City quiet on carbon capture facility as Methanex ramps up production

By Collin Gallant on July 19, 2024.

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A private sector deal to partner on building carbon capture capacity at a local plant site is not the agreement that the City of Medicine Hat is still apparently preparing for its own carbon storage hub with separate private company.

On Wednesday, Methanex outlined an initial agreement with Alberta-based “carbon solutions” firm Entropy to study, design and potentially greenlight a $100-million upgrade the methanol producer’s facility in Medicine Hat.

It would capture and reuse portions of carbon dioxide emissions to boost production, but also sequester a portion deep underground.

That comes as federal tax credit regime for such projects come into effect and a number of projects throughout the province are being announced this month.

But, it’s also six weeks after Medicine Hat city council directed administrators to finalize a commercial agreement with unnamed private entities related to “Project Clear Horizon” carbon storage project.

That June 3 decision included the requirement that staff prepare public and stakeholder outreach and information for when the deal in question was signed.

However, no statement other than a general statement of support from City Hall is being offered.

“No off-take agreements have been announced for Clear Horizon to date,” said top energy division administrator Rochelle Pancoast in a prepared statement. “Clear Horizon development remains on track to meet timelines required by anticipated off-take agreements.”

Sources say members of council’s energy committee met with consulting groups during a closed portion of a regular meeting on Thursday.

That means more news could be coming soon for the city’s exploration of developing a regional “open access” hub planned for west of the city to which the Methanex-Entropy project would deliver.

“The hub is in the hands of the city,” said Entropy vice-president Eric Petursson. “For us it is important to access that pore space (of the hub) and we’re very excited about the geology around Medicine Hat.”

Entropy operates a carbon capture facility at the “Glacier” gas plant in northwest Alberta – collecting CO2 from compressors at the plant and sending it down Entropy developed wells in the area.

Petursson called that endeavour, completed in 2022, a first-of-its-kind on a huge natural gas combustion engine, and is now adding waste heat recovery and planning for more efficient cogeneration project at the site.

He said the company’s expansion to the chemical sector was “very, very positive development for carbon capture.”

That comment was echoed in a company release by Premier Danielle Smith, whose government has included CCUS projects in qualifications for petrochemical and diversification investment grant programs.

Medicine Hat Deputy Mayor Ramona Robins also issued a statement saying that the local project is a positive step for industry in southeast Alberta.

City officials told the News on Thursday that it would not comment further at this point, but said the City still holds exclusive geologic rights to explore and develop a hub in the area.

Several large items need to be completed by Methanex and Entropy before a final agreement and investment go-ahead decision is made.

This week’s announcement only approved work to proceed with final engineering for the physical infrastructure that would connect existing and upgraded Methenex facilities to a new Entropy plant adjacent at the northwest Medicine Hat site.

Petursson said that once approved, construction could take up to two years.

The release states 200 construction workers would be required and several permanent positions would result once completed.

A portion of the estimated 140,000 tonnes of captured CO2 would be returned in to the methanol production process. That would boost production by 50,000 tonnes, close to 10 per cent, over the current capacity.

Methanex outlined its roadmap to reducing emissions by 10 per cent by 2030, then become net zero by 2050, in its “corporate sustainability” report this spring.

In it, the company divulged it had spent $2 million in determining its facilities in Medicine Hat and Geismar, LA., were the most promising sites to further carbon capture projects and a decision between the two for an initial project would be made in 2024.

There is no estimate from either company on when a final investment decision will be made.

[Editor’s note: this version includes a corrected percentage for the expected production increase of methanol is the project proceeds. The current plant capacity is abut 600,000 tonnes per year, and a 50,000 tonne production increase equates to about 8.3 per cent more.]

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