When British Columbia Premier Christy Clark admitted that all the power generated by BC Hydro’s Site C hydroelectric project could be used by the liquefied natural gas (LNG) facility proposed by Shell Canada alone, Brian Vermeulen started thinking about alternatives for power generation in the province.
Like many North Peace residents, Vermeulen is no fond supporter of Site C. And like many North Peace residents, Vermeulen is involved in the oil and gas industry. He began his career as a landman with Encal Energy in 1994 and is now president of BV Land Consulting and Northern Rockies Environmental Services in Fort St. John.
Vermeulen also firmly believes that a combination of natural gas power generation and carbon capture and storage (CCS) in Northeast B.C. is a far better option for satisfying the province’s energy needs than Site C.
“There’s so much potential for the North here if we can think a little bigger picture and outside the box,” said Vermeulen.
“The footprint of a natural gas power generating station,” he continued. “You take a look at the size of it versus what Site C’s going to impact – I mean, there’s no comparison as far as impact with regards to the environment, with regards to flooding all the ecological values that are presently along the Peace River.”
The Peace Valley Environmental Association (PVEA) isn’t about to promote an alternative to Site C, but they share those concerns about the project.
“Basically, we had suspected that the power from Site C was going to be used for industry for quite some time now,” said Andrea Morison of PVEA. “So, it wasn’t a big surprise to us. But I think it’s something that all the Hydro ratepayers in B.C. need to be well aware of, that there’s no announcement that industry’s going to pay for 100 per cent of Site C.”
However, as noted by a Ministry of Energy and Mines spokesperson, it was announced during the launch of the Province’s LNG Strategy that “the natural gas industry will be required to contribute to the cost of new infrastructure and energy required to serve future LNG projects.”
“We make ourselves well aware of what some of the alternative energy options are,” Morison continued. “But we’re not taking a position on endorsing any single option because that’s not our specialization and we simply don’t have the resources to do that. However, I do make a point of sharing information on our social media sites about alternative energy sources. And our focus, what we have to stick to, is preventing the destruction of this ecologically rich valley, and all the values that are going to be affected by that.”
Morison also suggested that there should be greater discussion about alternatives to Site C.
“It’s really disappointing that the British Columbia Utilities Commission (BCUC) oversight has been removed specifically from the Site C project by our former premier [Gordon] Campbell,” she said.
“Because it’s within their mandate to examine alternatives to the project. So, now we have the joint federal-provincial environmental assessment process. And they are supposed to look at alternatives to the project.
“However, we don’t know to what degree, what level of depth, they will examine that. But we will be requesting that it be a comprehensive assessment of alternatives to Site C providing energy that the Province says it needs as compared to many alternatives that exist.”
Environmental issues aside, Vermeulen insists that natural gas power generation – an option that he knows BC Hydro has examined in the past – should also be considered simply for the sake of a B.C. natural gas industry that is trying to cope with record low commodity prices.
Over the past eight months, Vermeulen has seen activity slowing down in the Horn River Basin, the shale gas play expected to provide much of the resources for LNG facilities on the coast, such as the one proposed by Shell Canada.
“We do a lot of projects up there with some of our clients,” he said. “The fact is that three of our clients who are up there are basically doing nothing. They’ve basically come to a screaming halt because, based on the economics, it’s not worthwhile even doing anything up there until the gas price has turned around.”
“Gas prices drive this area so much,” he added. “It’s not going to be very pretty up here at all.”
Vermeulen suggested that natural gas power generation and associated CCS would provide a much needed market for natural gas, as well as more jobs and other economic benefits at a much smaller environmental cost than Site C.
“With the ups and downs that we face here, why wouldn’t you create employment here with all this ability here?”
he asked.
Obviously, Vermeulen is aware that there are obstacles to CCS, which include the cost of finding a suitable disposal reservoir for the carbon dioxide (CO2) and constructing the facility, not to mention geological issues.
“Our geology here has always been a struggle for stuff like that,” he said.
Still, companies are slowly moving ahead with plans for CCS in the region. For example, Spectra Energy is currently working on a CCS project to go alongside their natural gas processing plant in Fort Nelson. That work began in 2008.
“We continue to advance the feasibility assessment, which is very positive,” said Gary Weilinger, Vice President of Strategic Operations and External Affairs with Spectra.
“A lot of work that we’re doing is not necessarily onsite,” he continued, “but is behind the scenes, using the available data that we collected through, not only the first drill, but then the side kick that we did when we went back into the hole and did some permeability and pressure testing.”
“We’ve got some tremendous amount of data as input to our overall geologic risk assessment.”
Weilinger noted that the project has taught Spectra a few things about the overall feasibility of CCS in the region, both in terms of geology and economics.
“Depending on where the storage reservoirs are, you have to come up with a project design that fits, not only the point source, but also the storage reservoir,” said Weilinger.
“The storage reservoirs and depleted natural gas reservoirs are not homogeneous. So, it’s not just kind of a one size fits all and, if you’ve got it figured out in one place, you’ve got it figured out everywhere. And so because the pools that we’re injecting CO2 into are not homogeneous, you’ve got to make sure that what you’re designing is very specific and fit for the purpose of that application. So, it requires a tremendous amount of analysis.”
That is especially important considering the potentials risks associated with CCS.
“Before we go out in a public way that we have a project and that we are proceeding, we have to make sure that we’ve got a very good understanding of what those risks are in this application and how we’re mitigating those risks,” he added.
“Whether it’s North America or Europe or Algeria or Norway, there’s got to be a commercial or economic incentive to do this,” Weilinger continued.
“And this is why, to the largest extent, this project has been delayed in actually saying we’re moving from a feasibility-technical assessment stage to actual construction, design, application. Because it’s still very tenuous worldwide as to the economics behind this investment.”
“The conundrum that we’re trying to solve with government [is] where these JAMES WATERMAN
Pipeline News North
When British Columbia Premier Christy Clark admitted that all the power generated by BC Hydro’s Site C hydroelectric project could be used by the liquefied natural gas (LNG) facility proposed by Shell Canada alone, Brian Vermeulen started thinking about alternatives for power generation in the province.
Like many North Peace residents, Vermeulen is no fond supporter of Site C. And like many North Peace residents, Vermeulen is involved in the oil and gas industry. He began his career as a landman with Encal Energy in 1994 and is now president of BV Land Consulting and Northern Rockies Environmental Services in Fort St. John.
Vermeulen also firmly believes that a combination of natural gas power generation and carbon capture and storage (CCS) in Northeast B.C. is a far better option for satisfying the province’s energy needs than Site C.
“There’s so much potential for the North here if we can think a little bigger picture and outside the box,” said Vermeulen.
“The footprint of a natural gas power generating station,” he continued. “You take a look at the size of it versus what Site C’s going to impact – I mean, there’s no comparison as far as impact with regards to the environment, with regards to flooding all the ecological values that are presently along the Peace River.”
The Peace Valley Environmental Association (PVEA) isn’t about to promote an alternative to Site C, but they share those concerns about the project.
“Basically, we had suspected that the power from Site C was going to be used for industry for quite some time now,” said Andrea Morison of PVEA. “So, it wasn’t a big surprise to us. But I think it’s something that all the Hydro ratepayers in B.C. need to be well aware of, that there’s no announcement that industry’s going to pay for 100 per cent of Site C.”
However, as noted by a Ministry of Energy and Mines spokesperson, it was announced during the launch of the Province’s LNG Strategy that “the natural gas industry will be required to contribute to the cost of new infrastructure and energy required to serve future LNG projects.”
“We make ourselves well aware of what some of the alternative energy options are,” Morison continued. “But we’re not taking a position on endorsing any single option because that’s not our specialization and we simply don’t have the resources to do that. However, I do make a point of sharing information on our social media sites about alternative energy sources. And our focus, what we have to stick to, is preventing the destruction of this ecologically rich valley, and all the values that are going to be affected by that.”
Morison also suggested that there should be greater discussion about alternatives to Site C.
“It’s really disappointing that the British Columbia Utilities Commission (BCUC) oversight has been removed specifically from the Site C project by our former premier [Gordon] Campbell,” she said.
“Because it’s within their mandate to examine alternatives to the project. So, now we have the joint federal-provincial environmental assessment process. And they are supposed to look at alternatives to the project.
“However, we don’t know to what degree, what level of depth, they will examine that. But we will be requesting that it be a comprehensive assessment of alternatives to Site C providing energy that the Province says it needs as compared to many alternatives that exist.”
Environmental issues aside, Vermeulen insists that natural gas power generation – an option that he knows BC Hydro has examined in the past – should also be considered simply for the sake of a B.C. natural gas industry that is trying to cope with record low commodity prices.
Over the past eight months, Vermeulen has seen activity slowing down in the Horn River Basin, the shale gas play expected to provide much of the resources for LNG facilities on the coast, such as the one proposed by Shell Canada.
“We do a lot of projects up there with some of our clients,” he said. “The fact is that three of our clients who are up there are basically doing nothing. They’ve basically come to a screaming halt because, based on the economics, it’s not worthwhile even doing anything up there until the gas price has turned around.”
“Gas prices drive this area so much,” he added. “It’s not going to be very pretty up here at all.”
Vermeulen suggested that natural gas power generation and associated CCS would provide a much needed market for natural gas, as well as more jobs and other economic benefits at a much smaller environmental cost than Site C.
“With the ups and downs that we face here, why wouldn’t you create employment here with all this ability here?”
he asked.
Obviously, Vermeulen is aware that there are obstacles to CCS, which include the cost of finding a suitable disposal reservoir for the carbon dioxide (CO2) and constructing the facility, not to mention geological issues.
“Our geology here has always been a struggle for stuff like that,” he said.
Still, companies are slowly moving ahead with plans for CCS in the region. For example, Spectra Energy is currently working on a CCS project to go alongside their natural gas processing plant in Fort Nelson. That work began in 2008.
“We continue to advance the feasibility assessment, which is very positive,” said Gary Weilinger, Vice President of Strategic Operations and External Affairs with Spectra.
“A lot of work that we’re doing is not necessarily onsite,” he continued, “but is behind the scenes, using the available data that we collected through, not only the first drill, but then the side kick that we did when we went back into the hole and did some permeability and pressure testing.”
“We’ve got some tremendous amount of data as input to our overall geologic risk assessment.”
Weilinger noted that the project has taught Spectra a few things about the overall feasibility of CCS in the region, both in terms of geology and economics.
“Depending on where the storage reservoirs are, you have to come up with a project design that fits, not only the point source, but also the storage reservoir,” said Weilinger.
“The storage reservoirs and depleted natural gas reservoirs are not homogeneous. So, it’s not just kind of a one size fits all and, if you’ve got it figured out in one place, you’ve got it figured out everywhere. And so because the pools that we’re injecting CO2 into are not homogeneous, you’ve got to make sure that what you’re designing is very specific and fit for the purpose of that application. So, it requires a tremendous amount of analysis.”
That is especially important considering the potentials risks associated with CCS.
“Before we go out in a public way that we have a project and that we are proceeding, we have to make sure that we’ve got a very good understanding of what those risks are in this application and how we’re mitigating those risks,” he added.
“Whether it’s North America or Europe or Algeria or Norway, there’s got to be a commercial or economic incentive to do this,” Weilinger continued.
“And this is why, to the largest extent, this project has been delayed in actually saying we’re moving from a feasibility-technical assessment stage to actual construction, design, application. Because it’s still very tenuous worldwide as to the economics behind this investment.”
“The conundrum that we’re trying to solve with government [is] where these costs get applied and how does someone make a return on investment in CCS.”
As far as Vermeulen is concerned, all the questions surrounding CCS in B.C. should be figured out before proceeding with Site C and LNG exports regardless of future plans to use natural gas for long-term power generation in B.C.
After all, there are plans to use natural gas for short-term power generation to supply electricity for LNG facilities while other infrastructure – Site C and other renewable energy options – is being completed.
Additionally, Horn River Basin gas is over ten per cent CO2. If the Province is going to meet its greenhouse gas (GHG) emissions targets, those CO2 sources have to be addressed.
“The focus on everything is emissions and CO2,” said Vermeulen. “Let’s get that resolved first. If we can come up with how we’re going to deal with that, then the rest of the stuff will fall into place.”
“The fact is that they’re putting carbon capture at the end of it, rather than putting it up first,” he added. “Let’s figure out how we’re going to deal with carbon capture and disposal.”
Weilinger acknowledged that government involvement in CCS is vital.
“Our position, which really hasn’t changed from the beginning, is that, given the scale and scope and the fact that this is new, there has to be some government participation,” he said. “And we’ve got that in principle from the [United States] Department of Energy, B.C. government, as well as the federal government.”
However, that isn’t all about subsidizing the cost, as is often discussed in newspaper articles, according to Weilinger.
“The Province of B.C. put in a nominal amount at the very beginning,” he said. “And now the question is, okay, how much ultimately is required from all levels of government to make this work?”
Weilinger noted that Spectra’s project doesn’t fit into the category of those that are described as being “very expensive.”
“CCS is not all the same,” he explained. “There’s a whole bunch of different applications in terms of carbon capture, just as there are a whole bunch of different applications for carbon storage.
“What gets us enthusiastic is we’re probably the most cost effective in carbon capture because the Fort Nelson project, for example, is very large scale, it’s cost effective, it’s cost efficient, and the Fort Nelson gas plant is fundamentally designed to capture CO2. So, the emphasis for us then is on the storage side and finding a reservoir that’s large enough in scale and scope to accommodate that CCS in the volumes that we want to inject it.
“And so just from an overall cost point of view, we’re probably looking at less than half of what some of the purported CCS costs are when you look at numbers like $120 a tonne or more. This is not anywhere near that scale from a cost point of view. So, that’s why we’re encouraged to keep working to find a model that will work.”
The Ministry of Energy and Mines is currently developing a regulatory framework for CCS to address issues such as emissions reductions, monitoring of injection sites and liability. According to a ministry spokesperson, the government is also “open to engaging in discussions with CCS project proponents on innovative ways to overcome this cost hurdle.”
That doesn’t mean the Province is about to promote natural gas power generation and CCS as an alternative to Site C.
“The proposed Site C project will be a source of clean, reliable and cost-effective electricity,” said a ministry spokesperson in an email.
That spokesperson also insisted that no single element of BC Hydro’s system is devoted to one particular use.
That claim is just semantics from Vermeulen’s point of view.
After all, whether Shell Canada’s facility obtains every gigajoule of energy it uses specifically from Site C, or from a variety of sources throughout the province, the reality is that one facility would be using an amount of power equivalent to that produced by a hydroelectric project reportedly designed to meet the growing energy needs of a growing province with a growing population.
