Connect the Dots: AVATAR Winners say Canada needs CCUS Network Linking O&G Hubs

Originally authored by Carter Haydu and reposted with permission:

Western Canada requires an integrated carbon capture, utilization and storage (CCUS) and enhanced oil recovery (EOR) network connecting major emitters with potential markets, which starts by linking existing Saskatchewan and Alberta carbon capture hubs. At least, that is what the winning team from this year’s Avatar Program recommends.

“Connecting these hubs will create a marketplace for CO2 by allowing it to be shipped to multiple end users for EOR activities. Construction of new pipeline connecting these areas has been estimated at over $3 billion,” Landon Lonsberry, president of Plex Projects Inc., told a panel of industry leaders judging nine virtual presentations.

“However, we’ve identified existing infrastructure connecting these locations that could be repurposed for 16 per cent of the cost of building new,” he added. “This pipeline would deliver [carbon dioxide] through the heart of the Western Canadian Sedimentary Basin, which is prime geology for the future of CCUS and EOR activities.”

According to Lonsberry, whose Avatar team consisted of six members in total, including fellow presenter Alicia Lenny, decommissioning of Line 3 provides a 34-inch conduit between Edmonton and southeastern Saskatchewan, which could transport about 14,000 tonnes of CO2 per day. Enbridge Inc. has estimated pipeline decommissioning costs at approximately $55 million.

“Since this work has yet to be completed, these funds could be redirected towards repurposing this asset, further increasing the financial viability of the project. Reusing existing pipeline infrastructure would significantly reduce the environmental disturbance created by the project when compared to new construction.”

The team’s second concept is to create an industrial hub in the Fort McMurray region, which represents the largest source of CO2, encompassing major oilsands operators, as well as several SAGD operating plants.

Lastly, the team is recommending connection of Fort McMurray to the Industrial Heartland to complete the CO2 network by accessing the Alberta Carbon Trunk Line (ACTL) — a 240-kilometre pipeline, operational in June, which currently collects CO2 from the Sturgeon Refinery and Nutrien’s Redwater fertilizer facility and transports it to central Alberta oil reservoirs for EOR applications.

“We’ve estimated a pipeline connecting Fort McMurray to the [ACTL] would cost approximately $1.1 billion,” said Lonsberry. “Construction of this pipeline would also provide potential sequestration opportunities in the Swan Hills and Pembina oilfields.”

He added: “An integrated CCUS network would require a total capital investment of approximately $5 billion, producing yearly revenues of $2.1 billion. This results in a payback period of approximately eight years, and internal rate of return of approximately 15 per cent, assuming a $30 per barrel oil price and $50 per tonne carbon credit.”

Examples of future opportunities a CCUS network facilitates include providing CO2 for the cement sector, noted Lenny, who is a construction project management engineer at Enbridge Gas. She highlighted one undisclosed cement producer that could tap into the network and therefore stop trucking CO2 for its purposes.

Capturing and storing carbon will be key to future energy production as well, Lenny told Avatar’s virtual panel of judges, particularly when considering development of blue hydrogen from natural gas. “It’s important to keep in mind that it is CCUS infrastructure that will enable the creation of this new fuel source [and] CCUS will facilitate many opportunities in the future if we install the network now, using our expertise and our vast natural resources.”

In the end, Lenny told the Bulletin, the judges appreciated the team’s plan for how this CCUS network would help Canada as a whole. The team also spent a lot of time considering all the financials and showing the feasibility of such a project. “Not only is it a way to put Canada back on the map for climate change leadership, but we can also make this economically feasible, which has been kind of a problem with carbon capture in the past.”

She added: “In the beginning, we all took some time to research separately and come up with a couple of ideas we saw as being valuable for a way forward for carbon capture and use, and then we sort of pitched our ideas to each other, actually. We took the best of those ideas and created what ended up evolving to be our idea for a CCUS network.”

Environment matters

Canada’s oil and gas sector has an opportunity to transform CO2 from an emissions problem into a potential resource that can create value for the economy, Lenny told the DOB, with doing so requiring the establishment a framework for a CO2 network and a marketplace.

“What has been recognized is that the oil and gas markets in Canada are in some ways at the heart of some of the climate change controversies despite exceptional environmental controls and so much work that has been done, and so we as an industry need to do better. And with the global demand for energy rising, and CO2 emissions rising, we have an opportunity to curb those emissions and bring investment back to Canada through CCUS.”

Although many environmentalists are not necessarily onside with CCUS currently, according to the presenters, CCUS nonetheless will be part of Canada’s transition to a low-carbon economy. Their argument was enough for the team to win this year’s Avatar Program, which concluded in August.

“This is obviously [relevant] within our industry, looking to the future and dealing with some of the more major challenges we face,” Jawad Masud, senior vice-president, operations and projects execution, Canadian natural gas pipelines, TC Energy Corporation,said while announcing the winning group. He was one of the Avatar judges.

“While everyone hit it, we felt that the carbon trunk line project really hit all of the right marks in terms of not only leveraging the existing infrastructure so the economics make sense, as well as the opportunity not only from a province perspective but from a Canada perspective and launching our industry to the next level.”

Future plans

There is a three-part prize for winning the Avatar Program. Every team member’s individual leadership profile will be highlighted across the Young Pipeliners Association of Canada (YPAC) communication and social media feeds. Each team member also receives individualized mentorship to match his or her particular career goals. Winning team members will also meet with the board of the Energy Futures Lab to discuss possible implementation of their idea.

“We’re looking to tighten up the project’s scope, and we’re also going to tighten up the current economics, looking at the business needs, because we actually plan to pitch the idea again in the future,” Rob Goodreau, senior analyst in contracting at Enbridge, and a winning team member, told the DOB. “We think it could be helpful for many companies. It could align with their ESG goals and their visions.”

Beaver Drilling Ltd. partnered with the University of Calgary and YPAC to ‘relaunch’ this year’s Avatar Program over six virtual sessions held this summer. Between sessions the participants participated in real-world, new energy future ‘Action Learning Projects’ for this industry-wide leadership, training and collaboration forum designed to advance innovative solutions to the oil and gas industry and create new business lines.

“What I can see now is the next step in human evolution will not just be led by energy, but it will also be led by you,” Kevin Krausert, president and chief executive officer of Beaver Drilling, said to all of the Avatar teams at the conclusion of this year’s program. “You’ve accomplished much, and you have overcome every hurdle, and you have met with some of industry’s most senior leaders, and you’ve become a shining light for our country’s future.”

Avatar recommended

Both Lenny and Goodreau heard about this year’s Avatar program via an email from senior leaders at Enbridge. Both also have an interest in the future of Canada’s energy sector, and so they decided to sign up for the multi-week online event. Both would recommend Avatar to other young professionals in the oil and gas industry as well.

“You are able to gain some skills along the way, or enhance some you may want to work on,” noted Goodreau. “It was challenging, but it was worth the challenge. The speakers and mentors we were exposed to were incredible. I don’t think you would get an opportunity like that anywhere else, especially the one-on-ones with our coach.”

While the pandemic perhaps forced this year’s program to be fully virtual, Lenny said this actually worked out for the best considering she and Goodreau are both based out of Ontario and otherwise might not have been able to attend if the program was held live in Calgary. “Part of what COVID teaches so many of us, and what we continue to learn, is we can evolve and we can make changes to how we would have done things in the past, making it work now.”

Along with Lenny, Goodreau and Lonsberry, other winning team members include Saharsh Shah, process and analytics engineer at Enbridge, Mike Watters, vice-president of business development at Demon Oilfield Services,and operations analyst Adam Hayman.