Canadian Energy Centre
Canada should ‘shout from the rooftops’ its ability to reduce emissions with LNG
Morning view of a coal-fired power station in China. Getty Images photo
From the Canadian Energy Centre Ltd.
By James Snell and Deborah Jaremko
Canada should work with its allies and potential customers to receive credit for the global emissions reduction benefits of exporting liquefied natural gas (LNG), says a prominent Canadian energy advocate.
The equivalent of all Canadian GHG emissions could be eliminated by helping Asia switch 20 per cent of its coal fired power stations to natural gas, says Shannon Joseph, chair of Energy for a Secure Future, citing a recent report published by the Canadian Chamber of Commerce.
“Canada could help deliver 680 megatonnes of emissions reductions, and that’s more than our whole country,” she says.
“We should do it and shout it from the rooftops. We should move forward with LNG as an energy and emission solution.”
Receiving credit for lowering emissions with LNG could come through what’s known as Article 6 of the Paris Agreement, but Joseph says Canada need not wait for these carbon accounting rules to be settled before pressing forward.
“We need to assert, confidently, the environmental value we would be delivering to the world,” she says.
Shannon Joseph, chair of Energy for a Secure Future. Photo by Dave Chidley for the Canadian Energy Centre
Article 6 conceptually allows countries to collaborate with each other on emissions reduction goals by trading carbon credits. In theory, for example that could allow Canada receive credit for emissions reductions achieved in China by using Canadian LNG to displace coal.
The Paris Agreement signatories have not yet agreed on the rules to make Article 6 a reality. Meanwhile, driven by Asia, last year the world consumed more coal – and produced more emissions from that coal – than ever before, according to the International Energy Agency (IEA).
The IEA says switching from coal to natural gas for electricity generation reduces emissions by half on average. LNG from Canada can deliver an even bigger decrease, reducing emissions by up to 62 per cent, according to a June 2020 study published in the Journal for Cleaner Production.
Even before Russia’s invasion of Ukraine, world LNG demand was expected to nearly double by 2040. The market has become even tighter as countries work to exclude Russian energy, says a report by Energy for a Secure Future.
Japan and South Korea, as well as Germany have asked Canada to step up LNG development to help mitigate the energy crisis.
With or without Article 6, Energy for a Secure Future is calling on Canada to work with its potential customers in Europe and Asia to recognize and credit the environmental benefits of Canadian LNG displacing higher emitting energy.
“Canada’s allies have come here asking for energy, and we should work directly with them to find a way to have our environmental contributions recognized,” says Joseph, adding the U.S. has moved ahead without credits, more than doubling LNG exports since 2019.
Canada has yet to export significant volumes of LNG after years of regulatory delay and cancelled projects – but things are changing.
LNG Canada in Kitimat B.C. will be the first major export facility to operate, starting in 2025. Woodfibre LNG near Squamish begins construction this fall with the aim to start operating in 2027. Other proposed projects include the Indigenous-led Cedar LNG facility in Kitimat and Ksi Lisims LNG near Prince Rupert.
LNG Canada CEO Jason Klein stands atop a receiving platform overlooking LNG processing units called trains that are used to convert natural gas into liquefied natural gas at the LNG Canada export terminal under construction, in Kitimat, B.C., on Wednesday, September 28, 2022. CP Images photo
Meanwhile, India, China and Japan remain consumers of Russian oil and gas, according to the 2023 Statistical Review of World Energy.
“We are trying to help our allies meet the challenges they are facing. One of these is ensuring that their populations – sometimes of over a billion people – can even access modern forms of energy,” Joseph says.
“If Canada wants to be relevant and to lead, we have to come to the table with solutions to this question, alongside the environmental one. LNG is our biggest card.”
India will have the world’s largest population by 2028 – climbing to 1.45 billion and rising to 1.67 billion people by 2040, according to the United Nations Population Fund.
“Currently India is the fourth largest importer of LNG [in the world] and demand is expected to grow massively as 270 million people move up the socioeconomic ladder,” says Victor Thomas, CEO of the Canada-India Business Council.
Canada’s potential to deliver LNG to India “just makes good sense when you look at the geopolitical fractures that have occurred since 2022,” he says, noting the U.S. has recognized the opportunity and is taking action to form new business relationships in India.
Burning wood and other biomass for heat and cooking is still common in the South Asian country, while coal produces around three quarters of India’s electricity. According to the IEA, by 2040 India’s total energy demand will be 70 per cent higher than it was in 2019.
“Transitioning from wood burning to LNG is a massive emissions reduction,” says Thomas. “It’s a safe and reliable opportunity. People are looking for a country like Canada to be able to provide that.”
From the Canadian Energy Center
By Grady Semmens$923 million spent cleaning up inactive wells, sites and pipelines in 2023
As a business owner, Ryan Smith values few things more than predictability when it comes to the oil and gas market and the demand for his company’s services.
That’s why knowing that next year in Alberta, the regulator requires at least $750 million worth of work cleaning up inactive oil and gas wells and other legacy energy infrastructure is tremendously helpful for the CEO of Calgary-based 360 Engineering & Environmental Consulting.
“Having a minimum spend in place for the province makes the market more predictable and consistent, which in turn helps our clients and our business plan for the future, which is a good thing,” says Smith, whose company has completed more than 5,000 site closure activities in Canada and internationally since 2015.
“Site closure has really emerged as a growth market over the last decade, especially in Western Canada where the regulatory systems for oil and gas are more advanced than anywhere else we are exposed to. It is an integral part of the energy lifecycle, and if it is done well it adds a lot of value to the industry.”
The Alberta Energy Regulator (AER) introduced an industry-wide minimum “closure” spending requirement in 2022, part of Alberta’s Inventory Reduction Program to accelerate the remediation of inactive oil and gas wells, facilities and pipelines across the province.
The mandatory quota determines the minimum level of work a company must conduct primarily to decommission and reclaim a proportion of its inactive inventory.
Inactive wells are defined as those that have not been used for six months or a year, depending on what they are being used for. When a company decides that they will not reactivate an inactive well they decommission it through a process called abandonment.
A well is considered successfully abandoned after it is cleaned, plugged with cement, cut to a minimum of one meter below the surface and covered with a vented cap. After abandonment comes remediation and reclamation, where the land around the well is returned to the equivalent of its original state.
The first two years under the new rules saw Alberta’s energy industry significantly exceed the minimum closure requirements.
In 2022, companies spent more than $696 million, about 65 per cent more than the initial threshold of $422 million. The AER increased the minimum spend to $700 million in 2023, which producers surpassed by 22 per cent with total expenditures of $923 million.
The 2024 minimum remains at $700 million, while in July the regulator announced that the minimum spend for 2025 was raised to $750 million.
This closure work does not include remediation of oil sands mining sites, which is handled under the Mine Financial Security Program, nor does it include the closure of orphan wells (wells without a legal owner) managed by the industry-funded Orphan Well Association.
Gurpreet Lail, CEO of Enserva, an industry association representing energy service companies, suppliers and manufacturers, says there was an initial rush of closure work when the quotas were first put in place, but activity has since become more even as companies develop long-term closure plans.
“A lot of the low-lying fruit has been taken care of, so now companies are working on more complex closure files that take more time and more money,” Lail says.
Facility owners say that Alberta’s rules provide direction for planning closure and remediation work, which in the past may have been put on hold due to the ups and downs of the oil and gas market.
“When commodity prices are up, everyone is focused on drilling more wells and when prices are down, budgets are strained for doing work that doesn’t bring in revenue. Having a minimum spend makes sure closure work happens every year and ensures there is longer-term progress,” says Deborah Borthwick, asset retirement coordinator for Birchcliff Energy, an oil and natural gas producer focused in Alberta.
Over the last few years, Birchcliff has budgeted more than $3 million for annual facility closure work, far above its required minimum spend.
The company completed 11 well abandonments and decommissioned 23 facilities and pipelines in 2022, according to its latest environmental, social and governance report.
Borthwick says having the closure quota for 2025 already set has allowed it to plan ahead and line up the necessary service companies well in advance for next year’s remediation work.
Clean Energy Fuels CEO Andrew Littlefair, Tourmaline CEO Mike Rose, and Mullen Group chairman Murray Mullen attend the opening of a new Clean Energy/Tourmaline compressed natural gas (CNG) fuelling station in Calgary on Oct. 22, 2024. Photo courtesy Tourmaline
From the Canadian Energy Centre
New compressed natural gas fueling stations in Grande Prairie and Calgary join new stop in Edmonton
Heavy-duty truckers hauling everything from restaurant supplies to specialized oilfield services along one of Western Canada’s busiest corridors now have more access to a fuel that can help reduce emissions and save costs.
Two new fuelling stations serving compressed natural gas (CNG) rather than diesel in Grande Prairie and Calgary, along with a stop that opened in Edmonton last year, create the first phase of what proponents call a “natural gas highway”.
“Compressed natural gas is viable, it’s competitive and it’s good for the environment,” said Murray Mullen, chair of Mullen Group, which operates more than 4,300 trucks and thousands of pieces of equipment supporting Western Canada’s energy industry.
Right now, the company is running 19 CNG units and plans to deploy another 15 as they become available.
“They’re running the highways right now and they’re performing exceptionally well,” Mullen said on Oct. 22 during the ribbon-cutting ceremony opening the new station on the northern edge of Calgary along Highway 2.
“Our people love them, our customers love them and I think it’s going to be the way for the future to be honest,” he said.
Heavy-duty trucks at Tourmaline and Clean Energy’s new Calgary compressed natural gas fuelling station. Photo courtesy Tourmaline
According to Natural Resources Canada, natural gas burns more cleanly than gasoline or diesel fuel, producing fewer toxic pollutants and greenhouse gas emissions that contribute to climate change.
The two new CNG stops are part of a $70 million partnership announced last year between major Canadian natural gas producer Tourmaline and California-based Clean Energy Fuels.
Their deal would see up to 20 new CNG stations built in Western Canada over the next five years, daily filling up to 3,000 natural gas-fueled trucks.
One of North America’s biggest trucking suppliers to businesses including McDonald’s, Pizza Hut, Subway and Popeye’s says the new stations will help as it expands its fleet of CNG-powered vehicles across Canada.
Amy Senter, global vice-president of sustainability with Illinois-based Martin Brower, said in a statement that using more CNG is critical to the company achieving its emissions reduction targets.
For Tourmaline, delivering CNG to heavy-duty truckers builds on its multi-year program to displace diesel in its operations, primarily by switching drilling equipment to run on natural gas.
Between 2018 and 2022, the company displaced the equivalent of 36 Olympic-sized swimming pools worth of diesel that didn’t get used, or the equivalent emissions of about 58,000 passenger vehicles.
Tourmaline CEO Mike Rose speaks to reporters during the opening of a new Tourmaline/Clean Energy compressed natural gas fuelling station in Calgary on Oct. 22, 2024. Photo courtesy Tourmaline
Tourmaline CEO Mike Rose noted that the trucking sector switching fuel from diesel to natural gas is gaining momentum, notably in Asia.
A “small but growing” share of China’s trucking fleet moving to natural gas helped drive an 11 percent reduction in overall diesel consumption this June compared to the previous year, according to the latest data from the U.S. Energy Information Administration.
“China’s talking about 30 percent of the trucks sold going forward are to be CNG trucks, and it’s all about reducing emissions,” Rose said.
“It’s one global atmosphere. We’re going to reduce them here; they’re going to reduce them there and everybody’s a net winner.”
Switching from diesel to CNG is “extremely cost competitive” for trucking fleets, said Clean Energy CEO Andrew Littlefair.
“It will really move the big rigs that we need in Western Canada for the long distance and heavy loads,” he said.
Tourmaline and Clean Energy aim to have seven CNG fuelling stations operating by the end of 2025. Construction is set to begin in Kamloops, B.C., followed by Fort McMurray and Fort St. John.
“You’ll have that Western Canadian corridor, and then we’ll grow it from there,” Littlefair said.
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