Blog: LNG, hydrogen, carbon capture: More of all

The reports from market-watchers keep coming in: World demand for liquefied natural gas continues to grow, and LNG is going to be around for decades.

One reason is the impact of the Russian invasion of Ukraine, and Russia’s reduction of natural-gas exports to European political opponents who normally rely on Russian gas.

So today we see Europe scrambling for long-term LNG contracts with the US and Qatar to replace Russia as a source of gas.

Leaders of the Group of Seven nations agreed to support public investments in the natural-gas sector ‘as a temporary response’ to the abrupt shortfall in global gas supplies created by the pariah status of Russian fossil fuels.

Germany is pushing for Canada to get moving on potential exports of LNG via Maritime Canada, and hopes for a deal in August.

Qatar is building three new LNG-for-export projects. Five more are under construction in the United States.

Alberta’s Canadian Energy Centre reports: “Global LNG demand is forecast to double and exceed 700 million tonnes (MT) by 2040 from its 2021 level of 380 MT.

“There is a sizeable gap between the demand for LNG by Asia and Europe and their domestic natural gas production. This gap will be filled by imports from various countries.”

It’s all good news for LNG, and for our West Coast LNG exports to Asia (which we can deliver more cheaply than US exporters, who have to spend more time and more money moving LNG through the Panama Canal; costs we do not face.)

So LNG Canada is already exploring expansion of its export plant at Kitimat.

All that said, we and others still look on LNG as a transition fuel. It can replace coal as a fuel for generating electricity and replace oil in the world’s ships. But cleaner fuel such as hydrogen, and renewable green energies, must and will have their day. So will carbon-capture projects.

The energy industry in Canada (and in other key nations) is notably stepping up and speeding up its investments in the production of hydrogen — and its efforts to reduce emissions associated with energy production.

Thus, in a podcast on hydrogen from law firm Gowling WLG, guest JJ Traynor of HydrogenOne Capital in the UK, said: “The demand call that we’re seeing in the hydrogen sector today is supply of clean hydrogen. . . .The off-take is industry. It’s chemical plants. It’s fertilizer plants. It’s oil refineries.

“There’s an absolute imperative on those heavy industries to take this clean hydrogen and make it work to reduce the greenhouse gas emissions from those facilities. It’s not to say that hydrogen is going to fix all of these problems but many of these refining,  petro-chemical sites and steel plants won’t be viable with the carbon penalties that are coming in, unless they can really move on this theme. Green steel would be a great example of that, which also can use a lot of hydrogen.”

He noted that 39 nations, including Canada, now have hydrogen strategies.

“We would see Japan, South Korea, Denmark, Germany, California actually, as the more advanced in terms of target setting and then the policy formation that’s required to make those targets happen. Then other countries obviously catching up pretty quickly.

“But what we’re also seeing is big business kind of getting on with it anyway because of this imperative to clean up the existing greenhouse-gas emissions.”

According to the Hydrogen Strategy for Canada, hydrogen could deliver up to 30% of Canada’s end-use energy and up to 24% of the global energy demand by 2050.

Where is the hydrogen to come from?

Amit Kumar of the University of Alberta says Alberta could become a global leader in the export of hydrogen.

“Globally, we are one of the lowest-cost blue hydrogen producers in the world, given our natural gas prices and the scale at which we produce.”

(Blue hydrogen is made from natural gas, with carbon capture and storage, while green hydrogen is made from water by using renewable electricity.)

The challenge ahead, Kumar said, is to progress to green hydrogen using wind, solar and biomass energy. But for now, the costs of hydrogen from these sources are high compared with blue hydrogen.

Canada is already one of the largest hydrogen producers in the world, and several First Nations have been quick to see a future in and for hydrogen.

The Fort Nelson Nation, for example, proposes a $1.2-billion “bright green” hydrogen production plant that would use wood waste as a feedstock, with carbon capture and storage or use.

JJ Traynor spoke of those industries such as steel and petrochemicals and oil refineries using more and more hydrogen — down the road — to clean up their production and reduce emissions.

But such industries are already working hard and fast to reduce emissions through such technologies as carbon capture. So are natural-gas and LNG producers.

There are two large-scale CCUS (carbon capture, utilization and storage) projects in Alberta, and one in Saskatchewan. There is also a string of smaller projects, and interest is growing fast in others.

At Squamish, Carbon Engineering has a plant that sucks carbon dioxide directly from the atmosphere rather than from an industrial process. The CO2 can then be buried underground or, among other things, used to produce fuel.

Ottawa wants to help eliminate 15 megatonnes of emissions per year through its CCUS  tax credit. It says carbon-capture technology is key to achieving net-zero emissions in Canada by 2050. Natural Resources Canada has committed $319 million for CCUS research and development.

And the International Energy Agency says world emissions-reduction targets cannot be met without CCUS.

Again, First Nations see opportunity (as well as a cleaner atmosphere) in carbon capture.

Squamish-based Huron Clean Energy, a partner of Carbon Engineering, plans a plant at Merritt BC to extract CO2 from the air and turn it into transportation fuel. It has backing from the BC government and an equity partnership and land-lease arrangement with the Upper Nicola Band.

Alberta is looking at six proposals for carbon sequestration hubs in its industrial heartland region north and east of Edmonton, and one is from a coalition of Nations.

Chief Greg Desjarlais of the Frog Lake First Nation, 200 km east of Edmonton, describes it as a historic opportunity.

“We have to leave Mother Earth in a state where our kids and grandkids can flourish and have fresh water and breathe fresh air. So I think that’s the big sales pitch that we need to look at. And secondly, is economic reconciliation with the First Nations.”

Alberta has also invited proposals for projects outside that region.

Whether it’s hydrogen or carbon capture, things are beginning to move faster in Canada, and a greener future is the light at the end of the investment tunnel.

(Posted here 29 June 2022)


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