Last week as Ukranians woke up to the reality of a Russian invasion, the rest of the Europe woke up to the new reality of the insecurity of war added to their energy crisis.
It is not lost on many who are involved in the energy industry just how much of the Russian war machine is powered by an inexhaustible supply of Russian oil and gas, developed and expanded while Western countries sought to constrain and limit their own production.
The event will most certainly cause a rethink of energy policy with a different focus on the speed at which economies will be transformed. The designation of natural gas as a “temporary” transition fuel and that it should be a short-lived fix for coal to gas-fired power conversions.
Brad Hayes, president of Petrel Robertson Consulting, a geoscience consulting firm addressing technical and strategic issues around oil and gas, has over 40 years of exploration and development experience and thinks the future role of natural gas should be considered in light of world events, not just greenhouse gas emissions profiles.
Hayes says the idea that natural gas is a fix that is temporary or that the switch to gas is temporary is problematic. We know that the gas is available now and we also know that it’s a relatively cheap conversion from coal-fired electrical generation to natural gas. We can use existing infrastructure and convert quickly.
”But when you say something is a temporary fix it implies that there’s an alternative,” says Hayes. “It implies that it’s just a placeholder and something else is going to take over in the future. Quite frankly nobody has identified what might replace natural gas for power generation, heating, and industry in Alberta at any foreseeable time in the future.”
Delaying a shift to greener sources
Some academics and pro-environment groups assert that the pivot to natural gas will only serve to delay a meaningful shift to greener sources of electricity.
Certainly in Alberta, there is a rich menu of low-carbon alternatives that are being considered to create electrical power. Beyond wind and solar, the Western Canadian Sedimentary basin has geothermal opportunities and potential for subsurface energy storage which are quite exciting.
But none of these alternatives, nor all of them together, have the ability to meet the electrical demands of Alberta, according to Hayes, especially during the winter months when extended periods of extreme cold occur while wind and solar contribute almost nothing to the grid.
There seems to be an ignorance of the enormous size of the prize – of the scale of Canada’s natural gas resources. There seems to be a lack of awareness of the economic benefit it can provide. It seems too easy to decide, as the province of Quebec has, that natural gas is a nonstarter because it is a hydrocarbon.
We’ve got the technology and capacity if we choose to spend the money on CO2 abatement according to Hayes.
He says Alberta is well-positioned to use existing technologies and resource availability to reduce CO2 emissions using natural gas power generation and natural gas for heating while sequestering CO2 underground.
“We’ve got carbon capture and storage projects that are developed and in operation. We’ve got the right type of reservoirs and facilities if we choose to spend the money on CO2 abatement. People keep talking about carbon abatement measures as economic challenges and yes, they are expensive, but they are well-established technologies that have a role to play in reducing net emissions.”
Limits to what is physically possible to capture energy
Hayes points out that it doesn’t matter how much money is spent or how hard you wish for it- we will not be able to power Alberta with hydro, solar, wind, and geothermal. He notes British Columbia has an energy-different mix – they have very abundant hydro resources although they are having issues with recent developments such as the Site C dam on the Peace River.
Alberta simply does not have the big rivers and topography to generate big hydro. While wind and solar efficiencies have increased greatly in recent years, both sources generate electricity only intermittently. There are other technologies to be carefully considered according to Hayes.
“I was listening to a talk about ammonia- how much energy it takes to create ammonia which can be used for a lot of processes and has potential use as the transport mechanism for hydrogen,” says Hayes.
“But when it comes down to it – you have to spend at least the same amount of energy to create ammonia as the amount of energy you can extract from it. Ammonia and hydrogen are only energy vectors or storage mechanisms – they are not energy sources.”
The energy density advantage of natural gas
Those realities return us for the energy density advantage of natural gas in the foreseeable future. Hayes points out that there are still other energy technologies to exploit, and that can play a role in energy production and storage.
Besides some hydro, wind, and solar, there is potential for geothermal energy production in Alberta, as well as pumped hydro and potentially compressed air energy storage projects to consider.
“But today in Alberta we consume 10-11,000 megawatts and renewables can really at the best of times put out a fraction of that amount,” according to Hayes. “As well, we still use natural gas for heating and oil for our transportation. But if people want to electrify those applications, then the electrical supply problem becomes much, much larger. There’s a cost for everything and this idea that emissions are the paramount measure of everything is a bit of a distortion.”
In terms of opportunities for hydroelectric, Hayes says Alberta has tapped considerable hydro potential with dams on the Bow, Oldman, and Brazeau Rivers, but since most of our land is pretty flat, there are limits for further hydro development. However, we can look at storage potential using pumped hydro with our existing hydro facilities.
Transalta has proposed to create a pumped storage project at the Brazeau Dam. On favourable days, solar and wind can generate power which can be used to pump water from below the dam back up behind the dam – so you are storing the water and its energy to let out as needed.
“It’s surprising how much pumped hydro storage is used around the world already – in mountainous areas of China, Japan, the United States, and some European countries,” says Hayes. In fact, 96% of the total electricity storage in the world is pumped hydro so I think it’s a wonderful idea. We haven’t built any in Canada, but Transalta is planning it at Brazeau and I believe there are one or two Ontario projects where they’re talking about it.”
It’s another one of those pieces of the puzzle according to Hayes. Since the energy transition is going to be composed of many diverse elements, with so many technologies and individual projects to be built, along with their supporting infrastructure, that transition is going to take decades, not years. There is an immense amount of work going on to transition energy systems.
What is not understood and reported is the scale of just how much energy is needed and being used. There is still a lack of understanding of the concept of energy density and how difficult it is to replace fossil fuels.
“I’ve done work in India and Pakistan where the goal is to double their oil and gas production so that they don’t have to import as much and their people have more energy to live their lives,” says Hayes. “China and India are building new renewable projects but the rates at which they can build can’t keep up with the growth in energy demand.”
He points out that China is also building hundreds of coal-fired electricity plants in China and other countries. Developing countries are focused on providing more reliable and affordable energy for their citizens, and they will inevitably use all means at their disposal to do so.
Hayes is convinced that India and China would love nothing more than to be less reliant on coal because of the pollution issues. He says the best thing that Canada could do to help them and to reduce global emissions would be to put every resource into building LNG capacity to ship natural gas to Asia so that less coal is burnt.
He thinks we could ship enough LNG within the next few years to more than makeup for all the emissions produced in Canada. When asked if Canada’s delays in moving LNG projects forward are incentivizing coal consumption in Asia, Hayes has an interesting answer.
“I think it’s fair to say that if our regulatory issues have been handled better – if governments and industry had been more straightforward and honest in negotiations with the First Nations, Canada would have a lot more LNG being shipped to Asia right now,” says Hayes.
“And yes, it would have hit the market at a wonderful time considering gas prices today. But four or five years ago when 25 of these LNG plants were proposed and needed financing, many investors couldn’t see sufficient economic return in LNG, considering the regulatory hurdles in place.”
He notes we would’ve been influencing decisions as to whether a new coal plant gets built versus a new LNG burning plant in China.
Energy assets – Ignore at your own risk
Putting aside for the moment the Russian invasion of Ukraine, (as difficult as it is) and looking at the energy crisis that has been happening in Europe over the last year, one can see that Canada or any country needs oil and gas resources.
Hayes says when push comes to shove, it is nice to say we aspire to be green but when the question becomes “Do you want to be green or do you want to be warm?” then people will choose warm every single time.
“It’s kind of sad that Canada has taken such short term, short-sighted emissions reductions actions without looking at the global energy picture. Our friends and allies have inadequate energy supplies and are taking desperate actions like begging OPEC to produce more oil or Russia to ship more gas to survive. We thus weaken our friends, strengthen our enemies, and promote the development of the dirtiest, least environmentally-friendly energy supplies.”