Opinion: Enhanced oil recovery offers a significant opportunity for Alberta

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After two turbulent and unprecedented years, the recent provincial budget delivered some desperately needed good news. For the first time since 2014-2015, Alberta posted a surplus. Also, after being consumed by the COVID-19 crisis, the government is once again looking to the future by investing in skills development, training and employment programs so that more Albertans can return. at work. Fear and uncertainty are finally giving way to even moderate optimism.

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Soaring pump prices for Canadians, fueled by Russia’s recent invasion of Ukraine, clearly demonstrate that oil and gas are still essential commodities and provide Alberta with an opportunity to develop its energy sector. . That’s not to say the industry doesn’t need to change, and Albertans understand that. A low carbon future is not a ‘nice to have’, but a ‘must be achieved’. The sector has made great strides in recent years to reduce emissions, deploying innovative technologies with significant effect.

Enhanced oil recovery is one such technology. More commonly known as EOR, it involves injecting CO2 into existing oilfields to increase overall oil recovery in the reservoir, often without the need for any new producing wells. Once the oil has been recovered, the remaining CO2 is permanently stored in the tank. In terms of emissions per barrel produced, EOR is unmatched, emitting 82% less than traditional extraction methods.

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Where to get this CO2? Carbon capture, use and storage (CCUS) is an obvious source. Probably one of the hottest topics in energy circles these days, CCUS involves the capture of CO2 from fuel combustion or industrial processes. Once removed from the atmosphere, the CO2 is then transported by pipeline for permanent storage in spent gas reservoirs, deep saline aquifers and, of course, EOR systems in oil reservoirs.

The combination of CCUS and EOR potentially holds the key to revitalizing a critical component of Alberta’s economy: junior/midstream oil and gas companies. Long considered the backbone of Alberta’s energy sector, these small businesses have been decimated over the past decade. At the start of 2015, 229 juniors were listed on the TSX Venture Exchange. Four years later, that number had fallen to 119. By the end of 2019, there were only 89 left. weren’t interested in putting more money into the sector if there wasn’t a full-cycle economy to come out.

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CCUS and EOR have modified this calculation. If juniors and middlemen can grow their oil and gas assets while helping nearby issuers in the process, they can raise the new capital that is essential. Private equity firms want to pivot in this space, and what better group to pivot to than the entire energy sector. These companies are some of the best and brightest in the province — engineers, geologists and geophysicists, to name a few — with considerable expertise and experience. CCUS and EOR would allow them to use the exact same skill sets, just in reverse.

And then there are the broader benefits to the province. Using CO2 for EOR would generate hundreds of millions of dollars in royalties at a time when the province is getting back on its feet and looking to get its fiscal house in order.

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If the government really wanted to speed up the process, it could introduce something similar to Saskatchewan’s Petroleum Infrastructure Investment Program, which provides portable oil and gas royalty/freehold production tax credits for qualified projects such as transmission pipelines and enabling infrastructure. For an investment of $500 million, our neighbor to the east should benefit from billions of dollars in new capital investments.

EOR and CCUS are a unique opportunity for Alberta. Not only can they significantly reduce the province’s GHG emissions and generate much-needed revenue; they can also help us transition our existing energy workforce and get more Albertans back to work. It really is a win-win on every level.

Terry R. McCallum is president and CEO of Free Rein Resources in Calgary.

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