By COLLIN GALLANT on August 17, 2021.
The city that made its name lifting natural gas out of the ground, could make money and build a future by burying carbon dioxide, according to the City of Medicine Hat’s economic development department.
Last week, Invest Medicine Hat announced that the city, several local industrial operators, and government agencies would form a working group to drive the creation of a hydrogen production “hub” in southeast Alberta.
That would produce a roadmap toward local production and eventually wider distribution of the hydrogen fuel that academics and economists say is a zero-emissions solution to meeting climate and emissions goals.
But, Invest will concurrently work on a carbon sequestration initiative that could re-purpose city gas division assets, and be combined with upper government grants and the private sector to create a new dividend-producing utility, administrators told council Monday.
“That (carbon capture) infrastructure is absolutely essential for the City of Medicine Hat, not only for its utility operations, but for private-sector operations here as well,” said Eric Van Enk, manager of strategic direction with Invest, during a mid-year update on the office’s activities.
“In order to really move the needle on economic development in Medicine Hat and southeast Alberta, we need to be a leader.”
Mayor Ted Clugston says the endeavour is complex but worth the effort.
“There are a lot of puzzle pieces … increasing carbon taxes and carbon intensive industries in Medicine Hat …, and a new hydrogen economy,” he said. “If you can put it all together, you’ve stumbled on something very important.”
Coun. Phil Turnbull says the city’s utility as well as the global industrial sector are seeking lower costs, and a civic drive for carbon capture and hydrogen production could couple city assets with federal grants – a bold but needed strategy.
“This is the time to save what we’ve got as well as build,” he said, stating the underlying driver is carbon pricing that will increase over time.
“It’s here to stay, and the way it’s set to rise will have mind-boggling effects on utility bills unless we do something else.”
The hydrogen hub includes the city, existing petrochemical manufacturers Methanex and CF Industries, gas transportation and marketing company Rockport Gas Storage, the City of Brooks and several other gas producers and agencies.
The “Hydrogen Hub” study is now being completed by the Transition Accelerator, a non-profit group that states it aims to ease complex problems of tackling climate change for industry and governments.
The initial study would be complete in early 2022, but Van Enk says the city is advancing a carbon-capture plan immediately.
Earlier this year, the Industrial Heartland Petrochemical complex near Edmonton became the first “hydrogen hub” in Canada, benefitting from grants from federal and provincial governments, a number of large industrial partners and existing pipeline networks and off-take potential. Both Alberta and Ottawa are developing hydrogen strategies, and have grants available for project co-ordination and development, said Van Enk.
The Heartland is also connected to the Alberta Carbon Trunkline, which would gather and pump deep underground the carbon dioxide produced from transforming natural gas to hydrogen.
This summer TransCanada and Pembina pipelines announced they would jointly explore creating a carbon network across Alberta, but initial plans do not mention the southeast quadrant.
The city’s utility department would become an initial customer of private-sector production, for blending into gas for home heating and power production, as well as for use in the municipal fleet, once technology is studied. Medicine Hat could also become a fuel supply depot of the heavy hauling industry.
“It feels like the creation of another legacy,” said Coun. Julie Friesen, who like many councillors lauded the potential in the report, invest officials and the work done by the utility department.
“I challenge anyone to look at the horsepower we’ve got working for us in (the Invest office),” said Coun. Darren Hirsch. “Who else could take a $100-million liability (in gas fields) and turn it into an asset?”
Most of the city’s well inventory comprises holes too shallow for carbon sequestration, however there are a number of very deep exploratory wells that came up dry for oil but which meet the required depth.
The city also expects to have final plans for the proposed Northwest Sector industrial park completed next winter, which could provide land base for new companies, says Invest director of real estate development Chris Perret.
Van Enk also revealed the city is in talks with Hub partner Envoy Energy, which plans to build a CNG station in Redcliff, to make the city’s fleet CNG fuelling station a key bulk shipping point in its network.
The report also detailed land development strategy and an analysis of development subsidies.
“The whole report is a positive,” said Coun. Brian Varga.
“We can’t stand still.”