An environmental dividend is emerging for Canada's energy warehouse province as a bonus of oilsands development across northern Alberta.

By doing double duty as fuel for steam and power generation at thermal bitumen extraction projects, natural gas will take over from coal as Alberta's top workhorse of electricity supplies, said a forecast by the provincial Energy Resources Conservation Board (ERCB).

An annual state-of-the-industry report by the agency counts 17 cogeneration plants as under construction, approved or announced for the next 10 years in a growth wave that is expected to more than double oilsands production to 3.7 million b/d.

"Although there is some uncertainty in the timing of additional oilsands cogeneration facilities, most are expected to proceed within the forecast period [through 2021]," the ERCB said.

Oilsands power plants date back to the birth of commercial Alberta bitumen production in the 1960s. The electricity stations are invariably built with capacity to spare, and the excess power is sold into the transmission grid serving all consumers across the province. Up to half of the output from oilsands cogeneration facilities is sold on Alberta's public power market.

Over the coming decade the board expects gas-fired cogeneration capacity in Alberta will climb to 8,500 MW, or half the anticipated total provincial electricity supply of 17,000 MW as of 2012. The projected new level of gas-fired generation will exceed the current total capacity of about 5,600 MW at coal-burning plants.

In Canada the reduced greenhouse-gas emissions of gas-fired stations set the standard for power generation under clean air rules announced by the federal environment department in mid-2010. The national standard requires all operating coal plants to shut down once they reach 45 years of age or at the end of power purchase agreements if the contracts with participants in deregulated provincial markets run past the birthdays. The rules prohibit the owners of coal plants from making investments to extend the sites' lives unless their carbon emissions can be about cut in half to the level of cleaner gas-burning operations.

In the national capital of Ottawa the cleanup standard remains in the proposal stage with a target enforcement date of July 15, 2015. The ERCB believes the new regulation will go into legal force on schedule.

Over the next 10 years coal's share of power sales in Alberta is expected to drop to 40% from the 2011 level of 55%, with gas-fired plants picking up most of the market shift while wind farms, wood-burning biomass projects and periodic low-cost imports from hydroelectric-rich British Columbia also expand.

On electricity markets the ERCB predicts that "load growth will continue to be met primarily by existing and new natural gas-fired power plants." On a much smaller scale, in southern Alberta, Calgary's city-owned Enmax utility also aims to build gas-fired power plants.

The growth in gas-burning power sources in the northern oilsands has been under way since rising oil prices lit a fire under bitumen development about 10 years ago.

Power transmission companies have responded by building a high-capacity line from the bitumen belt capital of Fort McMurray to Edmonton, in the geographical center of the province. The northern power connection was built on schedule and budget with little fuss, because the route crosses sparsely populated terrain via a well-established corridor for pipelines, other utilities and roads serving the energy industry frontier.

Attempts to expand the grid farther south -- into the most heavily populated areas of Alberta between Edmonton and Calgary -- have run into the heated public resistance and landowner demands for high compensation that power transmission projects face across North America.

A new, revised incarnation of an Edmonton-Calgary power line project is currently going through the public hearings stage of the regulatory process before the Alberta Utilities Commission.

Oilsands power development has also spawned long-range export schemes. The biggest foray into the field -- called Northern Lights Transmission and proposed by TransCanada Corp. -- cites potential for export lines reaching from Fort McMurray to the Pacific Northwest region of the United States and possibly all the way to northern California. The idea remains a study item on the drawing boards of power system planners, with no target dates set for construction or deliveries.

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