Alberta company says flared gas from oil drilling sites to help power Saskatchewan’s electricity grid Achi-News

As pressure mounts on the oil and gas sector to reduce its emissions, one Calgary company is banking on the potential to turn waste gas from oil wells into valuable electricity for nearby communities.

The Steel Reef Infrastructure Corp. privately held — which owns and operates a network of crude oil and natural gas pipelines as well as processing and storage facilities in Saskatchewan and North Dakota — wants to become known as an industry leader in the relatively new flaring space. gas recovery.

The company announced this week that it has signed a series of power purchase agreements with Crown corporation SaskPower that will see it provide the utility with about 100 megawatts of electricity per year for the Saskatchewan grid – enough to power 100,000 homes each a year.

The electricity, expected to come on the provincial grid by the end of 2027, will be generated at five Steel Reef gas plants in Saskatchewan, using recovered gas that would otherwise be flared into the atmosphere on well sites.

“When we started this, flare gas was a problem and it continues to be a problem,” Steel Reef CEO Scott Southward said in an interview.

“To me it’s inefficient. If you flash… you miss an opportunity, right? That is a valuable product that cannot be used.”

Flaring refers to the practice of burning the excess natural gas associated with oil production.

Natural gas is a by-product that comes to the surface when companies drill oil wells. If the volumes of the gas are small, and there are no pipelines nearby to transport the gas, companies often choose, for economic reasons, to dispose of it by flaring.

Since 2012, Steel Reef has helped its oil drilling customers by capturing this excess gas for them and then transporting it through a pipeline to its processing facilities where it can be made into useful products such as propane and butane.

But its foray into the electric space is new. Southward said in an interview that the company plans to invest $265 million to install new turbines and electrical substations at five of its locations in Saskatchewan to convert the gas into electricity. The power produced at the sites will be “carbon efficient” as it will put flare gas, a waste product, to productive use at a time when demand for electricity is increasing.

“The demand for electricity is really growing, so we feel this is a good first step for us to become the market leader in the emerging flare gas-to-power space right now,” he said.

“Flashing wastes potential energy when, as a society, we are crying out for more energy.”

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Steel Reef’s announcement also comes at a time when the practice of flaring is increasingly coming under environmental scrutiny. The combustion process associated with flaring releases a variety of byproducts and greenhouse gases into the atmosphere, including carbon dioxide, according to oil and gas data provider Enverus.

The World Bank calls the practice of flaring “wasteful and polluting” and has identified the need to reduce flammable volumes globally as an urgent problem. He has also drawn attention to recent scientific studies which suggest that more methane may escape into the atmosphere during the flaring process than previously thought, suggesting that the greenhouse gas effect of flaring could be underestimated.

In Canada, the federal government’s updated draft methane regulations – which aim to reduce oil and gas methane emissions by at least 75 per cent from 2012 levels by 2030 – say any flaring that doesn’t get carried out for safety reasons is supported by an engineering study that shows the lack of alternatives.

Amanda Bryant, senior oil and gas analyst with clean energy think tank The Pembina Institute, said the type of investments Steel Reef is making are exactly what will be increasingly needed in the coming years.

“Capturing waste gas from oil and gas production that would otherwise be vented or flared and instead putting it to productive use is a good thing,” Bryant said in an interview.

“I would say that solutions like this are increasingly important and will become increasingly important.”

& copy 2024 The Canadian Press