Varcoe: Dawn of a new energy era if Alberta can ride the momentum

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Despite all the criticism over the state of Alberta’s energy industry, two announcements this week provide a glimpse of what the future may look like – if the province and industry can seize the opportunity that arises. offer to it.

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The future looks cleaner and greener, with massive investments in technology and new projects needed to produce low-emission energy and other products.

Alberta’s dream of becoming a petrochemical powerhouse took another leap forward on Wednesday as Dow Inc. announced plans for the “world’s first net-zero carbon-emission ethylene and derivatives cracking complex. Which could cost $ 10 billion or more.

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The next day, Calgary-based TC Energy unveiled plans with electric truck maker Nikola Corp. to co-develop and operate large-scale hydrogen production centers in North America.

These follow a series of announcements from companies such as Suncor Energy, ATCO, Air Products, Petronas, Mitsubishi, Shell and Pembina Pipeline to embrace the energy transition. They are considering proposed investments in Alberta in areas such as hydrogen, as well as carbon capture, use and storage (CCUS) developments.

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“All of these announcements have the potential to really stimulate the Alberta economy,” Canada West Foundation CEO Gary Mar said on Friday.

“It is the dawn of a new era for energy. And it’s clean energy, and it’s very good for the environment and good for Alberta.

Dow’s decision to expand its existing petrochemical operations to Fort Saskatchewan is expected to generate thousands of construction jobs and hundreds of permanent positions, though the company has not disclosed such details or a price tag.

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Its existing facilities northeast of Edmonton already employ approximately 1,200 people.

PHOTO BY JEFF KOWALSKY / BLOOMBERG NEWS
PHOTO BY JEFF KOWALSKY / BLOOMBERG NEWS Photo by JEFF KOWALSKY /BLOOMBERG NEWS

For years, the province has sought costly investments for at least one new ethane cracker, which converts raw ethane to ethylene, which is used as an input in the manufacture of plastics.

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Dow’s development will more than triple the existing ethylene and polyethylene capacity at its Alberta plant by 2030.

The project will convert waste gases into hydrogen, which will be used as fuel in the production process. The carbon dioxide captured on site will be transported through Alberta’s existing carbon mainline.

“All of our customers are asking for more information on the impact of our products on their carbon footprint,” Dow CEO Jim Fitterling said on Wednesday at the company’s investor day.

“It’s a no-regrets decision to do what we’re doing in Alberta. It will be structurally advantageous and at low cost.

The US chemicals maker cited a number of reasons for deciding to invest in Alberta, including a large supply of low-cost raw materials.

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Industry analysts estimated the project would cost over $ 7.5 billion and potentially over $ 10 billion once all phases are included.

Steve Lewandowski, vice president of olefins for energy consulting IHS Markit, pointed out that the demand for ethylene is increasing by three to four percent per year. With governments adopting lower emission targets, it makes sense to move the entire facility to net zero emissions through new technology.

“From a feedstock perspective, we always thought there was additional ethane available to build,” said Lewandowski. “Other competitors were looking to do things and Dow was the first to have access to this additional ethane.”

A company official said the development is expected to be operational by 2030. A final investment decision is still required from Dow’s board of directors, along with regulatory approval.

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“This is a historic announcement,” Dale Nally, Associate Minister of Natural Gas for Alberta, said in an interview on Wednesday. “They confirm that we are a hub for clean and innovative technologies. “

Richard Masson, executive member of the School of Public Policy at the University of Calgary, said Dow’s announcement sent a signal.

“Dow is basically saying that we think there will be an economically viable supply of methane, which comes from natural gas, for the next 30 or 40 years,” Masson said. “It’s a big statement.”

The Government of Alberta announces a strategy to expand the natural gas sector in Edmonton on October 6, 2020, and seize new opportunities for clean hydrogen, petrochemical manufacturing, liquefied natural gas and plastics recycling.
The Government of Alberta announces a strategy to expand the natural gas sector in Edmonton on October 6, 2020, and seize new opportunities for clean hydrogen, petrochemical manufacturing, liquefied natural gas and plastics recycling. jpg

While Dow’s announcement has a lot of sizzle, given its potential size, TC’s announcement with Nikola is also noteworthy.

Phoenix-based Nikola manufactures battery-powered and hydrogen-powered heavy haul trucks.

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The deal with TC Energy will see the companies working together to deliver low-carbon hydrogen to hubs along the truck lanes that serve Nikola’s vehicles.

Corey Hessen, president of energy and storage at TC Energy, said on Friday that the two companies were looking at how they could “marry two sets of expertise necessary for the future of the hydrogen economy.”

The companies are examining how hubs can operate, what infrastructure is needed and how they can serve the trucking industry, although it is too early to discuss potential costs, he said..

This week’s announcements are another sign of the change underway in Alberta’s energy industry, which has come under pressure in recent years due to decarbonization and ESG considerations as Canada aims to achieve net emissions. zero by 2050.

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While interest in massive new oil sands development projects has waned, investments in hydrogen and CCUS development projects are under consideration.

For example, TC Energy teamed up with Calgary’s Pembina Pipeline earlier this year on plans to create a transportation and carbon sequestration network in the province.

Hessen said the energy transition is evolving rapidly, noting that the changes will be driven by demands from customers who need safe, reliable and profitable energy.

“We have a comprehensive strategy, which means that the energy transition is, in fact, a journey,” he added. “So there is a long-term place for natural gas and there is a long-term place for wind and solar.

“As time goes by and our customers’ demands change… and you get more and more economic signals from the market that these are the types of products that our customers are looking for, it is inevitable that this will happen. occur.

“I just can’t tell you when or how long it will take.”

Chris Varcoe is a columnist for the Calgary Herald.

[email protected]

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