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Plugging the leaks in B.C.’s oil and gas sector

CleanBC Industry Fund helps natural gas sector electrify, reduce methane emissions
A substation for Arc Resources’ Sunrise natural gas plant in northeastern B.C. – one of four that use electricity instead of natural gas.

Electrification, carbon capture, methane abatement – there’s work afoot in the Montney formation of northeastern B.C. to reduce greenhouse gas (GHG) emissions from B.C.’s oil and gas sector. 

It’s just not clear whether all the investments being made will be enough to meet the province’s aggressive emission reduction targets. B.C.’s oil and gas sector, ordered by the B.C. government to go on a carbon diet, has just eight years left to lose a third of its greenhouse gas weight. 

The province’s CleanBC plan sets reduction targets for the oil and gas sector. By 2030, methane emissions are to be 75 per cent below 2014 levels and overall GHG emissions 33 per cent to 38 per cent below 2007 levels. 

The plan also provides funding to help industry make the investments needed under the CleanBC Industry Fund, which is part of a CleanBC program for industry that earned the province an award at COP26 last year for most creative climate solution. 

B.C.’s oil and gas sector accounts for one-fifth of the province’s emissions. Reducing its emissions intensity is critical to its survival. The only way it can continue to grow – and its growth is necessary if B.C. is to have a liquefied natural gas (LNG) industry – and still meet emission reduction targets is to find ways to reduce its carbon dioxide (CO2) and methane intensities. 

There are solutions available, like replacing natural gas generators at gas processing plants with electric ones or swapping out pneumatic valves at well pads for electric valves to reduce methane leakage.

All of this costs money, which is where the CleanBC Industry Fund comes in. 

From 2019 to 2021, $113 million has been granted for decarbonization initiatives. 

“I think this program is important in moving industry in the right direction, and this shows that there’s uptake – that companies are using the program to make the kinds of reductions that we need to be seeing to lower emissions in industry,” said Jan Gorski, program director for oil and gas at the Pembina Institute. 

While a number of pulp mill and mine operators have received sizable grants under the fund, the oil and gas sector has received the lion’s share of funding – not surprising, given that it is the province’s second largest emitter of GHGs by sector. 

One of the largest recipients of the CleanBC Industry Fund grants to date is NorthRiver Midstream Inc., which has been given $18.5 million for three projects, including $7.5 million to electrify its Dawson Creek natural gas plant and $10 million for a carbon capture and sequestration project. The latter project will capture and sequester “CO2-rich acid gas” at its McMahon gas processing plant near Fort St. John. 

In total, the NorthRiver’s investments are estimated to reduce GHGs by about 1.9 million tonnes of CO2 between now and 2031 – equivalent to removing 409,392 cars from the road for one year. 

Arc Resources Ltd. (TSX:ARX) has received $13.7 million to electrify its Dawson Creek natural gas plant. 

The size of CleanBC Industry Fund grants are based on the amount of emissions that will be avoided. In Arc Resources’ case, electrifying the Dawson Creek plant is estimated to reduce emissions by 135,000 tonnes annually. 

The total capital cost to electrify the Dawson Creek plant is about $60 million, so the grant will cover slightly less than one-quarter of the cost. 

There are 74 natural gas processing plants in B.C. These plants remove impurities, like hydrogen sulphide, and separate out liquids (light oil, condensate, propane). Most of them burn natural gas to produce power for their operations. Sixteen have converted to electricity. 

Four of those electrified plants belong to Arc Resources, which operates six plants in B.C. In addition to electrifying the Dawson Creek plant, the company plans to build a seventh natural gas plant – the Attachie project – which will also be electrified. 

Thanks to new BC Hydro transmission lines, clean grid power is now available to the upstream sector in northeastern B.C. According to a 2018 Clean Energy BC white paper, “extensive electrification” of the upstream could reduce the natural gas sector’s emissions by 60 per cent. 

The CleanBC Industry Fund helps companies cover some of the cost of tying into the grid and replacing natural gas turbines with electric drive. 

Arc Resources operates i n both B.C. and Alberta. Armin Jahangiri, Arc Resources’ senior vice-president and chief operating officer, said B.C.’s clean hydro power gives it an advantage when it comes to decarbonizing natural gas production through electrification. 

Even if Alberta manages to phase out coal power by 2030, it still gets more than 50 per cent of its power from natural gas, so electrifying natural gas processing plants in Alberta would not achieve the kind of emissions reductions that can be achieved in B.C. 

“Electrification in Alberta is still a big question mark because of the grid emissions intensity,” Jahangiri said. 

A number of oil and gas companies are receiving smaller grants to reduce methane emissions by switching out pneumatic actuators with electric ones. On well pads, these actuators use natural gas to open and close valves, which means methane escapes every time a valve opens. 

Methane is magnitudes worse than CO2 in global warming potential (GWP). A single kilogram of methane has the same GWP as 27.9 kilograms of CO2 over a 100-year period. 

A number of companies are tapping the CleanBC Industry Fund to switch from gas-activated valves to electric on well pads, some of which will get their electricity from solar panels. 

Canadian Natural Resources Ltd. (TSX:CNQ ), for example, received $2 million last year from the industry fund to replace 254 actuators at well sites with solar-powered electric actuators. The switch will reduce emissions by 298,913 tonnes of CO2 equivalent – equivalent to the emissions produced by 46,427 cars over a year. 

Petronas and Veresen Midstream received $482,320 and $817,839, respectively, to install vapour recovery units at their processing plants, which reduces the flaring (burning) and venting of natural gas. 

Ovintiv Inc. (TSX:OVV) is receiving $1.3 million to retrofit gas processing equipment at its Cutbank Ridge facility near Dawson Creek. The equipment will run on compressed air instead of methane. 

Gorski said it’s hard to assess how far some of the efforts underway will move the sector toward hitting reduction targets. 

“We really need to see what they’re expecting in 2030 on an annual basis to get a sense of how far this gets us,” he said. “But overall it’s a step in the right direction towards reducing these emissions. We now need to scale up these investments from industry if B.C.’s going to meet their targets.”