Transition Matters: Ministers O’Regan and Savage talk Canada’s Energy Future during YPAC x AVATAR Session

Re-posted from the Daily Oil Bulletin – originally authored by Carter Haydu:

Using renewables such as wind turbines to electrify upstream oil and gas operations would allow for oil extraction with lower emissions per bbl, says Minister of Natural Resources Seamus O’Regan. He believes for Canada to attract investment in an increasingly environmentally-conscious world, such “outside-the-box” thinking is necessary.

“We’re going to be broadening our view,” he told Friday’s Avatar Program session. “We’re investing in initiatives to diversify the oil and gas sector. We’re advancing innovative ideas for bitumen beyond combustion. We want to do that in a way that produces zero emissions. We’ll get there by thinking broadly and by thinking bigger, and by making those investments that allow us to get there.” 

Last week, for example, O’Regan announced Canada will join the Three Percent Club, committing the country to collaboration with international partners, including 15 other countries, towards energy efficiency increases, accelerating a transition towards clean energy and helping Canada meet climate change goals.

During the Avatar session, the minister said the future of Canada’s oil and gas industry lies in “net-zero” emissions, as investors are continuously looking towards jurisdictions with cleaner energy production. “We have to take that head on and we have to take net-zero seriously or we’re not going to get the investment we need.”

The Three Percent Club is a collaboration of governments, businesses and institutions the International Energy Agency (IEA) spearheads and is committed to driving an annual three-per-cent improvement in global energy efficiency.

Canada has already outlined measures in the Pan-Canadian Framework on Clean Growth and Climate Change and by the government’s 2019 investment in new energy efficiency programs through the Green Municipal Fund — both expected to reduce Canada’s energy use and cost year over year.

Official membership in the Three Percent Club aligns with the Generation Energy Council’s recommendations, which advised that Canada take steps to achieve greater annual energy improvements by 2030.

“We’re going through a period of change. One of the best things you could do in a market-led economy like ours is to follow the money,” O’Regan told Avatar participants. “The money is leading towards jurisdictions that take net-zero seriously. We have numerous strengths working in our corner — a young workforce that’s incredibly able and talented … is geared towards this.”

Friday’s online Avatar session was a joint dialogue session with both O’Regan and Alberta Energy Minister Sonya Savage interacting with program participants. During the session, Savage told participants that Alberta is diversifying its energy mix, exploring new lower-emissions technologies and opportunities, including ‘blue’ hydrogen, geothermal, small modular energy, helium and a new minerals and mines strategy for the province, and a value-added gas strategy.

She said: “We know as we look to the future, there is going to continue to be a demand for oil and gas. Even as the world moves towards [net-zero] solutions there is going to be continued demand for oil and gas. We just have to make sure we’re the best at it.”

Geothermal potential

Geothermal energy produced from abandoned wells offers potential to Alberta’s energy future, suggested Savage, although there are still “regulatory and competitive questions that need to be answered,” including what agency would regulate this form of energy production, and if it would be done separately from other forms of energy regulation.

“People are reluctant to invest if they do not know where it is going to be regulated,” she told Avatar participants. “In Alberta, right now, [geothermal approvals] are done project-by-project. An individual process and approval permit has to come up for each project.”

Investors need certainty around matters such as whether there are royalties involved, what sort of monetization is involved, and whether there is certainty over surface access, she added. “We are working on all of that, looking to an announcement of the policies in weeks and months, because I know there is a tremendous potential, and that it can be used utilizing abandoned [wells]. They just need the certainty and knowledge of how to do that.”

CCS necessary for ‘blue’ hydrogen

Carbon capture and storage will play a key role in Canada’s energy sector developing of ‘blue’ hydrogen, in which hydrogen is extracted from hydrocarbons, with the leftover carbon captured and stored or reused, noted O’Regan.

“When we take natural gas and look at creating hydrogen for what I think will be an increasing hydrogen market, we need a place to put the carbon,” he said, adding Canada has actually been a player in the hydrogen space for 100 years, but the energy sector has been waiting for better technology to grow this resource opportunity.

“But now we’re looking at this green recovery coming out of this pandemic, the European Union is putting some serious money into hydrogen … and it opens a potential huge export market for us. It’ll also cause us to up our game, but we are well equipped to handle the hydrogen market. We could become real leaders in it.”

He added: “The big advantage we have is people — smart people who’ve been working in the energy space [who have] learned to pivot and move in the direction in which the market is moving. We have a great base. We have people, incredibly educated, talented and skilled people. That’s our biggest asset.”

If you missed the conversation on Friday July 24, check out the recording here: