Sunday, April 29, 2007

Norway's Statoil on GHG emissions in the Oil Sands

Here is an interesting perspective from a European newcomer to the Oil Sands, Statoil a Norwegian oil company, which just acquired North American Oil Sands Corp. A Statoil executive said that last Thursday’s Greenhouse Gas emission targets were no surprise to them, and Vice President Peder Sortland further added: “When it comes to environmental issues we've seen this coming in Europe” and “To us, it was a surprise almost that it didn't come sooner”.

Statoil is planning on using Steam-Assisted Gravity Drainage (SAGD) technology to extract the bitumen from the ground, and it is considering creating an upgrader in Fort Saskatchewan. Statoil has used CO2 Sequestration technology at 3 existing operations and will likely use this technology for this oil sands operation.

Special thanks to Scott’s DiaTribes blog in bringing to light this perspective on this story.

I have never been a fan of too much foreign ownership of Canadian resources such as the Oil Sands, but I think we need this type of leadership to come into this industry wherever it may come from.

Tuesday, April 24, 2007

My thoughts for Alberta's Climate Change plan

Refocusing Oil Sands Royalties
The existing Generic Royalty Regime for the Oil Sands has outlived its original goal for promoting development in the Oil Sands. The Oil Sands have gone under exponential growth over the last 7 years and have greatly surpassed 1997 expectations (i.e. it reached 1MBbls per day of production by 2004 instead of 2015 as predicted in 1997). Industry analysts including Wood Mackenzie have noted that if the Generic Royalty Regime development incentive were taken away, growth in the Oil Sands will likely not be affected.

On a different note, the Oil Sands account for the single highest source of growth of Greenhouse Gas (GHG) emissions in Canada. The industry is projected to produce 40Mt of CO2e in 2007, approximately 5% of Canada's total emissions. We must begin to offer incentives followed by tougher regulations to this industry to dramatically reduce its emissions over the next 5-15 years.

Given that the Generic Royalty Regime is no longer value added, we should refocus it as an incentive program for investing in GHG emission cutting measures and technologies, and for ongoing low GHG emission intensity performance (i.e. reward a company when it produces a certain amount less of its allowed GHG emission intensity target).

Phasing Out Natural Gas Rebates
The Natural Gas rebate program does not encourage energy conservation or the use of alternative heating source such as the solar powered boiler systems in Okotoks or geothermal energy, which is becoming more popular in Manitoba. These means cannot become competitive if the Government is subsidizing Natural Gas. I believe this rebate program should be phased out by April of 2008 for all middle-to-high income households in Alberta, and the savings should be redirected to a green technology fund.

Electrical Power Conservation Measures
Providing incentives and overuse penalties to reduce electrical power consumption from residential, commercial and industrial facilities should also be considered.

Upgrading Building Codes to R-2000 Standards
In addition, substantially upgrading our minimal residential, commercial and industrial building codes to R-2000 standards would also be a good measure to consider in the coming years.

Consumer Energy Monitoring
In order to assist the population in reducing its energy consumption, we need to allow people to better measure how much electricity and natural gas they are consuming on a daily basis. You can't manage what you can't control, and you can't control what you don't measure. Household electricity meters that produce real-time power utilization metrics can be purchased for as little as $200. I am not familiar if there are similar household Natural Gas meters out there also. In the coming years, I believe we should aim to have all Alberta households equipped with electricity meters.

Automotive Fuel Efficiency
Another major challenge for this province and the rest of Canada will be to dramatically reduce our use of fossil fuel consumption on the roads within the next 15-30 years. In the short term, we should provide incentives for standard transmission vehicles, as they are generally more fuel-efficient (if driven properly) and additional incentives for fuel efficient vehicles as defined by the federal ecoAUTO program (except for the "Flex-fuel Vehicle ecoAUTO Eligibility" AKA. Impala, Sebring, Monte Carlo).

Transit Oriented Development
In the mid to long term, we need to make walking, biking and mass transit the top 3 transportation priorities when developing our cities (similar to Vancouver). We need "Transit Oriented Development" (TOD) to become the standard in every city, which has a population greater than 100K people. This means that when areas are being planned for development or modified, the 3 transportation priorities above need to be on the same priority footing as providing water, sewage and electricity. We need to revamp and retrofit our existing cities to make them compatible with TOD concepts. In order for this to be successful, I believe we will need to legislate new municipal planning standards. On a related note, if our communities are designed to promote walking and biking then we can expect improvements in peoples' health to happen also.

Inter-City Transit Links
With a successful transit system growing in our major cities we should then consider high-speed rail for inter-city transportation connections; however the success of high-speed inter-city transit will depend on the success of intra-city transit systems.

Carbon Sequestration
I am pleased to hear that the Carbon Capture and Sequestration is a key element of Alberta's GHG reduction plan. I hope the Carbon Capture and Storage Task Force will take into account this province's growing expertise and past successes with this technology as surveyed by then Environment Minister Guy Boutilier in January 2006. Here is an article published by the Edmonton Journal on the matter.

Direct Hydrogen Production from Solar
Lastly, I believe we need to secure Alberta's long-term status as an energy superpower, which in 30 years will require that we broaden and diversify our energy expertise. One field we could benefit from is direct hydrogen production from solar. This process uses two solar cells, which are coated with a metal oxide (e.g. Titanium Oxide), to cause a reaction that will directly split water into hydrogen and oxygen. This technology is currently being developed in Australia, the UK and the US. I believe we should be welcoming this technology into Alberta by sponsoring R&D projects on the matter.

Tuesday, April 3, 2007

ACCA somewhat refocused

This is not new news, but I was anxious to hear more details on this, which did not materialize, before I publish anything because the details are sketchy. Well the Accelerated CCA was refocused in Mr. Flaherty’s budget for bitumen producers, to allow only green projects within bitumen producers to qualify for this incentive. I did not see any details in the budget as to what would be the criteria for being a “green” project for this incentive. In addition, the program may still apply for upgraders and refineries, but once again the details were sketchy on this. If someone has some insight here, please share it.

From an environmental perspective, the budget obviously boasted the existing recycled Liberal programs, and introduced the sin tax on gas-guzzlers and incentives for fuel-efficient cars. I was disappointed in the last-minute amendment to include fellow gas-guzzler Impala E85 and Monte Carlo E85 to the list of eligible cars for this incentive. The argument that this move will encourage E85 to be widely available in Canada does seem to be more political then factual to me.

I am interested in finding out how the revised Clean Air Act (if you can still call it by its original name) will play with the Federal Conservatives. I am anxious to see if this will bring strong Conservative leadership on the issue of clean air, or will if it trigger and election. Stay tuned.

If you need some light reading material to fall asleep, here is a link to the budget itself.