Brian Zinchuk is editor and owner of Pipeline Online
Del Mondor, left, and Bronwyn Eyre, right, present Grant Fagerheim with the Oil Person of the Year award on June 1 Photo by Brian Zinchuk
WEYBURN – On June 1, Whitecap Resources CEO Grant Fagerheim was honoured as Saskatchewan’s Oil Person of the Year. A lot of that had to do with how he is leading his company in major developments in carbon dioxide capture, utilization and storage, particularly at the Weyburn Unit.
And the scope of these initiatives keeps getting bigger and bigger.
Last fall, Whitecap and Federated Co-operatives Limited (FCL) announced they were working on a carbon dioxide hub in the Regina area. The initial announcement was for two CO2 sources – FCL’s Consumers Refinery Complex, and their ethanol plant at Belle Plaine.
At the time, Fagerheim noted there could be several more companies seeing to take part in dealing with their CO2. To this date, Whitecap has quietly mentioned additional companies have been signing on, but not a lot of fuss has been made.
This is all occurring on a backdrop of other developments on the CO2 front. In 2000, the Weyburn Unit, at that time operated by EnCana, began accepting carbon dioxide from Dakota Gasification at Beulah, North Dakota via the Souris Valley Pipeline. The contract for that is coming to its end, and that could have substantial impacts. Currently the Weyburn Unit is receiving two million tonnes of CO2 per year between Dakota Gasification and SaskPower.
Pipeline Online had a few minutes to talk to Fagerheim before the awards banquet, and he elaborated on what’s happening.
Bronwyn Eyre, left, and Grant Fagerheim. Photo by Brian Zinchuk
Pipeline Online: You’re doing stuff that no one else is doing, you know, all the CO2 stuff, you’re working on as carbon hub, you got to this energy map. So what are you doing?
Grant Fagerheim: We’re an energy company, first of all, an oil and gas company. But we’ve also bought into the fact that energy transformation is underway. So, participating in, whether it’s hydrogen opportunities, and carbon capture utilization and storage, obviously, is going to be a very key component, if we’re really going to look to advance to a decarbonized world. So we want to play and participate in all of it. And why not do it right here, with probably the hardest working people in the in the country, but here in the province?
Pipeline Online: The Weyburn Unit started getting CO2 in 2000. And that contract, my guess, was either 20 years or 25 years. And I heard a rumor that there’s a possibility you might not be getting much CO2 past the 25 years from Beulah (North Dakota).
Fagerheim: That’s correct. I mean, we’re paying for CO2 right now. If you think about that, in this world that we’re living in, we’re paying for the CO2. We have one contract with SPC (SaskPower Corporation) that is terminated at the end of ’24. And our contract with Dakota Gasification terminates at the end of 2026. So, we’ll identify, which we have, bringing in new sources for CO2 into the pool, and that’s where we’re working with Federated Co-op, and some of the large emitters up in that Belle Plaine area.
Pipeline Online: When you first announce that stuff out at Belle Plaine and whatnot, was that going to be in addition to what you’re getting from the south?
Fagerheim: Yes, in addition. Renegotiate contracts, too, right? But we won’t be paying as much as we are right now for the CO2.
Pipeline Online: So that’s a question, here, because the US brought in 45Q, which you’re probably familiar with. And my understanding of that is if they’re using CO2 for enhanced oil recovery, in the US, they’ll get at $30 tax credit, and a $45 tax credit if they’re injecting it like the Aquistore project. Is that then putting a floor price for what you’re paying for CO2, or do you think people should be paying you for CO2?
Fagerheim: Yeah, no, I think you’re gonna have to pay some type of funds for the CO2, but just not at the price that we’re paying at this particular time. So we do believe in that to decarbonize, you know, we’ve got the technology to sequester, and store CO2, but we’re gonna have to pay something for it. And that’s a negotiation on a project-by-project basis.
Grant Fagerheim. Photo by Brian Zinchuk
Pipeline Online: A couple of years from now, then, are we going to see CO2 potentially from three different directions, or two different directions or are negotiations with SPC and Beulah are still up in the air?
Fagerheim: The premier is working with some cross-border arrangements regarding 45Q, with the governor of North Dakota. So that is underway.
Conversations (are ongoing) with SPC, as well as the current emitters that are looking to decarbonize. So, we’ve got lots of different opportunities and avenues to go down. You just have to apply our technology and advanced know-how.
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Pipeline Online: You probably can’t say anything about this, but have you heard anything from SPC regarding additional carbon capture? Have they said anything at all?
Fagerheim: Not yet. Not as yet, they have not. They’re making a decision on that. We have not heard that they’re going to proceed with that or not.
Pipeline Online: And if they do, will you take it?
Fagerheim: For sure.
Pipeline Online had run into one of Whitecap’s leaders on the CO2 front at the Williston Basin Petroleum Conference two weeks earlier. At that time, he indicated Whitecap was interested in taking all the CO2 it could get.
To that end, Fagerheim said: Totally.
Pipeline Online: Do you have all six (CO2-emitting companies) now, that you wanted lined up in Belle Plaine area?
Fagerheim: Yes.
Co-op Refinery Complex. Photo by Brian Zinchuk
Pipeline Online: That’s the Regina refinery, Belle Plaine ethanol, and K+S. Who are the other three?
Fagerheim: Yara, Mosaic (Belle Plaine), Evraz in Regina, and we’re in conversations with Gibsons’ (Moose Jaw refinery).
Pipeline Online: So that could be seven, then?
Fagerheim: Yeah. It depends upon the pace they want to decarbonize, right?
Pipeline Online: So what sort of tonnage are we talking about? I think you said two million tonnes per year, at one point?
Fagerheim: Between three and five million tonnes a year.
Pipeline Online: That’s incluse of the stuff from North Dakota?
Fagerheim: No, that would be on top.
Pipeline Online: So that would be a 24-inch pipeline or so?
Fagerheim: We can’t size it, because we haven’t got it under contract.
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Pipeline Online: So, when you first made this announcement last fall, as those were things I kind of clued in on. Basically, everyone’s got to decide if they’re in or not, because that pipeline – once it’s done, it’s done. If you’re not in, you aren’t going to get in.
Fagerheim: That’s right. That’s what needs. So, that is why we’re doing feasibility studies right now. That will include different sizings of pipe, but how much CO2 we can contract for, and then what we’re able to negotiate commercial terms? So that’s what we’re looking to do.
Pipeline Online: So that stuff from North Dakota is pretty sour. Is this stuff from Regina going to be sour?
Fagerheim: Not as bad.
Pipeline Online: But it will be partially sour?
Fagerheim: That’s right.
Derrick Big Eagle, left, and Grant Fagerheim, chat before the awards banquet. Big Eagle was being honoured as Oi Person of the Year for Southeast Saskatchewan, and Fagerheim got the provincial award. Photo by Brian Zinchuk
Pipeline Online: Is there anyone else in Saskatchewan working on this? I know Cenovus has been doing some stuff in the northwest. Are they working with you at all?
Fagerheim: No, not in the Regina-Belle Plaine area.
Pipeline Online: So five million tonnes a year is quite a bit more than compared to what was originally planned for Boundary Dam. That was supposed to be a million tonnes a year and ended up being about 700,000. So you’re looking at seven times as much?
Fagerheim: Yeah, a multiple of that, for sure.
Pipeline Online: You’ve been taking about an investment tax credit. Did you really get what you wanted?
Fagerheim: No. They’ve really missed the mark here a little bit, on 50 per cent tax that’s on capture and compression, and 37.5 per cent of transportation and storage. But we got to work, now, with the numbers that are out there. You have to see if we can make economic projects.
Pipeline Online: So, can that work with what you’re working?
Fagerheim: We’re not sure. That’s why you do the feasibility studies.
Pipeline Online: But you won’t get anything for putting in the ground. You get it for the pipe, for the compression, but you won’t get anything for putting CO2 underground.
Fagerheim: That’s right.
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