Vol. 26, No.43 Week of October 24, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Canada chases green

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TC Energy links up with Nikola to develop US, Canada hydrogen production plants

Gary Park

for Petroleum News

Clean, renewable energy plans are rolling off the design table at a steady rate in Canada, most recently led by a partnership to build and operate large-scale hydrogen hubs in North America and a proposal to embark on a massive expansion of an Alberta petrochemical complex.

The hydrogen initiative is a collaboration by Canadian pipeline operator TC Energy (previously TransCanada) which aims to establish plants near highly travelled truck corridors in Canada and the United States with the objective of achieving net-zero carbon emissions “over time.”

The hubs would produce 150 metric tons a day said the partnership of TC Energy and U.S.-based Nikola which plans to have its first “trial” generation of Class 8 fuel cell trucks delivered to five customers later this year.

The two companies plan to co-develop, construct, operate and own large hydrogen production facilities in the two countries, taking advantage of TC’s existing pipeline network and storage assets to distribute hydrogen and ship carbon emissions from the hydrogen process to permanent storage sites.

Initially the hydrogen would likely be produced in a liquefied form and transported by truck, then by rail, to fueling stations and to other industrial users, said Pablo Koziner, Nikola’s president of energy.

Nikola signed a deal in September with Germany’s Bosch Group to build fuel-cell power modules at the U.S. vehicle maker’s facility in Arizona.

It aims to design and manufacture zero-emission battery-electric and hydrogen-electric vehicles, electric vehicle-drive trains and components.

Nikola’s shares have dropped from a peak of US$65.90 in mid-2020 to about C$10.70 after U.S. federal prosecutors unveiled a criminal indictment of the company’s founder and former chief executive officer Trevor Milton, alleging he made false statements about the company’s technology and prospects.

Dow Chemical ethane cracker

The second major undertaking involves a venture by Dow Chemical that some experts believe will cost up to C$10 billion, marking the largest capital investment in Alberta in 15 years.

Dow aims to build an ethane cracker with capacity of 1.8 million metric tons a year at its complex near Edmonton, while achieving a three-fold boost to its ethylene and polyethylene output.

The cracker, which is the first step in transforming ethane into plastics products, would drive up natural gas demand in Alberta by 200 million to 400 million cubic feet per day, said Calgary-based consultancy Incorrys.

At the same time, Michigan-based Dow said it intends to retrofit its natural gas-to-plastics complex by capturing the facility’s gases and pumping them into an existing carbon capture pipeline.

Dow said its hopes the new venture will achieve its targeted volumes by 2030, allowing it to produce about 3.2 million mt of low- or zero-carbon ethylene for its customers.

Ethylene gas, which is derived from oil or natural gas, is transformed into a range of chemical compounds for use in food packaging, anti-freeze vinyl and medical devices.

“This investment builds on Dow’s strong leadership position and allows us to meet the increasing needs of customers and brand owners seeking to lower the carbon footprint of their products,” said Dow chairman Jim Fitterling.

If the project gets the final go-ahead from Dow’s board, the company expects to allocate about C1 billion a year of capital spending to the project.

Alberta goal to attract petrochem dollars

Alberta Premier Jason Kenney said that by choosing Alberta as its initial base for a net-zero emissions ethylene plant Dow “is highlighting our growing global leadership in emissions-reducing technology like carbon capture, storage and utilization.”

Kenney’s government and its predecessor New Democratic Party administration have tried for years to attract additional petrochemical investment through tax incentives, including a 12% rebate on capital costs as part of an economic diversification push away from purely upstream oil and gas investment.

But Alberta’s Associate Minister of Natural Gas Dale Nally declined to disclose what incentives were offered to Dow.

However, he said the province has received additional submissions for petrochemical projects.

“Our goal is to take the petrochemical industry and increase it by C$30 billion by 2030. (The Dow plan) is a giant step forward in this direction,” he said.

Fitterling said Alberta is “clearly a first mover” in carbon capture through its capture infrastructure and pipeline, along with government incentives and Canada’s carbon tax.

“In Canada right now, you have a C$40 per metric ton price on carbon. It’s going to more than C$100 in the time frame that we’re talking about for this investment and the carbon trunk line is in place,” he said.

Fitterling said his company supports a “market-based price” on carbon in the United States that would lead to similar investments in the U.S.

Other plans announced

In the last month, two other eco-friendly plans have been announced:

* ATCO Group says it will build two solar installations in Calgary with capacity to power more than 18,000 homes that will cover a site equal to 170 football fields. The company hopes to start construction early in 2022 and have the solar panels operating before the end of 2022. The locations are former industrial sites that have limited other options. ATCO has already completed two solar projects in Canada’s North and more are planned for Mexico, Chile and Australia.

* Pacific Cambrian Energy is gearing up to put an environmental stamp on the natural gas it produces to distinguish its molecules from those of its more carbon intensive rivals. The company has just undergone a third-party audit by New York-based Equitable Origin which granted Pacific Cambrian a sustainability certificate for responsible energy development. Pacific Cambrian has spent more than C$100 million investing in water recycling initiatives since 2008 and has tried to eliminate the use of diesel at its natural gas plant by using flue gas and diverting waste heat for energy.

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