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Featured Articles
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Mar 2010
| Source: Oilweek Magazine
| | | A deeper shade of green
| | | Long involved in wind energy, Enbridge is spreading its wings to take in solar and geothermal technologies
| | | by Jim Bentein
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| Calgary-based pipeline and power giant Enbridge Inc. has already invested heavily in such renewable electricity areas as wind and solar; now it has turned its attention to geothermal energy projects in British Columbia and elsewhere in North America.
"We believe there is meaningful potential for geothermal energy production in Canada," Chuck Szmurlo, vice-president of alternative and emerging technology with Canada´s largest pipeline company, told Oilweek.
"It´s on our radar screen. Canada is still in its infancy [in terms of naturally occurring geothermal power]. But there is an attractive resource in B.C."
Szmurlo said Enbridge would likely partner with companies that have been studying the potential of tapping natural geothermal from deeply buried hot water or steam, known as a geothermal reservoir.
"We´ve been exploring various possibilities with people in the industry," he said. University of British Columbia engineering professor Mory Ghomshei, who has studied the geothermal potential of British Columbia and the Yukon, says there is "immense" potential for power production from what he calls a coastal "ring of fire," stretching along the Pacific coast.
There are no existing geothermal reservoir projects in Canada, but they are prevalent in other parts of the world.
In Iceland, for instance, about half of the country´s electricity and most of its space heating and hot water requirements are met by geothermal resources.
In the United States, about 4,000 megawatts of power is generated using naturally occurring geothermal sources in California, Nevada, and other western states. Ghomshei has estimated there is the potential for between 3,000 and 6,000 megawatts of natural geothermal power generation in British Columbia.
Enbridge is interested in the utility-grade potential of such sources, rather than in heat pump-sourced geothermal energy, used in smaller residential and commercial applications (such as Drake Landing, a residential development in Okotoks, Alberta, where most of the space heating comes from geothermal sources).
"We´re interested in capturing larger, utility-scale sources," he said. Enbridge recently joined the Calgary-based Canadian Geothermal Energy Association, which promotes that form of energy.
While the company´s interest in geothermal power may seem out of character, given that its major focus is on the mostly government regulated pipeline business, where risks are minimal, he said the renewable energy sector offers the same kind of predictability.
"What I like about the area is it is consistent with our business model of providing attractive returns with little risk," he said.
He echoed statements made recently by Patrick Daniel, the company´s chief executive, who said the company will spend about three percent of its income by 2013, up from about one per cent now, on alternative energy projects.
"Over the next five years we expect to deploy at least an additional $1 billion on renewable energy projects," said Szmurlo.
The company, which transports more than 70 per cent of western Canada´s crude oil and is Canada´s largest gas distributor, with customers in Ontario, Québec, and New Brunswick, believes it can achieve the same kind of "double-digit" returns in renewable energy projects as it has historically in the pipeline and utility sectors, he said.
Szmurlo said Enbridge will continue to invest in wind power projects. It and wholly owned Enbridge Income Fund now have interests in five wind projects that can generate a total of 314 megawatts (enough to provide power to a mid-sized city like Red Deer, Alberta). They include an 11-megawatt wind farm in Saskatchewan; two developments in southern Alberta: the 30-megawatt Chin Chute project and the 30 megawatt Magrath project; its wholly owned 190 megawatt Ontario Wind Power project, located on the shores of Lake Huron; and the recently announced Talbot Wind Energy Project, which will produce 99 megawatts when completed by next year.
All the wind projects produce predictable returns, he said, with the Alberta and Saskatchewan output being sold into respective provincial grids at contracted prices and the Ontario projects contracted with the Ontario Power Authority for 20 years.
While the Ontario contracts are the most attractive, he said the company is interested in expanding it wind power presence throughout western Canada, Ontario, and Québec, as well as into the U.S. Midwest and Texas.
"Our focus is on areas where we have existing energy infrastructure," he said. "We would never build a wind project in Hawaii, for instance, even though it has a very good wind regime, because we have no other assets there."
He said, given that Enbridge has pipelines, tank farms, and other assets in many U.S. states and in much of Canada "that gives us a lot of room to play with."
He said the company, which has now been involved in wind projects for about a decade, has developed an expertise in building its own wind projects and would prefer to invest in its own projects, versus buying existing assets.
The company, which had already begun to alter its somewhat stodgy reputation with its wind power investments, went in an even more radical direction last October, when it announced it would invest in what will be North America´s largest utility-size solar energy project.
Last October, Enbridge said it would spend $100 million to acquire a 100 per cent interest in the Sarnia Solar Project from the world´s largest solar power developer, First Solar Inc., based in Tempe, Arizona. That project is now producing 20 megawatts of solar power.
It followed that announcement in December with word it would work with First Solar to have that company expand the Sarnia project to 80 megawatts. It will spend $300 million on the expansion.
Szmurlo said the Sarnia solar project may be the first of others Enbridge will invest in, in Ontario and elsewhere.
"We´re very impressed with First Solar," he said. "It´s a partnership that has the potential to grow in the years to come."
While solar power isn´t economically competitive with wind power at this point-output from the company´s wind projects is profitable at subsidized rates of 11 cents and up per kilowatt-hour-he said the cost of solar power components is declining rapidly.
Solar projects in Ontario are viable because the Ontario government provides an incentive of 42.5 cents per kilowatt-hour, the most generous subsidy in North America.
The Sarnia investment conforms to the firm´s mantra of only investing in renewable energy projects near its existing conventional energy assets, since it owns a tank farm nearby.
The company, which is investing in renewable energy with the goal both of diversifying its income sources and of offsetting the environment impact of its pipeline operations, has a number of other "green power" investments.
These include ownership in the world´s first hybrid fuel cell power plant, which converts unused natural gas pipeline energy into hydrogen (a small plant is located near its Toronto office), and an investment in a company that recovers waste heat from gas turbines at compressor stations and converts it to electricity (it has four such units operating in Saskatchewan, producing five megawatts).
It is also involved in two initiatives in Canada investigating the feasibility of the long-term sequestration of CO2 in deep saline aquifers. It is leading a consortium of 38 energy industry firms in the Alberta Saline Aquifer Project, which aims to identify deep saline aquifers in the province capable of storing CO2, and is involved in a similar initiative in Saskatchewan.
Szmurlo said he´s also excited about a plan, based on research that has been conducted by Enbridge for several years, to build a pipeline from Fort McMurray to central Alberta that would use liquefied CO2 in a slurry to transport waste solids, such as petroleum coke, sulphur, and limestone. Because CO2 works better than water as a delivery mechanism, the waste products from oilsands could be delivered to where they might have more use, while the CO2 would also be shipped south, where it could be used for enhanced oil recovery.
He said the company will be announcing a plan later this spring that would accelerate research into the line, with partners that include many "household names" in the energy industry.
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