Brian Zinchuk is editor and owner of Pipeline Online
On Nov. 2, the Government of Saskatchewan announced that two new oil and gas processing projects, undertaken by Steel Reef Infrastructure Corp., have been approved under the provincial Oil and Gas Processing Investment Incentive (OGPII).
That incentive was introduced in 2019 as part of the Government’s Methane Action Plan. OGPII is available for companies making investments in infrastructure and value-added processing projects, including ones that reduce venting and flaring of methane gas. The first project approved under OGPII was done at the Moose Jaw Refinery in 2019.
The announcement came the day after Prime Minister Justin Trudeau told the United Nations Climate Change Conference UK 2021 in Glasgow that Canada would be capping greenhouse gas emissions from oil and gas, and moving towards net zero emissions by 2050.
It also comes at a time when the value of natural gas at the AECO hub have gone up 58 per cent since this time last year. The December 2020 future price was $3.21 per gigajoule, while the December 2021 price is $5.07, according to GasAlbertaInc.
“These methane capture and commercialization projects will create local jobs and help grow our economy,” Energy and Resources Minister Bronwyn Eyre said in a release. “They build on our energy strengths and are another positive win-win for the economy and the environment.”
Steel Reef’s two North Portal projects represent an anticipated capital investment of $40 million into Saskatchewan. The company expanded its North Portal Gas Plant processing capacity, which became operational in April 2021, and reactivated gathering infrastructure to tie in previously flared gas through its existing integrated pipeline infrastructure.
Steel Reef is also investing in a new fractionator adjacent to the North Portal Gas Plant, which will allow it to process natural gas liquids from its North Portal Gas Plant and other gas plants in the area into separated propane, butane, and condensate for direct access to local and export markets.
“This partnership with the Government of Saskatchewan is a key part of ensuring more associated gas is being captured, processed and brought to markets,” Steel Reef’s chief operating officer Austin Voss said in a release. “We are proud to deliver on our core purpose of enhancing the energy community by investing in infrastructure that prevents flaring and creates value for the province.”
The Methane Action Plan is a made-in-Saskatchewan plan to reduce methane-based GHG emissions by 40 to 45 per cent by 2025 – the equivalent of taking up to 800,000 cars off the road for one year, the government said.
The OGPII program offers transferable oil and gas royalty/freehold tax credits for approved projects at a rate of 15 per cent of eligible program costs. Government investment follows up front private investment and so far, has successfully attracted over $200 million in private investment in Saskatchewan, the government noted.
Asked about possible future projects, Steel Reef spokesperson Andree Morier said, “We’re always looking for opportunities,” but wasn’t more specific than that.