Brian Zinchuk is editor and owner of Pipeline Online
North Portal gas plant, owned and operated by Steel Reef Infrastructure Corp. Photo by Brian Zinchuk
Steel Reef Infrastructure. was one of several oil and gas industry companies that provided submissions to the Saskatchewan Economic Impact Assessment Tribunal, which was tasked with looking into the proposed federal Clean Electricity Regulations. This is Steel Reef’s submission, verbatim:
Steel Reef Background:
Steel Reef Infrastructure Corp. (Steel Reef) is the predominate midstream infrastructure and service provider in Saskatchewan. Steel Reef provides an essential service by developing and operating the infrastructure to capture associated natural gas (flare gas) from oil production in Saskatchewan and North Dakota. Without Steel Reef, this associated natural gas would have otherwise been flared or vented. Steel Reef gathers and processes over 145 million standard cubic feet per day of associated natural gas preventing ~6,200,000 tonnes of carbon dioxide emissions annually that would have otherwise occurred from flaring or venting.
Steel Reef is supportive of the path to net zero in Canada and throughout the world. It aligns with our core activity of flare gas capture (which in our opinion, is still the most effective way of reducing Canada’s emission profile) and also aligns with our goal of installing electricity generation that continues to support emissions reduction. Our organization is already helping to shape a major energy transition for the Province of Saskatchewan by assisting in backfilling coal-fired electricity generation with electricity generated from captured emissions. This reflects Steel Reef’s positive impact and contribution to the sustainability of the energy sector and our communities. As such, we are keenly interested in the draft Clean Electricity Regulations (CER) and have been watching their development closely. We have been compelled to provide these comments in light of the Clean Electricity Regulations Public Update released on February 16, 2024 (the Update).
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25MW per site threshold impact on flare gas capture:
Steel Reef has been actively working on expanding our infrastructure to incentivize capturing additional volume of associated natural gas in Saskatchewan. To this end we are developing approximately 180 megawatts of flare gasfired electrical generation capacity through projects consisting of 8 and 15 megawatt (MW) units distributed across multiple facilities. These projects would reliably self-supply critical flare gas processing facilities with the required electricity to operate, and export excess electricity to the grid, thereby enhancing the efficiency and profitability of the captured flare gas. It is planned that between 30 to 50 MW would be installed per site, but with each unit at these facilities meeting the previously proposed CER minimum regulatory capacity threshold of 25 MW per unit. The public update provided by the ECCC on the CER included a “change under consideration” to move the per unit
threshold to a per facility threshold. This potential change puts these projects at risk. Steel Reef’s proposed development of 180 MW of capacity would provide an opportunity to capture up to an incremental 40 million standard cubic feet per day of natural gas that is potentially still being flared or vented (equivalent to ~1,700,000 tonnes of carbon dioxide of emissions annually).
It is understood that the regulatory rationale for the draft CER’s exemption applying to units 25MW or smaller was intended to provide relief for remote communities and to limit the administrative burden to manage these small units that produce only low overall emissions. The Update raises the concern that including the 25 MW minimum threshold could incent multiple inefficient units of less than 25 MW to be built to avoid the CER requirements (daisy chaining multiple small turbines) and indicates that a facility-based approach that instead adopts a collective capacity approach is now being considered. We believe that the same intent would be satisfied by retaining the previously proposed CER minimum regulatory capacity threshold of 25 MW per unit, while also adopting a total per site threshold of slightly larger limit (such as 35-50 MW). It is unlikely that setting the site limit to 35-50MW would limit the applicability of the CER as this capacity would still be too small a size to be used for large scale base load power. However, a total facility capacity of 35-50 MW does make sense for efficient flare gas utilization distributed across multiple facilities as it allows for efficient installations with flexibility and redundancy. One of our most fuel-efficient flare gas power generation configurations is the installation of two Solar Titan-130 turbines. The total name plate capacity for this design at one site is 33.1 MW and it can capture up to 11 million standard cubic feet per day of raw flare gas. Maintaining the 25 MW minimum threshold and applying it on a collective facility basis would have the perverse consequence of prohibiting this configuration under the CER, notwithstanding its clear environmental attributes in reducing GHG emissions.
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25MW per site threshold on Co-Generation:
The current commentary also will limit a cogeneration site where any amount of power (over a calendar year) is being exported to the grid but where there is more than 25 MW of installed power is on site. Therefore, a cogeneration unit is subject to the CER, even if its net exports have consistently been the same or lower than another < 25 MW generating unit that purely provides its electricity the grid, which is not subject to the CER. We would recommend to apply the per site exemption based on the total power exported not based on total power installed. This would allow for efficient use of potentially wasted power where waste heat needs can exceed onsite power requirements.
Summary:
With these proposed changes to the draft CER identified in the Update, multiple flare gas to power projects are at risk and create no viable option for captured associated natural gas that would otherwise have been flared or vented. Similarly, the proposed changes will limit the efficiencies that can be realized through cogeneration initiatives. We are requesting the ECCC consider the ramifications of the changes under consideration to the per unit exemption threshold and take into account the option for electricity generation from associated natural gas that would have otherwise been flared or vented.
Should you have any further questions, please do not hesitate to contact me.
Sincerely,
Scott Southward
President & CEO
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