Canadian Energy Centre
Indigenous trade mission to China highlights opportunity for B.C. LNG
Karen Ogen is CEO of the First Nations LNG Alliance. Photo supplied to Canadian Energy Centre
From the Canadian Energy Centre
By Will Gibson
First Nations LNG Alliance CEO Karen Ogen takes message of coastal nations to Beijing
Participating in a recent trade mission to China has strengthened Karen Ogen’s view of the opportunity for B.C. liquefied natural gas (LNG).
For the CEO of the First Nations LNG Alliance, one of 10 Indigenous business leaders in the Canada China Business Council’s trade mission to Beijing in late October, the opportunity was as obvious as the grey smog that blankets the air above China’s capital city on most days.
“So much of the problem with smog and air quality stems from using coal-fired plants to generate electricity,” says Ogen, a former elected chief and councillor of the Wet’suwet’en First Nation.
Researchers have found that switching Chinese coal plants to natural gas from Canada could reduce emissions by up to 62 per cent.
“The Chinese don’t view LNG as a fossil fuel. They see it as an important part of moving towards carbon neutrality,” Ogen says.
“There are huge opportunities for LNG in China and other Asian markets, especially for the coastal nations in British Columbia. The need is there, and the appetite is there. It’s up to us to take advantage of it.”
Ogen previously took trips to China between 2015 to 2018. The most recent trade mission was organized by the Canada China Business Council specifically for Indigenous businesses, organizations and leaders to build connections and partnerships to develop export markets and sources of investment to facilitate exports.
Ogen said the delegation gained valuable insights into new forces shaping China in the post-pandemic era, notably around using social media platforms such as TikTok as part of their marketing and e-commerce outreach to the Chinese market. But she remains struck by the appetite for LNG as a lever to lower emissions as energy demand rises.
“China produces 30 per cent of the world’s greenhouse gas emissions — it’s the world’s largest emitter and they are committed to addressing that,” Ogen says.
The U.S. Energy Information Administration projects natural gas demand in the Asia Pacific region will increase by 55 per cent in the next three decades, reaching 54 trillion cubic feet in 2050.
Canada can make a meaningful difference in helping reduce emissions by supplying Asian markets with LNG, she says.
“Converting coal-fired plants in China to LNG produced in Canada would make a bigger impact on greenhouse gas emissions than anything we do in Canada,” Ogen says.
“Canada needs to think globally when it comes to climate change.”
The United States already has seen this opportunity and is addressing it by aggressively expanding LNG exports. Already one of the world’s largest LNG exporters, there are five new LNG projects being built in the U.S.
Canada’s first LNG project is under construction with first exports targeted by 2025. Two Indigenous communities on the B.C. coast are advancing their own proposed terminals, Cedar LNG and Ksi Lisims LNG.
Ogen doesn’t want to see Canada or B.C.’s coastal First Nations shut out of the opportunities she saw on the trade mission.
“The message we received from China’s officials was very clear. They are prepared to do business with Canada and Canada’s Indigenous business community. There are opportunities for investment,” she says.
“But we need governments to work with us to realize those opportunities. If we pursue them seriously, there are real economic benefits for Canada and First Nations.”
And the five-day trade mission has convinced Ogen about the need to address the barriers for Canadian LNG.
“We have a real opportunity to help address climate change while benefiting First Nations,” she says. “It makes too much sense for us not to fight for this.”
Alberta
For second year in a row, Alberta oil and gas companies spend more than required on cleanup
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.
Alberta
Heavy-duty truckers welcome new ‘natural gas highway’ in Alberta
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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