances by the Calgary-based producers add up to a combined C$6.4 billion ($5.2 billion) investment in industrial market expansion in NGTL’s northern Alberta service territory.
Suncor, which is working on 10 production sites each capable of 40,000 b/d, announced a C$1.4 billion ($1.1 billion) fuel conversion to gas for the power and heat cogeneration plant at its Fort McMurray oilsands mine, ending 52 years of burning charcoal-like coke left over from processing heavy raw bitumen.
The renovated plant would eliminate 2.5 million tons/year of greenhouse gas emissions while generating 800 MW, or enough to satisfy all electricity needs of the mine with power leftover for sale into the Alberta grid, according to Suncor.
MEG received Alberta government approval for a C$5 billion ($4 billion) plan to develop 120,000 b/d of oilsands production at a 32 square-mile site called Surmont, 50 miles south of Fort McMurray. The producer started up in 1999 with the purchase of nine sections in what was then a relatively unknown Christina Lake region, which has since become a vast oilsands production area.
The Surmont project would employ the bitumen extraction method that uses the most gas: steam-assisted gravity drainage with horizontal well pairs for simultaneous heat injection and production flows. MEG has cut, but not eliminated, gas consumption with technical advances.
While MEG postponed big new projects for the duration of Alberta production quotas because of maxed out pipelines, the company kept the Surmont plan on its drawing board through a prolonged regulatory review that began in 2012.
NGTL expressed optimism for an oilsands growth revival in filings at the Canada Energy Regulator (CER), formerly the National Energy Board, to support expansion applications for the western gas grid.
New pipeline capacity for Canadian oil exports is forecast to open up in the mid-2020s with completion of the delayed 890,000 b/d Trans Mountain expansion project, Enbridge Inc.’s 370,000 b/d export Line 3 upgrade, and TC Energy’s 830,000 b/d Keystone XL.
Meanwhile, Alberta gas use for power generation is projected to increase more than two-fold over the next decade to 700,000 MMcf/d as a result of government-mandated fuel switching as well as economic and environmental advantages of alternative energy operations.
By 2030, NGTL projects oilsands gas consumption to rise by 31% to 3.4 Bcf/d as new pipeline capacity enables producers like Suncor and MEG to increase output by one-third to 4.2 million b/d.
Growth in gas use will also be generated by an emerging petrochemical project lineup, which is responding to Alberta government financial incentives and low cost of gas-based raw materials, according to NGTL.