Alberta reveals natural gas strategy
Earlier this week, the Alberta government released a vision and strategy for the natural gas sector.
Canada is the 4th highest producer of natural gas in the world, and about two thirds of that is produced within Alberta.
The newly released vision and strategy is intended to include more than natural gas production and distribution. The province also hopes to use the natural gas stores to create hydrogen, petrochemical, and recycled plastic products.
Within the vision and strategy are the following 5 goals:
- Exporting hydrogen and hydrogen products across Canada, North America, and the world by 2040
- Become a global top 10 petrochemicals producer and diversify portfolio of products manufactured
- Coordinate 2–3 new large-scale liquid natural gas projects by 2030 to deliver natural gas to Asia and Europe
- Become Western North America’s centre of excellence for plastics recycling by 2030
- Increase Alberta demand for natural gas and natural gas liquids
Regarding hydrogen production, there appears to be 4 types: brown hydrogen, grey hydrogen, blue hydrogen, and green hydrogen.
Brown hydrogen (also called black) is simply hydrogen created through the gasification of coal or lignite. Grey hydrogen, on the other hand, is created through natural gas. Blue is the same as grey, but carbon byproducts are captured during the production process and either stored or used for another purpose. Green production is created using renewable energy sources (solar, wind, hydro) to power water electrolysis as the hydrogen source.
(There’s a turquoise hydrogen, too, but it’s emerging, so I won’t discuss it here.)
Alberta wants to focus on blue hydrogen, presumably because of the huge natural gas stores we have (300 years worth, according to the announcement) and because it seems more environmentally friendly than brown or grey. And choosing blue over green is a way to seem environmentally responsible while also staying true to your oil and gas base. Plus, blue hydrogen is cheaper than green hydrogen. At least for the moment.
Something to keep in mind, however, is that green hydrogen seems to be where some countries are headed.
For example, just this week, the Spanish government revealed that it plans to invest €8.9 billion ($13.9 billion) into ramping up green hydrogen capacity in their country to 4 gigawatts within the next 10 years.
France plans to spend €7 billion ($10.9 billion) to get up to 6.5 gigawatts, while Germany hopes their €9 billion ($14.1 billion) investment will build their capacity to 5 gigawatts.
As well, making green hydrogen a larger part of this strategy could potentially be a boon for the renewable energy sector in Alberta.
Alberta claims to have one of the most established petrochemical manufacturing centres in the country, and apparently the province could grow this sector by over $30 billion over the next decade. The government claims that this growth could result in another 9000 direct and indirect jobs every year during that period and generate about $1 billion in both corporate and personal income tax each year.
Liquified natural gas
The new vision and strategy contains no information on the benefits to the province should the above 2 or 3 LNG major projects come to fruition. They seem to focus exclusively on extracting and exporting the LNG.
Justification for this approach seems to focus on the fact that exporting Alberta LNG it to Asia from BC could take half the time it does to ship it from the US Gulf Coast, and shipments to Europe from Canada could take less time (although it’s unclear how much less) than other North American LNG projects.
As well, they claim that LNG can help reduce carbon emissions in several countries as coal plants are replaced with natural gas.
There are two problems with these claims, however.
First, while it’s faster to ship LNG from BC than from the Gulf Coast, it’s even faster to ship it from Russia.
For example, the Power of Siberia pipeline will ship 61 billion m 3every year between Russia and China. Canada ships about 73 billion a year, but that’s for all exports, all of which currently go to the US.
Second, while it’s true that Alberta LNG can help reduce carbon emissions as countries transition away from coal electricity, that’s the case with all natural gas. There’s nothing special about Alberta’s natural gas for this purpose. And speaking of Russia, they’re the world’s largest exporter, exporting twice as much as the United States, the next largest exporter. They export 21% of all the world’s exports. Canada (as a whole, not just Alberta) exports just 6%. Plus, Russia has 24% of the world’s natural gas reserves, while Canada has only 1%.
And that’s just Russia. Qatar is the third largest exporter and has the third largest reserves.
There’s little incentive for Asia or Europe to use Alberta LNG over natural gas from Russia or Qatar, let alone the US.
As I mentioned above, the UCP government wants Alberta to become, by 2030 (I sense a theme here), the centre of excellence for plastics diversion and recycling within Western North America.
No data was included in the announcement regarding the impact this initiative will have on the province, not the increase in GDP, jobs, tax revenue, or any other measure.
That being said, 86% of plastics within Canada (95% of plastic packaging) ends up in the landfill, so recycling plastics could reduce that number, and that would be a positive thing. Plus, recycling plastic could also reduce demand on oil for producing new plastics, which itself could also be positive.
Not much was said regarding this area either, other than they want to increase demand within Alberta for Alberta natural gas. I wonder what increased demand would have on such things on emissions, from both consumption and extraction of natural gas.
There were a couple of quotes in the announcement that I found interesting. Take this one from Nancy Southern, chair and CEO of ATCO Ltd (as well as a member of the Economic Recovery Council announced this past spring, and her family and their business have donated over $350,000 to the UCP or its predecessor parties):
“Alberta’s natural resource industry is the greatest economic engine of this country, although the national prosperity it creates is often discounted. Nonetheless, the Government of Alberta and our industries continue to strive for excellence; advancing low-emissions technology and environmental efficiencies. The extraction of hydrogen from natural gas is yet one more example of our collective commitment to being the world leader in emissions reductions.”
If you want to be a world leader in emissions reductions, why not pivot to green hydrogen, instead of grey or blue hydrogen?
Or this one from Ginny Flood, chair of the Clean Resource Innovation Network:
The world will need all forms of clean energy sources to meet global demand and natural gas will be an important part of that energy mix
An important part, not the only part of the mix. Where is Alberta’s vision and strategy for the other clean energy sources that a part of that energy mix?
Why only natural gas?
Originally published at kimsiever.ca on 9 October 2020.