Dan MacLean. Photo by Brian Zinchuk

 

REGINA – After nearly five years as president and CEO of the Petroleum Technology Research Centre, Dan MacLean is retiring. Again.

This isn’t his first time hanging it up. Previously he retired as president of Tundra Oil & Gas, Manitoba’s largest oil producer.

And his term as head of the Regina-based PTRC coincided with most of the oil downturn. He started in May, 2017, during the first week of the Williston Basin Conference, an event that the PTRC took over the administration of from the Ministry of Energy and Resources. While the ministry remained a partner, the PTRC took the lead on putting the show together for the alternating years the event took place in Regina.

 

While the PTRC’s mission has always been aimed at increasing the province’s oil reserves and getting more oil out of the ground, a very large part of that has involved carbon dioxide, and its use in enhanced oil recovery. Reducing carbon dioxide, in recent years, has also been the nearly singular focus in global efforts to tackle what is believed to be anthropogenic (manmade) climate change. And thus, the PTRC has been heavily involved in research into reducing emissions and increasing energy efficiency of enhanced oil recovery (EOR). More recently, with the Aquistore deep saline storage project, PTRC has been specifically looking at the science of permanent CO2 geologic storage.

Pipeline Online spoke to him by phone Oct. 14, shortly after MacLean announced his retirement. His last day will be in early February, and a newly hired CEO is expected to begin work on Feb. 15.

“I came off being the president of Tundra for five years. I retired from them in August of 2014. By December the oil price had collapsed to about 40 bucks a barrel, and basically stayed there for the next three or four years,” MacLean said.

Wasn’t ready to actually retire

“Now, what’s interesting between leaving Tundra and starting at PTRC, I didn’t spend my time just twiddling my thumbs. I actually wasn’t quite ready to retire, but I certainly could have, if I wanted to. Instead, I use the opportunity to go out and talk to every private equity guy in Calgary and Houston, Dallas, New York, as well as keeping an eye on what was coming up for sale. I put a team together and we were looking at buying assets,” he said.

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“I say this kind of jokingly. Over that timeframe, between August of 2014 and May of 2017, the best deals they were doing were the ones I didn’t do, which were basically everything. It was that downtrend, period. What a time to try and start something on your own. But I gotta say, I learned so much about what it takes to finance an opportunity, put a team together, etc.”

MacLean continued, “By 2017, I was looking for something else, and the opportunity for PTRC came along, and I saw three things that I wanted to do there. And this was still through the downturn.

“I wanted to support research and technology, which is something that has been at the heart of everything that I’ve done in my career as a reservoir engineer, working for an international oil company for 26 years, Murphy and Tundra. I did everything I could to support developing and implementing new technologies. There’s a litany of things that I’ve been involved in, right from being part of the first laptop that ever came into the oilpatch in the offices to use for reservoir engineering.

“That’s what I wanted to do with PTRC. And I knew about them, because the person that I took over for as president of Tundra was a fella by the name of Roland Moberg. Roland was the first GM/president of the PTRC. So I knew about PTRC. Tundra was a member of PTRC for a while, so I knew they what they were all about, and I saw this as a great opportunity to continue that legacy of supporting research and technology. That was the first thing.

“The second thing was that at that time … the only gas industry was getting beat up pretty badly. And so I wanted to have a platform, if you will, to support this industry, and the importance of this industry, from the jobs creation perspective, cash flow, but also from the perspective of the kinds of technologies that we have been involved in throughout my entire career on reducing greenhouse gas emissions, our environmental footprint, etc, etc. That message, somehow, was getting drowned out by all these special interests folks, and I’ve wanted to be able to do that.

“And here’s the third thing, and it’s a bit selfish. My wife was born in Regina. She moved away when she was very young. She has two half sisters in Regina, and we have been getting to know them a little bit over the years, but this was an opportunity to spend more time in Regina and get to know them.”

Dealing with the downturn

MacLean said, “Now, what was it like through the downturn? It was tough. But you know what? I’ve been in this industry for 40 years. I can tell you from 1982 to 2000, the price of oil languished around that $15 to $20 a barrel, and yet this industry thrived and survived. Now structure has changed substantially.

“But you look at the arc of my career, follow the oil price and it’s been up, and it’s been down. And I guess I felt like I could bring some stability, even if it was in the way that I see this industry, to the folks who we provide services to, and to the folks that we report to, whether they’re in government or our industry sponsors, so that was something that was important

“This is the thing that I tell people – this business, like a lot of businesses, is a relationship-based business, so I’ve had a blast, just talking to people. And I took this job on knowing that, okay, my daughter happened to be in high school at the time, so I wasn’t planning to move full-time to Regina. I was prepared, at my own cost, to commute, weekly, to Regina. Monday mornings on a plane to Regina, Thursday afternoons back to Calgary, and every Friday I was downtown, talking to everybody; talking to whoever would listen to what PTRC was all about. And it was about building relationships.

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“Now having been a CEO, having talked to all these private equity guys, I knew what was ticking for these guys. So, part of it was having a sympathetic ear. They were struggling just to stay alive. And so, investing in research at that time wasn’t something they were interested in. But it was all about planting the seed. It was all about just continuing to talk to them, and let them know that PTRC is here, that we’ve been around for 20 plus years. These are our core research areas. We think that we can help you, but when you’re ready, we’ll be there and come and talk to us.”

Whitecap Resources-opearted Weyburn Unit. Photo by Brian Zinchuk

 

Phone ringing off the wall recently regarding CO2

There’s been more talk about carbon capture, utilization and storage in the last year then there has been since Boundary Dam Unit 3 first went into operation. The PTRC literally wrote the book on geologic storage of carbon dioxide through the development of the Weyburn-Midale project. Building on those relationships paid off, according to MacLean, who noted, “Lo and behold, I say this to folks figuratively, the phone in the last six months has been ringing off the wall. People are interested in what we have been doing, especially in the CO2 storage space. How do you do CO2 storage? What kind of wells and completions, do you need? How do you measure, monitor and verify that stuff? And who is it? It’s the folks I’ve been talking to for the last five years; the people that I have made contact with.

 

“And so, there’s a part of me that says maybe this isn’t a great time to retire but actually it’s the perfect time. When you look back at our history, presidents tend to leave on a downturn, or something happened. I’m leaving on an upswing, and I love it and I’m, I’m here to support whoever follows in my footsteps. So, I think this is a great opportunity and great time to pass the baton.”

Sometimes it takes a long time for things to percolate before they’re ready. With respect to a CO2 focus that just now is starting to develop, he said, “This is the thing about building relationships: you let it just settle, and then about a year later, I get an email, ‘Hey, let’s talk about this. What can you do? How can you help us?’”

Piloting

With the rising interest in carbon dioxide-enhanced oil recovery (CO2-EOR), MacLean said it’s a huge investment in capital, and companies are going to have to pilot it. “This is where we said we can help you with that. We can help you spend 50 cent dollars, if you’re willing to partner with PTRC in piloting this.

“Now, here’s the interesting thing, and this is the message I’ve conveyed to a lot of companies. You want to do that. I know what you’re interested in: can I get the CO2 in the ground? How long does it respond? What does it look like at the response? Well, that’s pretty much all they’re interested in.

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“My message to them is what we’re interested in from a research perspective: what’s going on down in the reservoir? How the rocks respond to the solvents that you’re putting in the ground? What does that geologic-solvent interaction look like? That’s the part that maybe you don’t spend a lot of time on, that we would be able to help you with – our stable of researchers have looked at this.”

Planets need to align with the oil price

MacLean said, “The other thing that has to happen: all the planets have to align, starting with the oil price, okay? And then you’ve got to get the regulators and royalty structures that support it. And then you have to have the infrastructure, and all these things. And this is what’s starting to happen here, with the talk around CO2 storage hubs. You saw the announcement from the Saskatchewan government looking at the five initiatives. They want to look at CO2 or royalties. They want to look at carbon credits, at CO2 storage, at CO2 transportation. All of these things are interconnected with the things that PTRC has been involved in for the last 23 years.

“And I found it quite interesting, when I went out and talked to all these folks, that there seemed to have been a lack of understanding what PTRC has been doing for the last 23 years,” he said, adding maybe that was the thing he could bring to the table for PTRC, his time in Calgary, which predecessors may not have done.

A cross-well seismic survey was done at the Aquistore site in December, 2021. This is the injection well. Photo by Brian Zinchuk

 

Aquistore grew in significance

The deep saline aquifer CO2 storage project known as Aquistore at Boundary Dam has been run by the PTRC for SaskPower, which owns the infrastructure (wells, MMV equipment). Now there’s interest to do a similar project in North Dakota at Beulah, site of the Dakota Gasification Plant. That’s also the source for carbon dioxide coming into the Weyburn and Midale Units.

 

A separate project at Center, North Dakota, is Project Tundra. It will work very much like the Boundary Dam Unit 3 Integrated Carbon Capture and Storage Project, using post-combustion carbon capture. Whereas BD3 sends nearly all of its captured carbon dioxide to the Weyburn Unit for enhanced oil recovery, and a small portion into Aquistore, Tundra will send all of its CO2 into deep saline storage. Basically, it’s just like BD3, but without the enhanced oil recovery. MacLean said North Dakota’s Energy & Environment Research Center (EERC) has long been a partner of the PTRC, and those efforts at the Tundra project are parlaying off research done at Aquistore.

Maclean said, “In fact, the EERC is involved in another project called Project Tundra, coincidentally it’s called that, and they have a pilot that they’re working with one of the small coal-fired power generation plants. What are they doing? Putting carbon capture on it, and CO2 storage. Where they going to store the CO2? into the Deadwood. And everything they ever learned, they’ve learned from us.”

When he first came to the PTRC, Maclean questioned the value proposition of Aquistore, thinking it was better to sell carbon dioxide for enhanced oil recovery. But he’s since come around, saying, “It didn’t take long before I saw the value in the interest not just locally, but internationally. So we have folks from Australia, from North Dakota, from other parts of the United States and Europe, all interested in what’s been going on there.

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“So I kind of eat crow, now, when I see how important Aquistore has become. The world is coming to this little province, to this little project, to try and understand what we’re doing because when you look at it, when you step back, nobody else in the world is doing what we’re doing at Aquistore. It’s a living, breathing research facility testing things and technologies that you can’t, or wouldn’t be able to test anywhere else. Starting with seismic and distributed acoustic sensing using fiber optics. We’ve got a Cadillac of surface and subsurface monitoring activity going on there. And we get to do this on the doorstep of Boundary Dam with the support of SaskPower, which I’m very grateful because Mike Marsh and I talked quite a bit.”

Marsh retired as CEO of SaskPower at the end of 2021. He was in charge for most of the duration of the Boundary Dam Unit 3 Integrated Carbon Capture and Storage Project’s operation, of which Aquistore is a part. MacLean noted that carbon capture is going to be important for nations to meet their respective Paris Accord targets.

He spoke of building public confidence that CO2 is indeed staying put, deep (3.2 kilometres) underground. “I can tell you exactly where the plume (of carbon dioxide) is. I can tell you that there is nothing happening on the surface, because we baselined everything, and then every year we monitor it and guess what? It’s zero, zero, zero, zero. We can tell the difference between anthropomorphic CO2 that’s injected into Aquistore, and naturally occurring CO2 on the surface. Those are things, as a third party, if anybody ever had anything to say about it, we would be able to step in and say, “No, as the authorities of this, we can tell you what’s happened. And we did that already, at Weyburn.”

Indeed, on Jan. 19, 2022, a group of over 400 academics wrote an open letter to Deputy Prime Minister and Minister of Finance Chrystia Freeland, urging her to reject the idea of a carbon dioxide investment tax credit for carbon capture, utilization and storage (CCUS). That letter said, “Safe, permanent, and verifiable storage of CO2 is difficult to guarantee,” a point MacLean refutes. His last week at the PTRC involved contesting the allegations in that letter with other CCS organizations around the globe and locally.

Carbon trunk line

MacLean is excited about recent developments within Saskatchewan with regards to CO2. In November, Federated Co-operatives Ltd. announced they were working with Whitecap Resources to build a carbon dioxide hub, what has also been referred to as a carbon trunk line, running from the Regina area to the Weyburn Unit.

He said, “In the province, we saw an opportunity to build a Saskatchewan carbon trunk line system connecting not just Boundary Dam or Shand. There are other sources, commercial sources of CO2, whether it’s potash or refinery, or whatever.

“Collect all that stuff into a distribution network, to be used for other CO2-EOR projects, and creating value, as well as reducing emissions, using old infrastructure, using old wells, that would otherwise be abandoned. This has been our vision.

“And it’s not just southeast Saskatchewan. The stuff we’re looking at, Lloydminster,” he said.

The PTRC has also met with many of the big and small players in Lloydminster’s heavy oil region about determining a safe hub location for injecting CO2. A meeting in Calgary in October of 2021 brought most of the players in Lloydminster together for discussions on permanent storage, not just CO2-EOR.

Applicable to Lloydminster area, too

“Well we talked to them all, and, and they are interested in CO2 storage. And they know that they are going to have to do it. We’re talking not just called heavy oil production with sand (CHOPS), the Cenovus/Husky and CNRL, but the little guys, the Strathconas and the Gears, and folks like that, who may be involved in SAGD. Well they’re going to have to recover CO2 from the natural gas they burn to generate steam. They don’t want to put that CO2 in a 2,000 kilometre pipeline. They want to put it in their backyard. And that’s exactly what we were looking at. We’re saying to them, “We can take everything we’ve learned from Aquistore and drop that into the Lloydminster area. But we need to study the Deadwood (formation). We need to understand it as a potential long-term storage facility.”

Aquistore puts CO2 in the Deadwood formation, the deepest formation in Saskatchewan before you hit the granitic Precambrian basement. And that formation extends into northwest Saskatchewan. MacLean noted it’s shallower, but critically, it’s just deep enough.

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“It’s right at that cusp of still allowing the CO2 to be super critical (in a liquid-like, compressed state), you don’t want it to become a gas in there, because it just expands. You want it to be in a sort of pseudo-liquid state that takes up less space. And in that state, it does impact rock properties, which allows you to use seismic to see what that plume looks like. All of these things that we’ve been pioneering at Aquistore we feel we can use up there, including all the measurement monitoring and verification.”

In these cases, the carbon dioxide would not be using CO2 for enhanced oil recovery.

However, he noted that the PTRC has been working with Husky/Cenovus/CNRL for years, looking at cyclic solvent injection using CO2 as the carrier gas in cold heavy oil production. The companies wanted PTRC to study how much CO2 would stay in the ground in that case. “They see the opportunity to go from five to seven per cent recovery on primary and cold heavy oil production with sand, to another five to seven per cent using cyclic solvent injection with CO2.”

 

MacLean wanted to see the PTRC help add five billion barrels to the province’s reserves over five years, and cyclic solvent injection would meet half that goal.

One of the PTRC’s projects in heavy oil was JIVE (Joint Implementation of Vapour Extraction), which was field trials of CO2 using other solvents. “As a consequence of that Husky ended up doing a CO2-EOR project in heavy oil up in the Lloydminster area,” he said. He found out about that just as he came into the position. That project is still going on today, he said.

“Cyclic solvent injection with CO2 – another two billion barrels of potential reserves – is that real? Yeah,” he said.

“Here’s the other thing it does: there are about 10,000 wells that are going to need to be abandoned up there. And when you think $50,000 to $75,000 a well, that’s a big chunk of change. Well, cyclic solvent injection helps you to defer abandonment of those wells. Now, there is the race against time. They want to abandon them. We want them to use them for enhanced recovery. This is where we’re pushing industry to really start thinking commercially.”

Tough times in 2020

That argument has been hard, with oil prices that were down to $40 a barrel, or lower. And when oil prices collapsed in 2020, it really hit home. The PTRC saw its provincial funding reduced, and oil companies taking a step back.

“We had to take a step back to do some soul searching. What we did, as PTRC, is we all took a pay cut. We knew that we were dependent on the oil industry to support the research that we have to do. We took a pay cut, and we were lucky because we have a little bit of money in our piggy bank, because of the last 20 years. And we said, ‘You know what? We are going to continue with our research program. If you, industry, are prepared to do the in-kind support; that is, you’re going to dedicate and commit your people, to helping us put our research program together, in particular for HORNET, the heavy oil side of things, we see this as important. The oil price will come back. Don’t worry, you know. We will help you through this.’

“And so we put a very robust research program together for 2020-2021. And lo and behold, pricing goes back up to 80 bucks, industry is back supporting us. In fact, we’ve been able to find other places to get funding, including internationally. We got some funding from the Swiss government,” he said.

 

Watch for the next installment, when MacLean talks about the future of the oil industry.

 

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Here’s the entire letter signed by 400+ academics in opposition to carbon capture, utilization and storage

Letter signed by 400+ academics shows “much deeper apparent revulsion for the energy sector,” says Saskatchewan energy minister