Oil and gas sector needs to see climate change business opportunities, industry sustainability leader tells Global Petroleum Show
Small photo is of Linda Coady.
Canada’s oil and gas companies need to look beyond the threats of climate change to their operations and see the business opportunities in providing low-carbon solutions, says an industry sustainability leader.
The Paris Agreement, reached in December by 195 countries at the United Nations international climate conference in Paris, committed the world to reduce greenhouse gas emissions by 80 per cent by 2050 and to limit global warming to less than 2 degrees Celsius.
“There is no debating the fact that this is where all ships are heading,” Linda Coady, chief sustainability officer at Enbridge Inc., told the Low Carbon Innovation Forum at the Global Petroleum Show in Calgary.
“This is a journey that we simply have to get started on,” and address the challenges as they arise, Coady told more than 100 people who attended the forum. “Energy transition is about how we allocate capital now and in the future.”
The Low Carbon Innovation Forum, sponsored by CMC Research Institutes and which ran over two afternoons, was the first event of its kind at the Global Petroleum Show.
Coady said another “imperative” for Canada’s oil and gas sector is being to compete internationally on both production costs and carbon, because in a low-carbon world the high-carbon producers will also be the high-cost producers.
The third imperative for Canada’s oil and gas sector is to focus on energy systems rather than on energy sources, she said. Even the language of describing itself as the oil and gas sector might be constraining in a low-carbon world, she noted, although she cautioned the industry against dividing into “old energy” and “new energy” camps.
Oil and natural gas will still be needed as the world transitions to low-carbon energy, she noted, pointing to an International Energy Agency forecast that fossil fuels will still comprise 60 per cent of the global energy mix in 2040.
The Carbon Tracker Initiative (CTI) recently released a study that found existing oil and gas operations would not be at risk in a low-carbon world, Coady added.
[EnviroLine notes that CTI also warned in a study that fossil fuel companies risk wasting up to $2.2 trillion in the next decade, threatening substantially lower investor returns, by pursuing projects that could be uneconomic “in the face of a perfect storm of factors including international action to limit climate change to 2°C and rapid advances in clean technologies.”].
“There are signs that the conversation about energy is beginning to change” in Canada, said Coady, who served a member of the Alberta NDP government’s Climate Change Advisory Panel. “Alberta is now at the forefront of taking action” on climate change, she said.
Imperative No. 4 for the petroleum industry, she said, is to build a “collaborative ecosystem” for innovation that draws on diverse sectors and perspectives, and moves beyond supporting only “one-offs” in low-carbon and clean technology projects and initiatives.
Coady, who described herself as a “climate optimist,” said there are no pre-ordained winners or losers in a low-carbon world. She noted that Peabody Energy, the world’s largest private-sector coal company, has filed for bankruptcy protection in the United States, but – for completely different reasons – so has SunEdison, the largest global renewable energy development company.
The energy transition will be complex and “messy,” but sustainability will be a key driver at the core of the transformation, Coady told the forum.
Transition technologies to a low-carbon world
Following her keynote talk, a panel – moderated by Richard Adamson, president of CMC Research Institutes – discussed the topic “Transition Technologies: Carbon Capture, Conversion and Storage.”
Tom Wiwchar, portfolio manager, Athabasca Oil Sands Project at Shell, told the forum about the company’s Quest carbon capture and storage project, for which he was the lead. The $1.35-billion project, at Fort Saskatchewan near Edmonton, is designed to capture and permanently store 1 million tonnes of carbon dioxide annually from the company’s Scotford oilsands upgrader. Quest, which started in August 2015, has to date captured 750,000 tonnes of CO2, Wiwchar said.
Asked by an audience member how Shell can verify that the CO2 is staying stored in the underground reservoir, Wiwchar replied that doing so starts by choosing a suitable reservoir – in Quest’s case, a saline aquifer overlain by cap rock. The company monitors the CO2 in the reservoir using 4-D seismic technology as well as temperature, pressure and flow measurements. Quest also includes a baseline groundwater data and monitoring program, atmospheric monitoring of CO2 in and around the well-injection areas, and measuring CO2 concentrations in soil.
Also on the panel was Darryl Wolanski, vice-president, business development and co-founder of Inventys, which has developed a post-combustion CO2-capture process that uses adsorbent structures rather than amine solutions. Wolanski likened the enormity of the climate challenge and the resources needed to tackle it to the U.S. effort to put a man on the Moon by the end of the 1960s (which it did on July 20, 1969). “This was something that no one thought they could do.”
Panelist Don Lawton, a geophysics professor at the University of Calgary and director of CMC’s Containment and Monitoring Institute (CaMI) told the forum that investment is needed in both carbon-conversion and carbon-sequestration technologies. CaMI, with a field research station located on land donated by Cenovus Energy near Brooks east of Calgary, is testing and advancing technologies for monitoring the geological storage of CO2 in real time, within an actual CO2-injection reservoir.
In the area of carbon conversion and utilization, panelist Apoorv Sinha, president of Carbon Upcycling Technologies, is heading a start-up company testing a process to make nano-sized “platelets” using waste CO2 and a cheap carbon feedstock. The product can be used to reinforce construction materials (such as concrete), increase electrical conductivity of plastics, produce water-purification membranes, and manufacture high-performance electronics.
“There is a need for a paradigm shift in how we look at the carbon problem,” Sinha said, adding that carbon conversion and utilization could advance faster if supportive policies were in place.
Carbon Upcycling is currently scaling up its process from the bench-top scale of a few grams to a multi-tonne industrial scale. The University of Waterloo is testing the company’s nanoparticles as a potential carrier for cancer drugs, Sinha said.
The company won $500,000 as a finalist, selected from more than 340 applicants worldwide, in Alberta’s Climate Change and Emissions Management Corporation’s Grand Challenge. Carbon Upcycling is now looking for technical and financial partners as it aims to develop a facility with 10 tons-per-year capacity by December 2016.
Panelists were asked about using CO2 in enhanced oil recovery (EOR). Wiwchar from Shell said EOR offers a way to help reduce the cost of CO2 capture and enables emerging technologies to be tested. Wolanski from Inventys said even if CO2 was utilized in EOR and all other current applications, there would still be a lot of CO2 left and technologies needed to keep it out of the atmosphere. Lawton from the University of Calgary noted that there are no policies in place for companies to receive carbon credits for geologically storing carbon dioxide – which acts as a disincentive to invest in CCS.
As for the current high cost of capturing CO2 (estimated to range from $80 to $150+ per tonne), Wolanski said the costs of not capturing carbon will be even greater if the world undergoes catastrophic climate change. Panel moderator Adamson noted that CCS consists of two different processes – capture and storage – and that Alberta and Canada have the components in place to become a world leader in the carbon storage industry.
The panel also was asked what one thing needs to happen for CCS and carbon conversion and utilization to take off. Wolanski said investors and companies need to be able to accept the risk of waiting longer to get a return on their initial investment. Panelists said there also needs to be more openness to collaboration on new technologies and processes among all geographic locations, and on best to use all available technologies together, including CCS, carbon conversion and utilization, and renewable energy sources.
Performing the ‘hat trick’ challenge
A separate panel, moderated by Heather Campbell, regional director for Sustainable Development Technology Canada, tackled the topic, “The Hat Trick Challenge: Achieving Profitability, Environmental Performance, and Social License in Extraction and Production Processes.”
Todd Parker, chief executive officer of oilfield services firm Blue Spark Energy, said the petroleum industry is starting to see more active shareholders – many driven by social media – demanding better environmental practices and action on securing social license. Fellow panelist Marty Reed, chief executive officer of Evok Innovations, said it is consumers who ultimately drive what companies do, so businesses need to make products that people want to buy. Evok Innovations is a partnership uniting Canada’s oil and gas companies and the BC Cleantech CEO Alliance. Reed suggested there be a federal loan-guarantee program to encourage companies and investors to take more risks in accelerating new and emerging clean technologies.
Panelist Joule Bergerson, a professor of chemical and petroleum engineering in the Schulich School of Engineering at the University of Calgary, said improvements are needed in how promising technologies are evaluated, and in learning from failures of early iterations of technologies. Parker said the new demographic now entering the workforce should help advance novel technologies, because these young people are technology-wise and are used to a rapid pace of change. Panelist Kevin Slough, president and chief technology officer at FilterBoxx Water & Environmental Corp., a solutions-based supplier of water and wastewater treatment systems, said there has been a need for years for a centre to test new water-treatment technologies.
[EnviroLine notes that Canada’s Oil Sands Innovation Alliance plans to build the Water Technology Development Centre, attached to Suncor Energy’s Firebag SAGD oilsands facility, to speed the development and implementation of new water-treatment technologies. The centre will be able to test new technologies on fluids with the same physical-chemical characteristics and elevated temperatures and pressures that occur at commercial SAGD in situ operations. Also, through the Advancing Canadian Wastewater Assets research partnership, scientists are working side-by-side with municipal wastewater operators to replicate environmental water problems within a full-scale municipal water treatment plant in Calgary, utilizing 3.8 kilometres of naturalized streams to test novel and emerging wastewater-treatment technologies.].
Moderator Campbell asked the panel whether Canada had any competitive advantages in clean technologies. Reed replied that for clean tech development to be competitive, it has to encompass all sectors and companies, not just oil and gas. “What we can’t be is the oil and gas clean-tech sector . . . We can’t be anchored just in Fort McMurray,” Reed said.
Campbell also asked the panel what can be done about political shifts, such as a change of government, which can trigger a “big undo” of policies put in place to encourage clean-tech development. Bergerson said international pressures around climate change and other environmental problems will continue to drive low-carbon and other green initiatives. “It’s bigger than the province or the country.” However, policies need to be designed in a way that makes sense to voters and business and is consistent, which then makes it difficult for a new political regime to simply abandon them, she added.
As an example of sensible policy, Slough pointed to how Alberta developed and implemented its water regulations for steam-assisted gravity drainage oilsands extraction, to encourage less use of freshwater. The process “has been spectacular,” he said. “It made changes to the reality easier.”
Reed called for reforms in the way political campaigns are financed. He maintained that in British Columbia, government policies are determined by top campaign donors which he contended are the liquefied natural gas, forestry and mining industries. For industry, companies need to implement a “sustainability accounting standard,” he suggested.
[EnviroLine notes that in May, B.C. Conflict of Interest Commissioner Paul Fraser cleared Premier Christy Clark of conflict of interest complaints over her political fundraising activities. The Globe and Mail had revealed that the Premier has attended private political fundraisers at which donors pay as much as $10,000 a seat].
Moderator Campbell also asked panelists about how best to achieve methane emission reductions in the oil and gas sector and improve the industry’s transparency. Bergerson said a big problem is lack of transparent data in Canada needed to compare this country’s methane emissions and the scale of the problem with data available in the U.S. Data is needed – including data that the general public can understand – to ensure that any new policy and regulations are correct, she said. However, Park said that given the current economic downturn in the oil and gas sector, more methane capture by industry won’t happen unless there’s a financial payoff compared with other investments and expenditures by the secotr.
The second day of the Low Carbon Innovation Panel featured a panel on advances in methane detection and capture, and another panel on the role of collaboration in innovation success.