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Oil & Gas



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Natural gas touted as clean alternative

Enmax’s new district energy system

Solar community soaks up energy savings

July/August 2010

where energy, the economy, and the environment intersect

Could a “BP” happen here? Could an environmental disaster like BP’s Gulf of Mexico oil spill ever hit Alberta?

courtesy: Highland Feeders

Bern Kotelko and daughter Kirstin.

Cow-pattie power Biorefineries represent the “merging of the agricultural industry with the energy industry”

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Jacqueline Louie Energize Alberta n a massive cattle feedlot located outside the town of Vegreville, Alta., the pungent odour of cow manure is masked by the sweet smell of the province’s energy future. Turning cattle dung — “brown gold,” as some call it — into green power and other valuable byproducts is a made-in-Alberta energy solution that is not only sustainable and energy efficient, but also cost effective. That’s according to Grow-Gen Energy and Atco Midstream, who are partners in what they are calling Canada’s first integrated biorefinery, designed to convert organic waste and feed wheat into fuel ethanol,

biofertilizers and green electricity. Their approximately $120-million project will expand an existing biogas-toelectricity plant, developed by the Kotelko family near Vegreville, east of Edmonton, that uses cattle manure to generate biogas and green electricity. The resulting green energy will be used to fuel a new ethanol production system. The ethanol will be derived from locally grown high-starch wheat, as opposed to high-protein wheat used for human food products. Once the expansion is complete, the biorefinery will generate 40 million litres of fuel ethanol, 10,000 tonnes of premium biofertilizer and 2.5 megawatts of green electricity each year. It will also annually create more than 100,000 tonnes of greenhouse gas emissions offset credits. “What’s unique is that it’s the merging of the agricultural industry with the energy industry,” says Kevin Cumming, president of Atco Midstream. “It’s a good balance throughout the whole plant, and you gain quite a bit of energy in terms of the process. You gain more energy than you consume.” ❯❯ continued on page 14

Jim Bentein Energize Alberta A spokesperson for the Energy Resources Conservation Board (ERCB) argues that it’s very unlikely an environmental disaster on a scale similar to BP’s Gulf of Mexico spill could happen here. “The short answer is that it couldn’t happen on land because the logistical difficulties that exist with a deepwater spill simply aren’t in play,” says Bob Curran. “[Also] there really aren’t any wells in Alberta that are comparable to the wells they are drilling in the Gulf.” Well, yes, there is that little thing about the lack of an ocean in the province. And, as Curran alludes to, giant oil finds on the scale of the BP well — U.S. government scientists estimate that between 35,000 and 60,000 barrels a day are leaking into the Gulf — just don’t occur any longer in Alberta’s mature basin, where the size of oil discoveries is smaller. But that doesn’t mean Albertans should be complacent and assume the

“The setting is very different….” — Gerry DeSorcy province is immune from environmental disasters. Just ask Gerry DeSorcy. DeSorcy, a regulatory consultant with more than 45 years of experience, 38 of those with the Alberta Energy and Utilities Board (now realigned as the Energy Resources Conservation Board and the Alberta Utilities Commission, which separately oversee the oil and gas and utility sectors, respectively), says it’s basically a matter of scale. “The setting is very different [because there is no deep ocean oil extraction in Alberta] and wells producing 25,000 or 40,000 barrels per day just don’t exist in the province,” says DeSorcy, who was the former chairman and chief executive officer of the province’s top energy regulator. “But it’s startling to hear politicians and others ❯❯ continued on page 2

2 • July/August 2010 • Energize Alberta Continued from page 1

Could a “BP” happen here? say it couldn’t happen here. It could.” But the “it” would be different. “It’s not a case of a reservoir running wild,” he says. However, environmental disasters are possible in the oilsands, he says. “There could be a pipeline break there,” says DeSorcy. “Also there could be a structural failure of a dike or a dam up there [that contains the tailings ponds]. It’s conceivable there could be some stored [petroleum] product getting into a body of water in the oilsands.” Another possibility is sour gas escaping from a gas well, something that has occurred in the past on a large scale in Alberta. The most infamous case of sour gas leakage occurred in the Lodgepole area, about 130 kilometres southwest of Edmonton. In 1982, two workers were killed at a wellsite there, and 280,000 tonnes of tonnes of sour gas were spewed into the air. “The potential for a sour gas leak is greater than for oil,” DeSorcy notes. “A sour gas well leak would emit H2S [hydrogen sulphide

gas], which is dangerous to the public.” However, he says the ERCB has implemented strict standards for sour gas wells, including a requirement that operators install blowout prevention equipment and have planning in place to respond to a leak, including igniting the gas and rendering it relatively harmless. Oil and gas companies co-operate to ensure they have enough equipment to respond to spills and other potential environmental problems, he adds, which should provide the public with a degree of confidence. Response times Bob Dunbar, an oilsands industry consultant who spent 10 years with the ERCB as the manager of its oilsands department, followed by 12 years with Petro-Canada, says it’s unlikely there will be a major environmental disaster in the oilsands. He says the most likely place for a serious spill would be in the case of pipelines crossing the Athabasca River. Both Syncrude Canada and Suncor

Coming in the next issue of Energize Alberta


he September/ October edition of Energize Alberta will feature some of the “ecoheroes” of the province’s One Simple Act initiative, a public information and education program that supports and inspires Albertans to lead more environmentally friendly lifestyles. In addition, we look at energy savings achieved by teleworking (working from home), and profile a teen who created a cartoon about the use of natural gas compared to coal for a school project. We’ll also have a special feature about an Alberta family involved in the oil

Energy have pipelines crossing the waterway, both moving “significant volumes” of oil. “But in those cases the pipeline operators have shut-off valves that could be closed that would isolate the spill almost instantaneously,” he says. Dunbar also believes operators and regulators can respond quickly to a sour gas leak. “On average there have been 10,000 wells drilled a year in Alberta, but I think effective regulations have been developed over that time and, the fact is, drilling on land is less technologically complex than drilling in the ocean,” he explains. Adam Driedzic, staff counsel for the Edmontonbased Environmental Law Centre, which helps the public deal with environmental issues, says the BP disaster has caused him to review the issue of energy industry–caused disasters. He says he worries about industry and government response to a disaster, and about compensation for those harmed. His concern about the response to disasters stems from where

most energy projects are located — rural areas. Rural areas usually have volunteer fire departments and very little other equipment or trained manpower to respond to accidents or environmental disasters. Driedzic says industry should be required to provide emergency response capacity. He also believes the legal system in Canada puts individuals affected by bad environmental practices by industry at a distinct disadvantage. “Individuals would have to use tort law, under which it’s very difficult to establish negligence in the case of harm to property or people,” Driedzic explains. In the U.S. it is much easier for individuals to establish the liability of corporations. Because of this it’s very unlikely there will ever be an Alberta version of Erin Brockovich, who was played by Julia Roberts in a 2000 film. Brockovich was the legal assistant who helped cancer-plagued residents living near a lake polluted by a California utility company gain millions of dollars in compensation.

Discover more online at

and gas industry that’s been affected by Lyme disease. Plus we’ll have all our regular Energize Alberta features, including: Talking energy talk, Recommended energy reads, How it works and Energy IQ.

“The short answer is that it couldn’t happen on land because the logistical difficulties that exist with a deepwater spill simply aren’t in play.” — Bob Curran, ERCB

Ab o u t u s

Energize Alberta is published six times a year by an alliance consisting of JuneWarren-Nickle’s Energy Group, Great West Newspaper Group and Farm Business Communications, all members of Glacier Media Inc., in association with an advisory board consisting of industry professionals. Energize Alberta is circulated to approximately half-amillion Albertans, in rural and urban settings.

President & CEO Bill Whitelaw Editorial

Publisher & Editor Stephen Marsters Associate Editors Deborah Jaremko Paul Wells Editorial Assistance Joseph Caouette


heck out for additional stories, polls, a link to the Energy IQ quiz and a searchable archive of past editions. You can also comment on our stories and forward them to friends. In addition, the site houses a directory of key players on the energy literacy stage. Write to us at with your feedback and suggestions. You can also reach us on Twitter by following @energizealberta.


Marketing Manager Sonia Crichton Creative

Designers Ken Bessie Cristian Ureta

Production, Pre-Press and Print Manager Michael Gaffney Staff Photographers Lasia Kretzel Aaron Parker Sales and Administration

Account Executive Rhonda Helmeczi Sales Nick Drinkwater Diana Signorile Administration Sandy Flaherty Website

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Find out more about us online at, and send your feedback to Write to us at 2nd Floor, 816 - 55 Avenue NE, Calgary, AB T2E 6Y4.

Energize Alberta • July/August 2010 • 3

Reader forum

The first edition of Energize Alberta generated lots of feedback from our readers. Here are a few of the letters we received. Please send your comments and suggestions to You can also reach us on Twitter by following @energizealberta.


reat newspaper guys! I think it’s what Alberta needs to read! I’m a portable welder here in Okotoks and with

95 per cent of my work being oilpatch/pipeline welding, it’s been a very slow and long two years! Let’s hope we can all go back to work soon. If you ever want to do a story on the slowdown of the oilpatch then please let me tell how the slowdown has affected me as a welder, and the little small towns up and down the highways of the Alberta oilpatch. Danny Coopet Okotoks


ead your article on wind power in Alberta. A lot of the article revolves around the economics of wind power and how it needs taxpayer subsidies to survive. Yet no mention is made of the environmental impact that wind power has. Why has wind power been able to coast in with no checks on its effect on the environment? Anyone who drives into southern Alberta can see these giant turbines obscuring the majestic view of the Rocky Mountains, thereby giving a visual pollution that no one seems to want to put a price on. Then, when one realizes that these turbines are busy chopping up all flying creatures 24/7 (migratory birds, local birds and bats), one begins to wonder why there are more and more of these monsters going up. They are fine and dandy if you purposely like subsidizing something that kills birds and destroys the natural views. I, for one, don’t like that. I’d like to see third-party studies of the environmental effect of all these turbines and then make all the data public so that the public learns the true environmental cost of this so-called “green” energy. Brad Bakuska Calgary EDITOR’S RESPONSE: The Pembina Institute, an independent environmental organization based in Canada, has a fact sheet on wind power realities posted on its website ( sources/wind). It says some local populations of birds and bats may be negatively affected by wind development. At the few sites where bat populations have been adversely affected, preliminary research suggests that bat fatalities have been reduced by more than 50 per cent by shutting down the turbines for a few hours a week at certain wind speeds and at times of night when bats are particularly active. Pembina also quotes research saying that, on average, a typical turbine in North America kills just two birds each year. In contrast, around 10,000 birds die each year from colliding with office towers in Toronto.

EDITOR’S RESPONSE: Last year’s economic downturn impacted workers across Alberta — from geologists in downtown Calgary to welders like Danny in rural areas of the province. The job front is improving, but the oil and gas sector is still on the rebound and clearly not everyone who was laid off before the recession has gone back to work. We’ll continue to follow employment-related issues in upcoming issues of Energize Alberta.

With all the negative publicity the industry, and particularly the oilsands, has received recently, the industry really needs to pull together and communicate the positive things it is doing. I know there are bad apples in the barrel on both sides of the fence, and I am also well aware of the difficult problems (such as tailing ponds in the oilsands), but this should not hinder communication of really good steps being taken to improve both communication and environmental concerns. The oil industry really must be much more open — the secretive environment it once clothed itself in must be relaxed even more. They also really need to tell people about the good things they are doing — not just try to weather a storm when something bad occurs. As a landowner who has three wells on our property, we can speak from experience over a 25-year period. About four years ago we had a well drilled on our home quarter. On touring the site during drilling, I was flabbergasted over the change in operation of the drilling rig over the same type of well drilled 25 years previously — differences such as noise control, safety practices, operational techniques and the recycling of drilling mud. With the exception of safety improvements, I had no idea that noise control and drilling mud recycling were now being practiced — and I read a number of industry magazines regularly…. My big question now is: “What are you going to do to inform and gain public acceptance in other areas of Canada (and the world for that matter) where population and votes far outnumber us in the West?” It is good to do reinforcing work here in the West, but the next step is to get out there nationally and globally. Wendy Vaughan Crossfield


P.S. I was particularly pleased to see 4-H [mentioned] in your paper. As a former 4-H member as well as [having] our kids going through 4-H, I know targeting this group of future employees is a smart move.

just wanted to let you know how pleased I was to see [Energize Alberta] arrive in the mail last week…. As a farmer, promotional products supplier to the oil (and other) industries, and as a person who worked directly in the oilpatch for over 12 years, I have long felt that the oil industry as a whole needs to do a much better job of communicating to the stakeholders and communities in which it operates. Some individual companies are already doing a good job of this. This newspaper is certainly a step in the right direction as well. Besides getting communities and individuals involved in a positive manner, it can really serve the industry by being a pipeline for what the industry is doing environmentally (as there is no doubt this is a global concern that will not go away — nor should it).

EDITOR’S RESPONSE: Thank-you, Wendy! See page 17 for another story about 4-H members. As for your suggestion that we “talk” to a broader audience about these issues, our website ( is a great way for readers across the country to read and learn about the issues and challenges surrounding energy development in Alberta. Breaking down barriers that create “energy solitudes” is an important role for this paper — whether it’s within the province or nationally. And while we can inform, our core purpose is not to help industry “gain public acceptance.” Energize Alberta is a voice for energy; it is not the voice of the energy sector. We are an advocate for balanced dialogue and increased energy literacy — that means the publication will contain multiple voices.

Committed to the

people and communities where we work and live.

4 • July/August 2010 • Energize Alberta

How it works

Setting royalty rates Stephen marsters Energize Alberta


he battle between the provincial government and the petroleum sector over royalty rates finally seems to be over. After close to three years of opposition, the two sides appear to have called a truce after the release this spring of the government’s competitiveness review, which proposes more favourable royalty rates for oil and gas producers. So what are royalties? Simply put, a royalty is the price charged by an energy resource owner for the right to develop those resources. In Alberta, 81 per cent of the mineral rights are owned by the provincial government, which manages those resources on behalf of Albertans. (The remaining 19 per cent are owned by the federal government in national parks or held on behalf of First Nations, and by individuals or corporations.) Royalties ensure Albertans receive a portion of the benefits arising from the development of the province’s energy resources. They are an important part of the provincial government’s revenues and help to fund health, education and infrastructure programs.

A jurisdiction’s royalty system can have a direct consequence on the pace of development, including the rate at which resources are developed and jobs created, as well as the level of investment. Royalties are set with the expectation that industry will earn a reasonable rate of return given the risk and investment they make in developing the resource. When setting royalty rates, the government considers factors such as oil and gas prices, production, costs and the province’s competitive ability to attract industry investment. Three years ago, Premier Ed Stelmach appointed a review panel whose members were asked to provide advice on whether Albertans were receiving a fair share from energy development through royalties. The resulting report, Our Fair Share, was released in September 2007 and said Albertans were entitled to another $2 billion per year in taxes and royalties as their share of oil and gas development. Industry roundly criticized the report, saying data used to create the document was flawed. Subsequently, many companies moved their investment capital to other jurisdictions, including neighbouring British Columbia and Saskatchewan.

PHOTO: joey podlubny

“You can’t get royalties from wells that are not drilled,” retired Talisman Energy chief executive Jim Buckee said in a letter to the premier, referring to the risk of companies moving their investment dollars out of the province. That risk turned into reality and the compounding worldwide recession that began in late 2008 delivered a blow to Alberta-based producers, especially natural gas producers. Drilling activity tumbled across the province and natural gas production declined by almost 10 per cent. Royalties paid to government fell. As a remedy, the provincial government released in May of this year the details of a new royalty framework for energizing investment in the province, including initiatives to accelerate new technologies to encourage development of Alberta’s vast

unconventional and deep resource pools, and finalized royalty rates for conventional oil and gas. The government said the new rates will encourage new exploration, development and production from deeper, higher-cost natural gas wells, gas resources within coal seams, shale gas, and horizontal oil and gas wells. The oil and gas sector generally appear happy with the changes. “Overall, I think it is very positive,” said David Collyer, president of the Canadian Association of Petroleum Producers. “Clearly to the extent that it [the new fiscal regime] has addressed the competitiveness issue, and we think it largely has, that’s going to drive incremental investment in the province and that’s going to create jobs for Albertans.”

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Energize Alberta • July/August 2010 • 5

In the hot seat Paul Wells Energize Alberta


ith climate change an entrenched global concern and Alberta often cast on the international stage as an environmental villain because of its vast oilsands development, the job of developing and implementing the province’s climate change strategy while in the crosshairs of numerous critics is no simple task. But that’s exactly what Andy Ridge and his team within Alberta Environment’s Climate Change Secretariat has been tasked with. Undaunted, Ridge embraces that challenge. Especially when it comes to trying to alter misconceptions that Alberta is an environmental laggard with no plan or policy in place. “We travel the world and [Alberta Environment Minister Rob Renner] gives talks about [the fact that not only does the province] have regulations, but we’ve got a dedicated unit that’s focused on climate change, and that surprises quite a few people,” says Ridge, who is the director of the secretariat. “Contrary to what some people might think, Alberta actually has people working on this. It’s too bad that people are surprised. But that said, at least they now know and have an idea what we’re doing in this province and they have an idea of where they can go to find out more information. The onus now goes onto them.” Ridge’s responsibilities include overseeing the development and implementation of Alberta’s climate change legislation and regulations, as well as developing policy related to greenhouse gas (GHG) reporting, the administration of the province’s Climate Change and Emissions Management Fund, and offset development (offsets represent reductions in GHG emissions meant to balance or compensate for “dirty” or emissions-producing activities elsewhere). He started with the provincial government in 1998 as an intern with the Department of Energy, where he worked with the department’s environmental affairs group on issues related to the environment and sustainable energy development. “Even when I started, about 70 per cent of our time was being spent on climate change,” he says. “It was still early days on the climate change file and Alberta in fact was one of the early leaders in Canada [of] talking about climate change.” Subsequently, Ridge took on a variety of roles from technical to policy related, but always with an environmental focus. And as the science — and concern — of climate change evolved, so too did the provincial group now overseeing the file. “As it grew, we have been through a variety of shapes and forms. It started in the Department of Energy of all places, looking at the issue, and in early 2000 we were picked up as a group of about 15 or so people and dropped into the Department of Environment, where we were basically

tasked and focused primarily on climate change,” explains Ridge. Although Ridge says Alberta had “bits and pieces” of lower-level climate change strategies already developed by that time, he notes that is when progress on the file truly began and the group worked on formulating the province’s initial climate change strategy, which was adopted in 2002. “That’s really when we had Alberta’s first provincial strategy with targets, and we were one of the first North American jurisdictions to have a dedicated strategy on climate change,” he says. Although under the auspices of Alberta Environment, the group’s members were dispersed throughout various government departments, and often climate change was looked at on a sector-by-sector basis. That changed about a year ago when Ridge’s group was repackaged as the Climate Change Secretariat. “The sense was we really had to have an even tighter focus on all levels — high-level strategic and international, right down to our provincial regulatory schemes — a dedicated focus on climate change. That’s when the secretariat emerged as the current vehicle to manage climate change for the government of Alberta,” Ridge explains. Climate change strategy In 2008, the province came out with its latest climate change strategy. Leading up to that strategy’s adoption, since 2007, Alberta companies that annually produce more than 100,000 tonnes of GHG emissions are legally required to reduce their GHG intensity by 12 per cent. Since the program started on July 1, 2007, the province says that more than 17 million tonnes of emissions that would have otherwise gone to the atmosphere were not released — the equivalent of taking 3.4 million cars off the road. Those facilities that don’t meet their targets comply with Alberta legislation by purchasing offsets or paying $15 per tonne into a technology fund called the Climate Change and Emissions Management Fund. Ridge says the technology fund and other initiatives such as the province’s $2-billion commitment to carbon capture and storage (CCS) are indicative of the importance technology will play in Alberta’s quest to reduce GHG emissions. While Ridge admits the math shows they may “not get a tonne of reductions today from the payment of that $15,” he believes the money will lead to future reductions. The fund is managed by the Climate Change and Emissions Management Corporation (CCEMC), an independent, arm’s-length, not-for-profit organization. Since its inception, companies have paid $187 million into the fund, and the CCEMC recently awarded more than $37.5 million to five Alberta-based renewable energy projects focused on waste-to-biofuels and energy, solar power, biogas production and home-based power generation. Projects were selected from a total of 223 submissions received in response to the CCEMC’s initial request for expressions

Alberta’s climate change point man says technology will play a key role in reducing greenhouse gas emissions

Andy Ridge, director of Alberta’s Climate Change Secretariat

PHOTO: lasia kretzel

of interest. From all submissions, 16 were selected for funding totalling $71 million. Project proponents must contribute at least half of the funds, or one-third if government money is available for the project. Price signals Ridge acknowledges that there are many critics who say the $15 cost is not a significant price signal for major investment or to increase the incentive to reduce emissions at source. “We wouldn’t necessarily disagree with that. We know that a higher price may be needed for things like carbon capture and storage, and that’s why we have the $2-billion carbon capture and storage fund to complement this, for example. But again…it’s $15 more than their competitors [might be paying], so it’s a cost they would like to avoid, I think, through mitigation or other means,” he says.

Ridge notes that the province has lowered the reporting threshold and has mandated that companies with facilities generating more than 50,000 tonnes of carbon per year had to begin reporting this June, a ceiling much lower than the 100,000-tonne benchmark that had previously been in place. “It’s purely for reporting. We had signalled it in our 2008 climate change strategy [report] that we would be looking to lower the threshold in the order of 50,000 tonnes for reporting. Subsequently, the federal government has identified a need to move the national program to a 50,000-tonne threshold for reporting, so we’re moving in step with them,” Ridge says. “June 1 was the reporting deadline, so it’s in play now. As of June 1, any facilities…that emit more than 50,000 tonnes by law have to report to us, just as the 100,000-tonne club has been doing.”

Key points to ponder 1. Alberta is the largest provincial emitter of GHGs in Canada, due to its role as a global energy supplier and reliance on coal-fired electricity generation.

2. Alberta was the first province to develop legislation regulating GHG emissions that require large industrial emitters to report their emissions and take actions to make mandatory reductions. 3. The program also puts a price on carbon and regulates an Alberta-based carbon offset system. 4. The Climate Change and Emissions Management Fund is one compliance option under Alberta’s emission reduction regulations. Companies that are required to meet the provincial reduction target for GHG emissions can choose to pay $15 a tonne into the fund for emissions over the target. The Alberta government is responsible for collecting this money for each compliance year. Players On The Stage 1. Alberta Environment (

2. Climate Change and Emissions Management Corporation ( Going Broader, Deeper 1. Climate Change Central (

2. Canada’s Action on Climate Change ( Your Feedback What do you think about the province’s climate change strategy? Send your comments to



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Energize Alberta • July/August 2010 • 7

Q&A with energy players Peter Tertzakian is chief energy economist and managing director at ARC Financial, one of the top investment firms in the Canadian energy industry. Peter has over 25 years of experience in the energy and finance businesses and is responsible for strategic investment research. He is also the bestselling author of two energy books, A Thousand Barrels a Second (2006) and The End of Energy Obesity (2009). Both books examine how societies evolve their uses and sources of energy. What was your primary objective in The End of Energy Obesity, beyond convincing readers that they’re voracious consumers of all forms of energy?

A Today there is a lot of curiosity surrounding the problems associated with using too much energy and damaging forms of energy. The primary objective of my book was to ask the question: “Is it possible for societies to continue to aspire to greater wealth and higher standards of living, while at the same time reduce their energy consumption?” I showed that this objective is realizable. Do you seriously think people can curb their energy appetites voluntarily? Can they really stop regular trips to the “energy fridge”?

A It is true, modern lifestyles demand more and more energy. I describe and prove this historic relationship as “The First Principle of Energy Consumption,” in Part I of my book. This principle says that the wealthier we become the more energy we use. However, in Part III of my book I also show that there are ways for societies to reduce trips to the “energy fridge” without the lost “calories” impacting their sense of well-being and ability to create greater wealth. In fact, countries like Denmark, Switzerland and Japan have proved it’s possible. For committed individuals, what would you say is the best course of action? An energy diet, so to speak?


I show in Chapter 10, when I discuss the “Asymmetry Principle,” that the highest impact action that individuals can make is the choice not to consume energy. This sounds difficult, but because there is so much wasted energy inherent in our day-to-day lives, there is tremendous scope to reduce consumption without feeling it at all. In the near future, new technologies will help facilitate our choice not to consume as much energy. How then does that individual action translate in collective social and policy action?

A Societies that have been able to reduce energy consumption without

compromising their standard of living and aspiration for greater wealth have one overriding feature in common: a desire to want to do it. The collective will of a society, which is composed of individual actions, is how individual actions ultimately translate into attainable results. In your view, how is energy literacy implicated in energy obesity? Do people know enough about their energy health to take meaningful action?

A Being energy literate is of paramount importance. It’s like needing to be more aware of your own health if you want to become fit. Once people realize that controlling their energy health does not mean limiting their quality of life, meaningful action is much less intimidating. We must objectively understand our energy obesity if we hope to improve our societal well-being. Do you think there is a global leadership role for Canadians in modelling healthy energy consumption?

A Absolutely! The world is in need of leadership by example and Canada has many of the elements to be a guiding force in showcasing best practices in energy supply and consumption. Would you support a global energy “weight-loss” competition—in other words, a serious take on the reality show The Biggest Loser?

A You may be surprised to hear that I don’t think such a competition is a good idea. The reason is that each nation in the world has its own unique circumstances. I take great care in my book to show that when it comes to energy consumption, a country like Canada cannot be compared to Japan. Nor, for example, can China be compared to the Germany. Population density, latitude, geography, economic circumstance and stage of industrialization are a few of the many variables that determine how much energy a nation’s citizens consume. Like weight loss, becoming wiser and ultimately “healthier” in energy usage is a very personal issue that demands personal goals without undue comparison to others. So too must it be for individual nations.

8 • July/August 2010 • Energize Alberta

Recommended energy reads

Advisory Board

Black Bonanza:

Canada’s Oil Sands and the Race to Secure North America’s Energy Future

Members of Energize Alberta’s advisory board come from many energy “walks of life.” This group, with its collective insight and expertise, works closely with the editorial team to suggest areas of coverage that will engage and educate all Albertans about our energy future.

Author: Alastair Sweeny Book review by


Peter McKenzie-Brown y the time you’ve finished Alastair Sweeny’s fine but controversial book, you’re likely to have quite a different perspective on Alberta’s oilsands. You may already be puzzled at the thought that, in an energy-hungry world, the second-largest petroleum deposit on Earth is being tarred by many brushes. You have probably already heard that the oilsands is a dreadful source of “dirty oil” because production emits climate-altering carbon dioxide, consumes tremendous amounts of water and leaves vast volumes of toxic compounds in hazardous tailings ponds. An articulate champion of the oilsands industry, Sweeny uses good research to challenge all those claims. For a rollicking good read with a small number of clearly defined messages, Sweeny’s Black Bonanza really hits the mark. Consider two of the many questions he raises in his preface. “Why are millions of people obsessing about carbon dioxide, a trace gas in the atmosphere, three per cent of which is due to human emissions? And, why are government officials demanding that billions of dollars be spent to control this gas that is so essential to plant growth, while real pollution concerns cry out for solution and scores of our fellow citizens starve to death or die from preventable diseases?” A historian by education and a writer by occupation, Sweeny’s chapters on the development of the oilsands are particularly worth reading. He captures the experiences of people well, and has an instinct for the compelling quote. The author successfully argues that Alberta’s oilsands have been demonized in large part because environmental organizations need easy, controversial targets to use in their annual fundraising campaigns. Similarly, celebrities

and politicians know that they can get press by visiting Fort McMurray and proclaiming that the mines and plants are an environmental disgrace, so they do. Sweeny is on another mission, however. His main message is that the oilsands present a tremendous strategic advantage to North American energy security and should be developed immediately. Canada would benefit enormously as it became a petroleum superpower, and North America would remain an ascendant geopolitical entity as it used a combination of secure crude oil, economic strength and technical expertise to develop the inexhaustible energy of the sun. While the text is riveting, Sweeny must destroy the foundations of the complex climate change and peak oil debates to make his case convincing. He picks away at the multi-faceted and technical ideas of climate change science, but his treatment is unfortunately short and therefore superficial. Similarly, his efforts to dismiss peak oil are dicey. He correctly observes that there is plenty of oil in the world’s unconventional oil deposits, especially the oilsands. However, he disregards the key argument of peak oil theory: unconventional deposits can’t be developed quickly enough to displace depleting supplies of conventional oil. Sweeny’s book is worth the read. It’s provocative, informative and entertaining. Importantly, it does much to rebalance conventional wisdom.

Western Canadian Sedimentary Basin Talking energy talk puts context and meaning to important words and phrases, allowing readers to move beyond jargon to participate in important energy discussions

Bobbi Beauchamp Community Affairs Analyst Cenovus

Mike Doyle President Canadian Association of Geophysical Contractors (CAGC)

Bruce Edgelow VP, Energy Group ATB Financial Services Carol Howes Media Relations Advisor, Corporate Communications Encana Caroline Grover Executive Director Economic Development Alliance of Southeast Alberta David Huggill Western Canada Policy Manager Canadian Wind Energy Association (CanWEA) Evelyn Ferchuk Manager, Oilsands Communications Canadian Association of Petroleum Producers (CAPP) Gary Redmond Executive Director Synergy Alberta Greg Gilbertson Operations Leader Energy Resources Conservation Board (ERCB) Jessica Wilkinson Public & Government Affairs Apache Canada Karin Gashus Advocate Utilities Consumer Advocate Kym Fawcett Manager, HSE, Regulatory & Stakeholder Relations Enerplus Resources


Mike Dawson President Canadian Society for Unconventional Gas (CSUG)

Bonni Clark Corporate Relations Alberta Innovates – Technology Futures

Talking energy talk

he Western Canadian Sedimentary Basin (WCSB) is a massive wedge of rock underlying northeast British Columbia, the western Northwest Territories, most of Alberta, southern Saskatchewan and southwestern Manitoba. Created over hundreds of millions of years, the basin’s rock is about six kilometres thick along the western edge and thins gradually to the east. The basin is called “sedimentary” because it contains layers of rock — also called formations — that come from the breakdown of the earth’s surface rocks through interaction with surrounding water, air, organisms and plants. About 60 to 100 million years ago it was the sea bottom of a large interior seaway. Over time, the layers of the WCSB gradually hardened with the pressure of overlying rock, trapping decayed organic

Alice Murray Stakeholder/Community Affairs Coordinator Stakeholder/Shell

Lynzey MacRae Public Relations Specialist Direct Energy Matthew Burns Associate Director (Calgary) University of Alberta

materials like plants and plankton that eventually became fossil fuels: coal, oil, bitumen and gas. Of all the jurisdictions that sit over the WCSB, Alberta is in a unique position as it presides over a majority of the basin’s oil, gas and coal reserves and almost all of its bitumen.

Michelle Chidley Event & Communications Director Small Explorers and Producers Assoc. of Canada (SEPAC)

Mike Finn VP, Exploration Trident Exploration Corp. Nancy Malone Manager, Economic Analysis Canadian Association of Oilwell Drilling Contractors (CAODC) Nicole Collard Public Affairs Specialist Penn West Energy Patricia Poulton Community & Aboriginal Relations Advisor TransCanada Scott Schreiner Director, Consultation & Communications AltaLink Sean McCarry President Sage Planning Group Stacey Ballash Executive Assistant to the President & CEO Trident Exploration Tracy Grills President Canadian Heavy Oil Association (CHOA) Tracy Heebner Business Development Officer Economic Development Alliance of Southeast Alberta Travis Davies Public Affairs Advisor, Media Relations Canadian Association of Petroleum Producers (CAPP) Trevor Williams Chair, Energy Utilities Sector Relations, School of Agriculture, Land & Environment Olds College- School of Business Ulrike Kucera Media Relations Officer Canadian Wind Energy Association (CanWEA)


10 • July/August 2010 • Energize Alberta PHOTOs: aaron parker

Clean dream Natural gas touted as a cleaner alternative to oil and coal

I Jim Bentein Energize Alberta

n Europe there are 40 different models of natural gas–fuelled cars available, and the market for natural gas–powered passenger vehicles has grown by 30 per cent since 2000. In Canada, meanwhile, there isn’t a single new natural gas–powered vehicle for sale. Only about 12,000 exist in the country, and those have been modified by individual owners. But if Calgary-based Encana, one of North America’s largest natural gas producers, has its way, that will change in the next 5 to 10 years. “Our industry has spent its time [concentrating on] the supply side, but what we haven’t done enough of is to show how natural gas can be used more by society,” says Eric Marsh, Encana’s executive vice-president of natural gas economy, who is leading his company’s charge to boost natural gas use in the power, transportation and industrial sectors. To that end, Encana is involved in the U.S.-based America’s Natural Gas Alliance and Canadian Natural Gas, a new group that includes the Canadian Association of Petroleum Producers, the Canadian Gas Association, the Canadian Energy Pipeline Association, the Canadian Natural Gas Vehicle Alliance and the Canadian Society for Unconventional Gas. Both groups are involved in education and advocacy. While natural gas has always played a role in the North American economy, Marsh says the unlocking of huge new shale gas, tight gas and coalbed methane reserves (see story on page 12) means there will be plentiful supplies of the fuel for hundreds of years. “There will be new reservoirs that will show up in the future,” he adds, citing a recent shale gas discovery by his company in Michigan as an example of huge new gas finds in locations previously not thought of as gas-prone areas. And now, in a world of plentiful gas supplies, producers like Encana need to increase demand for the fuel. Generating power with natural gas One obvious area is in the electricity sector, Marsh says, with the prime target being coal-fired power plants in the U.S. and Canada. The argument for more gas use in the power sector is simple. It’s all about the environment. Modern power plants fuelled by natural gas produce half the greenhouse gas (GHG) emissions of coal-fired plants, says Marsh.

Gas-fired plants also produce far less nitrous oxide, sulphur dioxide and mercury pollution than coal-fired plants. Meanwhile, only in Ontario, where coal-fired plants historically produced about half of the province’s GHG emissions and most of its acid rain, has decisive action been taken — action to close down its coal-fired plants and replace them with wind, solar, hydro and gas-fired power. Encana has produced a model of the “ultimate balance” of generation sources to reduce GHG emissions from the power sector by half or more while not causing a price shock for consumers. It shows that a mix of solar power, which averages 30 cents a kilowatt-hour (kWh), wind at 15 cents per kWh and both gas and coal at about 8 cents each would produce “a significant” decline in emissions, while overall electricity prices would be kept in check. The company believes gas consumption by the power sector could grow by 50 per cent by 2020. Meanwhile, the federal government announced plans in late June to phase out coal-fired power plants in favour of cleaner alternatives in the next several years, a move that should prove beneficial to the natural gas industry as it seeks additional demand for growing supplies. Environment Minister Jim Prentice outlined Ottawa’s plans to move away from coal power and said the government will soon introduce legislation that it hopes will encourage the power industry to move to a more sustainable energy supply. “A responsible, clear phase-out of the electricity sector’s inefficient coal-fired generation will allow ample time for the implementation of cleaner generation technologies,” Prentice said in a statement. Coal plants are responsible for almost 20 per cent of Canada’s energy supply, and contribute 13 per cent of the country’s GHG output. By way of contrast, natural gas– powered plants are decidedly less carbon intensive as they produce roughly 60 per cent of the GHGs that are produced by coal-fired plants. The country’s fleet of coal-burning electricity plants consists of 51 units, with 33 coming to the end of their economic life by 2025. Companies would be prohibited from making investments to extend the lives of those plants unless emission levels can be reduced to levels equivalent to those of modern natural gas plants. Oil and gas industry leaders view Prentice’s announcement as encouraging news for the natural gas sector. “We are encouraged to see the federal government take measured steps which will likely support increased demand for natural gas in Canada,” says Gary Leach,

Tim Dykes, owner of Edmonton-based Hi-Tec Fuel & Auto, has the contract to convert much of the fleet operated by Encana to natural gas.

executive director of the Small Explorers and Producers Association of Canada. “And given long-term forecasts that predict abundant supplies of natural gas, we think power generation companies should be increasing their use of natural gas to generate power for North American consumers.” Natural gas for transportation The transportation sector is the next largest target for natural gas advocates. Encana believes the switch from gasoline or diesel to natural gas could happen first with heavy-duty vehicles such as trucks, buses and other large fuel consumers. Natural gas proponents were encouraged by news in mid-May that the U.S. government has set new CAFE (corporate average fuel economy) standards for heavy‑duty vehicles. Those standards will require heavy‑duty vehicles to become 20 per cent more fuel efficient by 2018. The Canadian government issued a similar directive. It’s estimated a switch to natural gas in North America by heavy-duty vehicles would not only save money — it’s about 30 per cent cheaper than gasoline or diesel, according to Marsh — but could reduce overall GHG emissions by as much as 30 per cent.

Energize Alberta • July/August 2010 • 11 As for passenger vehicles, Marsh makes the point that natural gas is the fastest growing fuel source in Europe, with the market increasing by 30 per cent since 2000 and 40 different vehicle models available. “But there isn’t a single natural gas–fuelled passenger vehicle for sale in Canada, and only a natural gas–powered Honda Civic is available in the U.S.,” he says. While Encana and the natural gas groups it is involved with have met with the major auto manufacturers to try to change this, Marsh says it’s still a “chicken and egg argument,” since there are few natural gas fuel stations in North America. There are some exceptions. For example, in Utah there are about 8,000 cars fuelled by compressed natural gas (CNG), and the state has encouraged the development of fuelling stations. Also, in California there are 5,000 18-wheel heavy-duty trucks running on CNG. In Canada, Encana is working with various governments to create two natural gas highways — one in the west extending from Vancouver through Calgary to Edmonton, and one in the east that extends from Windsor in southern Ontario through Toronto, Ottawa and Montreal to Quebec City. Public refuelling facilities are available in all those locations, and municipal governments are exploring the potential of converting portions of their civic fleets to natural gas service. In an ideal world, those two Canadian corridors would be built out east and west to meet somewhere in the middle, but right now, Marsh says, it makes more sense to build U.S. corridors up in such a way that they can be linked to the Canadian corridors at the border. In that scenario, you could have a corridor extending from California into Utah and Colorado and on into Billings, Mont., where it would link to the Calgary corridor. “What we have to do is think about where can we build these corridors where we can get the most success up front, get things happening, get the movement occurring and then start to pick off the things to connect the corridors,” he says. (With files from Dale Lunan and Paul Wells.)

Life is a natural gas highway Encana’s Eric Marsh Key Points To Ponder 1. Natural gas is the cleanest burning fossil fuel.

2. It takes 60 per cent more coal than natural gas to produce one kilowatt-hour of electricity. Even if coal generation were as efficient, natural gas would still have almost 50 per cent lower CO2 emissions. 3. Today there are close to 11 million natural gas vehicles around the world, with Asia, Europe and South America leading the way in use. Players On The Stage 1. Encana (

2. Canadian Natural Gas ( 3. Canadian Gas Association ( Going Broader, Deeper 1. America’s Natural Gas Alliance (

2. International Association for Natural Gas Vehicles ( Feedback Does it make sense to increase our use of natural gas? Send your comments to

Building natural gas highway networks in Canada and the United States offers job creation, government revenue and economic growth benefits, not to mention the environmental perks: every heavy-duty truck converted from diesel to natural gas service is the equivalent of taking more than 325 gasolinefuelled cars off the road. According to auto experts, vehicles fuelled by natural gas are as safe as, or safer than, gasolinefuelled cars. Natural gas is lighter than air and will quickly disperse if accidentally released. Natural gas stations dispense either compressed natural gas (CNG) or liquefied natural gas (LNG). CNG is natural gas condensed under high pressures — between 2,000 and

3,000 pounds per square inch — and held in a special container; the gas expands when released for use as a fuel. Every CNGfuelled car reduces overall greenhouse gas (GHG) emissions by between 20 and 25 per cent compared to a gasoline vehicle. LNG is natural gas converted temporarily to a liquid form for ease of storage or transport by cooling it to approximately -162 C; LNG takes up 1/600 of the volume of natural gas in a gaseous state. By 2025, Encana’s national vision is for 2.4 million light-duty vehicles running on CNG, 145,000 trucks fuelled by LNG, upwards of 50 LNG plants scattered across the country and a network of more than 900 CvNG and LNG fuelling stations stretching coast to coast.

Being a Good Neighbour. In late 2007, Devon’s Marc LaBerge saw an opportunity to reduce the impact of pipelining on the land and build our relationship with landowners. By working in partnership with provincial regulators, Marc helped Devon introduce low-impact pipelining to the company and the industry. This innovative process involves less topsoil disturbance, smaller rights of way, narrower trenches, reduced clean-up costs, less deforestation and reduced downtime for both industry and landowners. As a result, this technique has become standard practice across Devon’s Canadian operations. Thanks to the creativity and resourcefulness of people like Marc, Devon is continually enhancing our ability to be a good neighbour.

GREAT PLACE TO WORK INSTITUTE CANADA Best Workplaces 2009 FORTUNE 100 Best Companies to Work For® 2010

12 • July/August 2010 • Energize Alberta

Unconventional Gas


Riding the “unconventional” wave Huge reserves of shale gas, tight gas and coalbed methane reshaping Canada’s gas industry Jim Bentein Energize Alberta


atural gas producers in Canada will have to shift to “a new business model” to remain viable in the North American gas market in the future, as a result of the unlocking of huge unconventional gas resources, says the head of a Calgary-based organization that represents the industry. Mike Dawson, president of the Canadian Society for Unconventional Gas (CSUG), says a recent study released by his organization suggests there may be at least 100 years — and possibly more — of potential natural gas reserves in Canada. The study, based on a CSUG analysis of a report prepared by Petrel Robertson Consulting, which summarizes the range of assessments of Canada’s natural gas resource base, concludes that Canada has an estimated 700–1,300 trillion cubic feet (tcf) of marketable gas in place. In a 2006 report, the Canadian Gas Potential Committee estimated Canada had 367 tcf of marketable gas. Dawson says abundant unconventional gas resources — including shale gas, tight gas and coalbed methane — have “dramatically” changed the dynamics of the gas sector in Canada. Unconventional gas is produced from reservoir rocks that are less porous and

permeable than conventional rocks (see sidebar). Porosity refers to the volume of pores in a rock, while permeability is the ability of a rock to transmit hydrocarbons. Simply put, unconventional gas does not readily flow to a wellbore. CSUG estimates there are 801 tcf of coalbed methane gas in place in Canada, 1,311 tcf of tight gas and 1,111 tcf of shale gas, although not all of it commercially viable at this point. “The magnitude of these numbers may blow you away,” Dawson says. These estimates doesn’t even include some of the most recent large shale discoveries, he notes, such as in the Horn River and Liard basins of northeast British Columbia, or the Duvernay shale play in Alberta, and much of the Arctic gas potential. Dawson, whose group has joined the Canadian Association of Petroleum Producers, the Canadian Energy Pipeline Association, the Canadian Natural Gas Vehicle Alliance and the Canadian Gas Association to promote more gas consumption (the group is called Canadian Natural Gas), says gas producers face a permanently altered future because of the new supplies coming on. “You have to be a low-cost operator now to survive as a gas producer,” he says. Junior gas producers will find it nearly impossible to compete in this “new world,” he adds, predicting gas prices in North America will likely remain in the $5 per thousand cubic feet range, one-third of the price they reached in the wake of hurricane Katrina in 2005, which damaged platforms and pipelines in the

Gulf of Mexico and helped send gas to record highs. Technology plays Unconventional reservoirs were once thought to be too difficult to develop. “The critical aspect of the story is that technology has allowed us to find these huge reserves,” says Dawson. “This would not have been possible without horizontal drilling and multi-stage fracturing. These are technology plays.” They’re also expensive, with wells commonly costing millions of dollars each. Dawson says only producers with access to large amounts of capital, multi-section land positions, and sophisticated fracturing and other technologies can develop these new unconventional gas plays. “Does it mean juniors are out of the game? I don’t want to say that. But it does mean they’ll have to redefine their business models.” That means driving out as much of the costs as possible, and adopting a “manufacturing” approach to drilling and production. Still, Dawson predicts there will be a good deal of merger and acquisition activity among juniors, as the trend is towards larger companies able to raise large amounts of capital. “This is not just a short-term change,” he says. “The dynamic of abundant gas supplies is here.” Now Canadian Natural Gas, the group formed to promote more gas consumption, “must address the demand side and make sure gas, the cleanest of the fossil fuels, is part of the equation,” says Dawson.

Shale gas Natural gas stored in organicrich, very fine-grained rocks such as shale, mudstone or laminated siltstone. Some of the gas is held in natural fractures, some in pore spaces, and some is attached or “adsorbed” onto organic matter. Because the permeability of the rock is very low, advanced technologies such as fracturing must be used to unlock the gas. Tight gas Natural gas stored in small pore spaces in very low permeability underground formations, such as sandstone, siltstone or limestone. Gas is produced from pores in the rocks through channels and by fracturing the wellbore. Coalbed methane Natural gas stored in coal’s naturally occurring fracture systems or bonded to the coal. It’s usually abbreviated as CBM and sometimes referred to as NGC, or natural gas from coal. Multi-stage hydraulic fracturing Also called fracing, this technology is a controlled operation that pumps a fluid, primarily water and sand, into a target formation at high pressure in up to 20 separate intervals, or stages. The process breaks up the rocks and creates pathways that allow the gas to flow from the very low permeability reservoir to the wellbore.

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Energize Alberta • July/August 2010 • 13

Taking centre stage The role of natural gas in our lives set to grow Jim Bentein Energize Alberta


atural gas can and will play a growing role among energy choices for Canadians, as it becomes recognized that the most environmentally benign of the fossil fuels can be used more in power production, in transportation and in other areas, says the head of an Ottawa-based group that promotes gas use. Michael Cleland, president and chief executive officer of the Canadian Gas Association (CGA), which represents gas producers, pipeline companies, utilities and others, says while there is a role for many energy sources in Canada, it will become readily apparent that some government efforts to encourage a wholesale shift to renewables are flawed. “A lot of the silver bullets aren’t ending up being bullets or silver,” says Cleland, who joined the CGA in 2003 and will retire this summer. “Ethanol is now being seen as probably a bad thing [because it diverts food-based crops to produce the fuel], hydrogen has serious storage problems, wind is intermittent and solar is expensive. Meanwhile, natural gas wasn’t invited to the party because it’s not renewable and it’s a fossil fuel.”

But the development of plentiful shale gas resources in North America, which experts say gives the continent potentially hundreds of years of reserves, “has changed the supply situation,” he says. Now even environmental groups are embracing natural gas, he says, since it burns about 50 per cent cleaner than other fossil fuels. Natural gas is already one of Canada’s most widely used fuels, with more than 25 per cent of residential heating and roughly 20 per cent of commercial heating provided by gas. The greatest penetration of gas use for heating is in Alberta and Saskatchewan, where it is responsible for more than 90 per cent of residential, commercial and institutional heating. However, it is much less heavily used for heating in most other provinces. For instance, in British Columbia, Quebec and Manitoba, all of which rely on hydro power for their electricity, gas has a lower market share for space and water heating. Gas also has a small market share in Atlantic Canada. Federal Environment Minister Jim Prentice recently met with Canada’s major electricity companies and told them he wants to see them gradually retire their coal-fired plants and replace those facilities with cleaner sources of power — a move that will likely be a boon to natural gas producers.

“A lot of the silver bullets aren’t ending up being bullets or silver.” — Michael Cleland, Canadian Gas Association In Alberta, electricity is primarily produced from coal or natural gas. According to the Alberta Electric System Operator, there are 5,667 megawatts of coal-generation capacity (45 per cent of the total), with an increasing amount fuelled by natural gas (5,111 megawatts, or 41 per cent). New gas-fired plants are also being developed. For instance, Calgary-based Enmax, which already owns gas-fired plants — including the 300-megawatt Calgary Energy Centre and the 120-megawatt Crossfield Energy Centre — is planning to develop the 800-megawatt Shepard Energy Centre, which would provide over half of the Calgary area’s power needs. Another promising area for natural gas use is in transportation, where Cleland says “return-to-base” transportation alternatives, such as public transit fleets and heavy-duty trucks, can tap compressed natural gas.

“The heavy-duty segment represents about one-quarter of all transportation fuel use in Canada,” he notes. “Most of the heavy-duty transport fleet uses diesel, so a switch to natural gas would substantially reduce greenhouse gas [GHG] emissions.” In fact, he says a wholesale shift to natural gas by the heavy-duty truck fleet would reduce Canada’s GHG emissions by 30 per cent and more, calling it the “low-hanging fruit.” A study released earlier this year says the natural gas sector accounted for 6.7 per cent of Canada’s gross domestic product in 2008, with a contribution of more than $106 billion. The study also found that the sector provides jobs for nearly 600,000 Canadians, with more than 125,000 Albertans directly employed by the industry. Alberta is more dependent on the industry in terms of jobs and economic impact than any other Canadian province.

Read more: Read more about natural gas at

July/August 2010 • Energize Alberta 14 • May/June 2010 • Energize Alberta

{ centrespread the

Illustration courtesy of Growing Power Hairy Hill LP

Highland Feeders Ltd.

Wheat Manure & Waste



Ethanol Production Facility

The biorefinery processes high-starch wheat to produce fuel ethanol. The residual distillers grain is fed to cattle at the nearby feedlot. Using GPADS (Growing Power anaerobic digestion system), cattle manure is converted into biogas, which is then used to generate electricity, steam and hot water to manufacture ethanol and bio-based fertilizer.

Kyoto Fuels is building a biodiesel plant south of Lethbridge.

Continued from page 1

Cow-pattie power

Atco Midstream will operate the biorefinery and be a part owner in the project. Grow-Gen Energy of Hairy Hill, Alta. — part of the 4BEL group of companies that develops and helps finance utility-scale, clean energy projects worldwide — is the other major owner, along with several investors including a farmer-owned grain procurement partner, Providence Grain Group of Fort Saskatchewan, Alta. The ethanol grain plant will operate on the energy produced from cattle manure, “so we are producing a low-carbon footprint ethanol,” explains Bern Kotelko, president of Highland Feeders, chairman of Highmark Renewables and a director with BECII (Biomass to Energy for Canada Integration Initiative), a new Edmontonbased not-for-profit organization that will promote research on converting biomass to energy. Biorefinery process The biorefinery project (also called the Growing Power Hairy Hill project) will process raw biomass into valuable products in a highly integrated, energy-efficient, cost-effective process that is virtually

waste-free, Kotelko says. A bio-digester produces gas that goes into a cogeneration unit and produces steam and electricity to be used within the ethanol plant. The residual wet, distilled grains that remain after the ethanol is made will be fed to the cattle at Highland Feeders’ nearby feedlot, so the grain is used multiple times. Biofertilizer, a byproduct of the biogas production, will be sold to local farmers and oil and gas drilling companies for soil enhancement and remediation. The biorefinery removes carbon from the manure in the form of methane, and the nutrients remaining in the manure are spread on a field and used to grow more crops. “This allows us to use our manure multiple times. The integration is important, because what it allows agriculture to do is to help offset some of the high production costs of growing food,” Kotelko explains. In order to keep producing food at what consumers want to pay for it, “if we have the opportunity to receive some of our revenue back in the form of selling energy and receiving carbon credits for it, it will help us to feed the world at an economical cost.”

Biorefineries represent the “merging of the agricultural industry with the energy industry”

This process could be used in other locations in Alberta, Canada and around the world, Cumming says, noting Alberta’s renewable fuel standard (RFS) requires that renewable products be blended into commercial fuels starting in the spring of 2011: five per cent ethanol content in gasoline and two per cent renewable content in diesel. “It’s a great fit in that we are taking a waste product and creating energy from it, and creating a renewable fuel on top of it. It’s a great project. We are really pleased with how it’s coming along.” Biosphere’s plans Grow-Gen is not alone in looking to turn bio-waste into high-value products. Another Alberta company, Biosphere Technologies, is planning to build an international commercial demonstration and research biorefinery in Lacombe by transforming animal and plant waste into sterile, organic nutrients for biogas and fertilizer production. “We now have an alternative that will be beneficial for human and animal health, beneficial for the environment and will bring economic value to material that

until now has been a cost to society,” says Biosphere Technologies’ president and chief executive officer, Erick Schmidt, the inventor of Biosphere’s BioRefinex thermal hydrolysis process. The process, which breaks down organic material using high-temperature saturated steam and pressure, is an environmental technology that destroys all infectious and disease agents in organic waste, making the material “absolutely safe,” says Schmidt, who is based in Ponoka, Alta. Biosphere’s thermal hydrolysis process has been approved by the Canadian Food Inspection Agency as an alternative technology to incineration. The technology has recently been adopted by the World Organization for Animal Health (176 member countries) as a process that will destroy all infectious disease agents. “The cycle is quite fast — it’s a two-hour process to transform the material into a molasses-like liquid,” Schmidt says. The material that comes out of this process is a nutrient, which can be used as a soil fertilizer, or as a feed nutrient in ❯❯ continued on page 16

Energize Alberta • May/June 2010 • 15 Energize Alberta • July/August

An in-depth look at issues and people on the energy landscape, connecting you to new ideas and interesting Albertans.

Meet the Kotelkos: Alberta’s biomass barons


t’s back to the future for Alberta’s Kotelko family, who are drawing on centuries-old farming traditions as a better way to practice agriculture. The Kotelkos’ vision is to add more value to manure, a biomass that is an inevitable, plentiful byproduct of feeding cattle. “We use biomass as energy, so we’re also marketing energy along with food,” says Bern Kotelko, 56, a third-generation farmer in the Vegreville area who raises beef cattle and runs a mixed-grain farm with his brother, Mike, 47. The Kotelko brothers are looking back to the era of their grandfather — who arrived in Canada in 1901 from the Ukraine, farmed with horses and grew oats — for inspiration in practicing sustainable farming for the future. “They had renewable fuel. Their energy supply was part of their production,” says Bern, who is president of the family business, Highland Feeders, which is one of the largest feedlots in Canada, with 36,000 head of cattle. Bern is also a director with another family business, Spring Creek Ranch, which produces a line of premium, natural-fed beef without antibiotics or hormones, and markets it across Canada and in Europe. Today, the Kotelkos are well set-up to follow in their grandparents’ footsteps. Highland Feeders and Spring Creek Ranch are flourishing and many family members are involved in helping run the business. Mike’s wife, Denise, works in the office full-time, while Bern’s wife, Donna, works part-time, helping market Spring Creek Ranch beef. The Kotelkos have tried to provide their children with as many opportunities as possible to expand their education, while showing them that agriculture and food production hold the promise of an exciting future. “You need to make it interesting, so that they want to come back and help out,” Bern says.

The Kotelko family, including Bern and daughter Kirstin, believe farmers will return to using renewable forms of energy to produce food. “Biomass is black gold,” says Bern.

It’s a strategy that seems to be working well. Bern and Donna’s son, Peter, 28, is a mechanical engineer working with the Growing Power Hairy Hill project. Daughter Kirstin, 27, who has a marketing background, heads up Spring Creek Ranch. And Brett, 23, is a chemical engineer studying at Cambridge University, where he is working on a PhD in renewable energy. Mike and Denise’s three sons are younger, but are also interested in joining the family business. In the not-too-distant future, maybe 10 years down the line, the Kotelkos want to be able to produce all of their energy requirements as part of the food production process. That way, “we won’t have to depend on conventional hydrocarbon forms of energy, which are obviously going to be more expensive, riskier and more unpredictable,” Bern explains. “If we can produce fuel as an integration of producing food, we’ll have much more stable costs of production, and much more stable food production.” And this will play an important role, he believes, in helping eliminate food shortages in the future. Kotelko sees society returning to using renewable forms of energy to produce food, “because biomass is black gold.” And he believes that what they are doing will be a sustainable model for producing food in the future. “Biomass is something that has been with us forever,” he notes. “We won’t have to worry about the world price of oil because we’ll be doing something as part of food production to produce our own fuel, not only for ourselves, but enough for the community. “When you look at all the biomass out there, not just from livestock, but also from landfills, water treatment plants and the byproducts of forestry or food processing — there’s enough biomass to fuel all of our energy needs. And we are just at the very beginning of realizing the potential for that. “We can say that black gold was a big part of Alberta’s economy for the past hundred years, but brown gold will be a big part of the Alberta economy for the next thousand years.”

July/August 2010 • Energize Alberta 16 • May/June 2010 • Energize Alberta

Continued from page 14

Cow-pattie power anaerobic digesters to create bio-ethanol, along with other feedstocks. “The whole objective and potential of this technology is to take all of the organic residues and wastes in communities, first of all to get rid of the diseases, and then to use [the organic wastes] as a feedstock or nutrient for the production of green energy through anaerobic digestion.” The technology solves an environmental problem, Schmidt explains, by turning organic waste into green energy. When organic waste is landfilled, he notes, it will emit methane, a much more potent greenhouse gas than carbon dioxide. “So by capturing the methane and turning it into renewable energy, you are mitigating greenhouse gas production and creating green energy. Hopefully, this will make a big contribution to nutrient recycling and will be beneficial to the biosphere.” Biosphere Technologies is currently negotiating funding from the public and private sectors to build its $35-million biorefinery, which it plans to have operational by spring 2012.

Southern Alberta The southernmost part of the province is also seeing a flurry of new activity in the area of alternative energy production, championed by the Southern Alberta Alternative Energy Partnership (SAAEP). Launched in 2006, SAAEP is a partnership of the SouthGrow Regional Initiative, Alberta SouthWest Regional Alliance and Economic Development Lethbridge, and represents 39 municipalities in southwest and south-central Alberta. SAAEP wants the region to become a global leader in alternative energy production and manufacturing. And it is already seeing results, with several biofuel companies planning to start up in southwest and south-central Alberta in the near future. Here are some of them: • Construction is nearly complete on Kyoto Fuels’ $24-million biodiesel facility, located just south of Lethbridge. One of the largest biodiesel plants in Canada, with production capacity of 66 million litres, the facility will focus on producing quality biodiesel through environmentally responsible practices. As a byproduct, the facility will also produce

glycerin at a minimum purity of 90 per cent. The company plans to sell this waste stream to a variety of markets, including the cosmetics and bio-plastics industries. • ECB Enviro North America and StormFisher Biogas have partnered to build a 3.2-megawatt biogas cogeneration facility in Lethbridge. Lethbridge Biogas will be a full-scale biogas cogeneration project fuelled by agricultural manure and food processing wastes. Once operational, the $25-million plant is expected to offset the carbon dioxide equivalent of more than 17,000 tonnes per year, and create enough energy to power more than 3,000 homes. The facility will also produce organic fertilizer.

Key Points To Ponder 1. Grow-Gen Energy and Atco Midstream will develop Canada’s first integrated biorefinery. The refinery will use organic wastes and high-starch wheat to create green electricity, biofertilizer and fuel ethanol.

2. The project involves the expansion of an existing biogas-to-electricity facility east of Edmonton, near Vegreville. 3. One cow produces six times the waste of one human (1,200 kilograms per animal per year), and there are close to six million cattle in confined feeding operations across the province. Players On The Stage 1. Highmark Renewables (

2. Grow-Gen ( 3. Atco ( 4. Biosphere Technologies ( 5. Southern Alberta Alternative Energy Partnership ( Going Broader, Deeper 1. BioAlberta ( Feedback Email and let us know what you think about the manure‑to‑megawatt movement.

Abundant, affordable natural gas creates jobs, and grows the economy. It brings what you need, in long-haul trucks, or takes you where you are going, in buses and cars. And it will even cook your dinner. Natural gas powers your neighbourhood, your town, your country, with fewer emissions than other fossil fuels. We are Encana.

Learn about a cleaner, brighter world by watching The Clear Energy Choice video at

• BFuel Canada plans to build an integrated oilseed crusher and biodiesel refinery 32 kilometres east of Lethbridge along Highway 3. The $35-million facility is expected to create approximately 30 to 35 on-site jobs, and produce 50 million litres of biodiesel annually. These projects will allow the region to diversify its economy and build on its natural strengths and resources, according to Kris Hodgson, senior manager of business development at Economic Development Lethbridge. “I think it will provide great economic opportunity, not only for the employees who work in these facilities, but also for the associated value and supply chain that come with these plants,” he says.

Energize Alberta • May/June 2010 • 17 Energize Alberta • July/August

Rural youth give back to Alberta Children’s Hospital Twila Bamford Energize Alberta s 17-year-old Kelsey Cartwright underwent two major brain surgeries at the Alberta Children’s Hospital last November, little did she know that a few months later she would be playing a key role in a significant contribution to support rural youngsters across the province. Kelsey and other members of the Jumping Pound 4-H beef club were front and centre at 4-H on Parade, held in late May at Calgary’s Stampede Park, as they auctioned off a 590-kilogram charity steer for the hospital. Jagger, named after the rocker Mick, raised a hefty $12,500. Encana Corporation, a long-time sponsor of 4-H, purchased the charity steer. “Encana really is proud to sponsor all those tremendous charities and 4-H is such a tremendous program

for the kids. It gives them such confidence,” says Mike Graham, president of Encana’s Canadian division, and whose three children were members of 4-H. Kelsey, who lives on a ranch near Cochrane, Alta., was diagnosed with epilepsy at age 11. By the age of 15, she was suffering from grand mal seizures, and early last year doctors determined that prescription drugs were not helping. Kelsey and her parents, Kelly and Ryan, were told the only chance at a life without seizures was brain surgery to remove part of Kelsey’s right temporal lobe and hippocampus. “It’s nerve racking,” Kelly says of the years of seizures her daughter had to endure. A teenager “can’t experience normal teenage situations because you never know if she is going to seize. It’s scary. There is always a possibility that she won’t come out of the seizure.” In November, physicians performed a craniotomy on Kelsey to determine the location of the seizures and a second operation that ultimately removed 20 per cent of her brain. Kelsey remained in intensive care for three and a half months. “The doctors, the volunteers and all the staff were amazing,” says Kelly. And so were Kelsey’s fellow 4-H members, her other “tight-knit family,” which overwhelmed her with support.

Kelsey Cartwright

“4-H is such a tremendous program for the kids. It gives them such confidence.” — Mike Graham, Encana It was that same tight — knit family that brought Kelsey to the closing event at 4-H on Parade, the largest gathering of 4-H members in the country. Each year a club is appointed to raise the steer and choose the charity. In previous years the funds have supported organizations such as Ronald McDonald House and Stars Air Ambulance. This year it was Kelsey’s club. The decision was easy. The Alberta Children’s Hospital had not only changed Kelsey’s life, but also touches the lives of many rural youngsters across Alberta. “Brain surgery down, a million other things left to do,” says Kelsey.

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July/August 2010 • Energize Alberta 18 • May/June 2010 • Energize Alberta

Be safe… Farmers cautioned about working around oil and gas equipment, power lines Lasia Kretzel Energize Alberta


very day, as farmer Wayne Notley works his 3,200 acres of farmland just south of Olds, he is met with the common challenge of working around oil and gas equipment. For nearly 40 years Notley’s leased property has hosted an array of energy and utility infrastructure, including sour and sweet oil and gas wells and power lines. He is keenly aware of the hazards they present. Every year, thousands of farmers must avoid oil and gas wells and power lines as they work their crops. However, despite efforts made by farmers and energy companies, accidents involving farming equipment hitting wellheads or pipeline risers are at concerning high numbers, according to a report by Alberta’s Energy Resources Conservation Board (ERCB). Susan MacDonald, community and aboriginal relations advisor for the ERCB, says the board is unsure why there has been an increase in accidents, but they are doing all they can to alert farmers to the potential hazards on their property. She wrote an article in March for Alberta Agriculture and Rural Development’s Agri-News website as a “friendly reminder” for farmers to be cautious around oil and gas wellheads. The short report details what farmers can do to prevent accidents and how to respond should one occur. “It’s about getting the awareness out there ahead of time,” says MacDonald. Back on the farm, Notley says the rise in accidents could be linked to a combination of factors including larger farming equipment, worker fatigue and the low visibility of some wells. “With bigger equipment you’ve got GPS [global positioning system] and you’re

working longer hours to make sure you get everything done,” he says. “It’s no different than somebody driving down the highway with the car on cruise and you hit ice. You’re going to end up in a mess because you’re not concentrating on steering or controlling the unit.” Notley says to avoid any hazards he and his two sons tend to the areas nearest the wells earlier in the day when they are most alert. However, Notley adds that safety is a twoway street between farmers and the oil industry and companies aren’t doing enough to make wellheads and fences visible. While wellheads are required to be conspicuously marked and visible in all seasons, low-profile fences and unmarked wellheads are a big concern, especially around harvesting season when they are less visible due to high crops. Notley says the fences are short enough for operators to step over, which poses a problem for farmers driving large tractors. Communication is the best solution to safety concerns for companies and landowners, MacDonald says, noting that both parties “need to work together to determine the best location for [wellheads].” Notley and other farmers regularly attend Synergy Alberta meetings, which are designed to bring companies and landowners together to discuss concerns. The ERCB has also been sending staff to the meetings to promote safety awareness and articles such as the one in Agri-News. Efforts like the ERCB article are important, Notley says, but only if those affected are actually reading it. “Any kind of information is valuable if the people read it, but in a lot of cases it’s not read or filed somewhere,” he notes. Other organizations such as Alberta’s Joint Utility Safety Team (JUST) are trying to get the word out about safety on the farm not only around oil and gas equipment, but power lines as well.

Lyndsay Thorlacius, communications advisor for JUST member AltaLink, says production pressures and larger farm equipment are partially responsible for an increase in accidents. Backhoes and trackhoes are the most common pieces of equipment to come into contact with power lines. But Thorlacius says that it’s still up to farmers to plan ahead and know where power lines are on their property. “Every day, three Albertans risk their lives needlessly by contacting a power line because they didn’t ask themselves, ‘Where’s the line?’” A news release from JUST says power lines can be particularly hazardous because farmers don’t have to touch them to be

injured or killed, and underground lines are virtually invisible. JUST encourages farmers to keep seven metres away from power lines to ensure safety. In 2009, 21 per cent of all power line contacts in Alberta were from farm equipment. In May, a 30-year-old farmer in southern Alberta died after his high-clearance sprayer hit an overhead power line. Notley says he has been fortunate that no accidents have occurred on his property, but that won’t stop him from keeping a sharp eye and an alert mind while working his fields. “The biggest thing is to respect what the hazards can be if you strike them and treat it as a hazard,” he says. “You got to keep it in everybody’s mind that safety’s got to be one of the big factors in life.”

A friendly reminder from the ERCB


xercising caution when operating farm machinery around oil and gas equipment can prevent incidents that are potentially dangerous. Damage to oil and gas facilities can cause explosions, fires and the escape of sour gas, all of which can result in the loss of life, personal injury, harm to the environment, evacuation of residential areas and costs to repair facilities and farming equipment. Energy companies are required to have emergency response plans in the event damage does occur. However, the best way to deal with an emergency is to prevent it from happening to begin with. If you do hit oil and gas surface equipment, stop work immediately and notify

the oil and gas company. If you don’t know the company’s name, call the local ERCB field centre. The field centres listed below can be reached 24 hours a day and toll free by first dialling 3100000 and then entering the number: Bonnyville: (780) 826-5352 Drayton Valley: (780) 542-5182 Grande Prairie: (780) 538-5138 High Level: (780) 926-5399 Medicine Hat: (403) 527-3385 Midnapore (Calgary South): (403) 297-8303 Red Deer: (403) 340-5454 St. Albert: (780) 460-3800 Wainwright: (780) 842-7570 Where energy, the economy, and the environment intersect

Visit to view additional web content, including stories and polls, as well as to provide feedback on articles you’ve read in this edition of Energize Alberta.

Energize Alberta • May/June 2010 • 19 Energize Alberta • July/August

Class acts Inside Education provides natural resources and environmental education to students and teachers Students participate in some hands-on exercises to learn more about energy.

Jacqueline Louie Energize Alberta


elping young people discover the complexity and mystery of Alberta’s environment is what Inside Education — Canada’s largest not-for-profit natural resources and environmental education organization — is all about. The Alberta-based non-profit organization, which is celebrating its 25th anniversary in 2010, develops programs and services for teachers and students from kindergarten through Grade 12. Dedicated to helping people better understand the issues related to Alberta’s environment and natural resources and the science behind them, “our goal is to help create future generations of natural resources and environmental stewards,” says Inside Education executive director Steve McIsaac. “Inside Education is primarily staffed by educators, so we understand what students need to know according to the Alberta curriculum, and what they are capable of understanding at various levels of their development.”

Inside Education began as a volunteer organization in 1985 and now employs 15 full-time staff in Edmonton and Calgary. Over the years, it has won many awards for its environmental education programming, which it delivers in partnership with diverse organizations ranging from government and the not-for-profit sector to industry and private foundations. Inside Education wants to help young people understand the role they can play when it comes to environmental issues. It addresses everything from taking personal action and conservation to the wide range of career choices that are available in the natural resources and environmental fields. What Inside Education focuses on, McIsaac explains, is demystifying complex topics such as climate change, and showing how people can make a difference. “What we try to impart is that students can, will and must make a difference, and that there are things that individuals can do. What we communicate to them is that the most important thing they can do at this stage of their lives is learning about it, so that they can have a head start. We are hoping to create a generation of responsible users of our natural resources.” Inside Education reaches young people in a variety of ways. Its educators visit classrooms across Alberta to present programming to students, primarily from grades 4–12. Presentations cover a wide range of topics, from water to waste, and from energy and climate change to recycling. Inside Education also offers field trips, where students can experience the natural world first hand. For example, students from Calgary and area can spend a day in the woods with Inside Education, learning about forest ecosystems and how humans interact with them at a nature centre located at Jumpingpound Creek in Kananaskis Country.

As part of a natural resources education tour arranged by Inside Education, teachers visit a compressor station. In addition to sending educators to interact with students directly, Inside Education reaches many more students indirectly by educating Alberta teachers. Inside Education has developed classroom instructional materials that teachers can use, such as videos, posters and other practical tools. It also provides extended professional development workshops for teachers, including tours of oil and gas drilling operations, power plants and oilsands operations in the Fort McMurray area, as well as hiking trips to learn about the boreal forest. “It’s really experiential learning for the teacher, to help their personal knowledge and help them to implement the curricula better and from a balanced point of view,” McIsaac says. Deepali Medhekar is a new teacher in Canada who has made the most of the opportunity to learn about Alberta’s environment and natural resources by attending several Inside Education professional development education tours. Medhekar, who teaches biology and chemistry to students in grades 7–12 in Edmonton, finds that Inside Education’s field programs help young people develop a deeper understanding of what Canada

has to offer its citizens. “What I really appreciate about the Canadian system is the emphasis on actually relating and applying concepts to daily life,” says Medhekar, who is grateful to Inside Education for helping her make these kinds of connections for her students. With all of its programs, Inside Education works hard to incorporate a multiplicity of perspectives, so that students will be exposed to a diversity of viewpoints. “While it’s impossible to bring in everybody’s perspective, we try to balance the different points of view that are out there,” McIsaac says. Ultimately, he explains, Inside Education’s goal for young people and Albertans of all ages is to give them as much knowledge as possible, so that they can be informed decision makers. “We are an organization that strives to make a difference in the lives of young people. We are proud of our accomplishments, and with the support of government, industry and the environmental community, we are looking forward to 25 more years.” Learn more: Visit for more information.

Energize Alberta • July/August 2010 • 21

District fine Enmax’s new district energy system to heat downtown Calgary buildings Paul Wells Energize Alberta


nmax chief executive Gary Holden doesn’t temper his enthusiasm when he talks about a recently completed facility in downtown Calgary that he says is a “worldclass” project on the leading edge of new sustainable energy initiatives. In fact, he says, the newly minted Calgary Downtown District Energy Centre is an example of the forward thinking that will be required province-wide as Alberta looks to successfully meet the economic, environmental and energy challenges that need to be confronted now and in the future. “This will be a world-class plant in the heart of downtown utilizing the waste heat to substitute for boilers — it’s really, really innovative,” Holden tells Energize Alberta. “There are plants like this in Europe, but this would be the first of its type and scale in Canada. I think of it as a symbol of what will happen in the future all across Canada when coal provinces [Alberta generates the majority of its power from burning coal] build gas plants

Rendering of Enmax’s district energy facility in downtown Calgary.

Image courtesy of Enmax

more in the heart of the population base, design them very well so they integrate with the landscape and then use the waste heat for heating.” District energy involves the generation and distribution of thermal energy at the community level instead of on a building-specific basis. It consists of one or more centralized heating generation plants interconnected with a network of underground pipes that distribute hot water to customers. Located at Ninth Avenue and Fourth Street Southeast, the $31.8-million district energy centre began operations in March 2010 providing heat to its first customer, the City of Calgary’s municipal building. The modern, 23,000-square-foot facility is capable of providing heat for up to 10

million square feet of new and existing residential and commercial buildings. The district energy centre incorporates high-efficiency boilers fuelled by natural gas. The closed-loop pipe system delivers hot water, typically around 120 C, to the customer’s building. The return water temperature of the system is around 75 C. By installing district energy in the municipal hall, the City of Calgary will not have to replace its aging boiler system, consisting of seven space-heating boilers. Not only is this a significant cost saving, Holden says, it is a worry-free heating system that is delivered to their door. “The hot-water piping system is connected to the customer’s own energy transfer station in their building. This station is the heat exchange interface

between the district energy piping system and the customers’ heating systems,” he explains. “The energy station occupies significantly less space than a traditional heating system.” The project is strategically located to service current municipal-owned and selected future downtown buildings and is considered integral to the redevelopment of Calgary’s East Village. “It is an opportunity that doesn’t come around very often,” says City of Calgary Alderwoman Druh Farrell. “We need to replace all of the infrastructure in East Village anyway, and district energy needs density in order to work. We have been able to partner with Enmax to help rebuild East Village into one of Calgary’s most sustainable communities. It’s perfect.”

Advocate’s Corner A column by Karin Gashus karin gashus Utilities Consumer Advocate


arming is a major part of Alberta’s economy. There are over 53,000 farms in the province spending over $460 million annually on energy. Farmers rely on natural gas and electricity to heat their homes and power most of their farm operations. They need their heat and power to work. Earlier this year, we did in-depth research about Albertans’ perspectives on energy issues. It was no surprise to hear comments from farmers like this: “On a farm, if you have an operation with intensive livestock and the weather starts to heat up, you have

to put on the fans. You have no choice. It’s not like in the city when you can do things at off-peak times.” That’s why part of my mandate as Alberta’s Utilities Consumer Advocate is to help farmers when they have problems unique to their operations. Here’s an example of how we recently helped a farmer. This farmer was experiencing a serious grounding problem affecting his and several other properties. In January 2008 he contacted the utility company to check the ground wire, but nothing was done. Last November, after another complaint, it was found that there was not enough power

going to his house. As a result, every time an appliance was turned on, it would draw all the power. Everything else in his house would shut off, ruining several appliances. He received no satisfaction in resolving the issue, so he contacted us in March. We reviewed his situation and found there was enough evidence to suggest the utility company reverse its decision to deny the damage claim. Now the consumer and company are working towards a settlement. With the complexities of farming operations, we find that each situation is different. The one-on-one attention to consumers and the relationships with the

industry are why our mediation officers have been successful in resolving issues. But we want more consumers to know we’re here to help, so this fall we’re launching an awareness campaign. As well, you’ll also see us at various festivals and trade shows in the coming months, telling the public more about our services. For more information on farm energy conservation and other farm information sources:

Visit or call 310-4UCA.

22 • July/August 2010 • Energize Alberta

By the numbers

100 per cent green electricity Jim Bentein Energize Alberta ou’re a committed environmentalist — so committed you’ve agreed to pay more for your electricity because it comes from “green” sources. But how do you know that the green power you’ve signed up to get actually comes from clean power sources, such as wind, solar or hydro? In fact, as with many other transactions that consumers make, you have to rely on someone else’s word that what you are buying really is what the seller says it is. In this case, that someone else is a utility, such as Calgary-based Enmax Corporation or Edmonton-based Epcor Utilities, or a power “reseller” such as Direct Energy Marketing or green-power specialist Bullfrog Power, both based in Toronto. The latter two don’t generate their own electricity, but sell electricity to consumers they purchase in bulk from power generators. Both Direct and Bullfrog operate in Alberta’s deregulated market.

Rob Falconer, director of distributed generation for Enmax, says the only assurance consumers have that they are indeed buying green power comes from a third party. In this case it’s the federal government, through Environment Canada’s EcoLogo program, which provides certification that “low-impact” sources of power comply with its standards. Falconer points out that there’s no certainty that the kilowatts of electricity flowing into your home are green. They’re just kilowatts. “Some have the misconception that green power is being delivered differently by power providers,” he says. “That’s not the case. There are really only two ways to deliver it. Either directly, by someone having their own microgeneration at their home, such as solar or small wind, or indirectly, through a validation system like EcoLogo.” Enmax pioneered the green power business in Canada, launching its Greenmax program in 1999. Customers who sign up for the company’s EasyMax program, which is a five-year fixed rate contract, can choose to put their annual reward dollars toward the production of renewable energy. Then,

Enmax puts 5,000 kilowatt-hours of renewable energy power onto the grid, which works out to a cost of two cents per kilowatt-hour. This is enough to supply two-thirds of an average household’s electricity for a year. Falconer says about five per cent of its customers have signed on to the Greenmax program. The company does use the additional capital it raises through the program to invest directly in clean sources of power, such as wind. It owns wind farms in southern Alberta and it also purchases wind-generated power from other providers. “Close to 50 per cent of the wind power in Alberta is contracted to Enmax,” says Falconer. Bullfrog’s electricity comes exclusively from wind and hydro facilities that have been 100 per cent EcoLogocertified. Customers continue to pay for electricity through their current providers, but pay an additional two cents per kilowatt-hour for the green electricity. For the average home, that means paying about $12.50 a month. An independent third party audits Bullfrog Power on an annual basis to confirm that all the power injected into the grid meets EcoLogo standards.

Valuable. Versatile. Conventional. Unconventional. Maybe you already know that 5,060 natural gas wells were drilled in Canada in 2009, or that Canada exported $33.3 billion worth of natural gas in 2008. But what do you know about Alberta’s natural gas industry? Take the quiz and find out.

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Energize Alberta • May/June 2010 • 23 Energize Alberta • July/August

Under the Albertan sun Solar community soaks up the energy savings

Klym Bolechowsky stands in front of the solar array at Drake Landing.

PHOTO: lasia kretzel

Deborah Jaremko Energize Alberta


hree years ago, environmental engineering consultant Klym Bolechowsky was living in Vancouver, B.C., and in the market for a home. Discouraged by housing prices on the West Coast, Bolechowsky became increasingly interested in a unique opportunity in Okotoks, Alta., where he could live close to family while being an early adopter of environmental housing methods. Today he is one of 52 homeowners in the Drake Landing Solar Community, 15 minutes south of Calgary, feeling lucky to be part of a fiveyear, federally funded experiment where his home’s space heating is fed by the sun. “I was living in Vancouver and I was looking for a home and there was no

way…. Through my work I’d heard about the Drake Landing project. I came and saw the show homes and was really impressed,” says Bolechowsky. “It was also affordable compared to a conventional home. I said, ‘Sounds interesting,’ so I bought in.” Buying in set him and his wife back $323,000 for a 1,500-square-foot, threebedroom, two-level house with an undeveloped basement — an amount designed to reflect average home prices in the existing neighbourhood. “These homes were basically marketed for the same amount as similarsized ones in Drake Landing,” says Keith Paget, who works for developer and project partner Sterling Homes. “The people who purchased these got a fantastic deal on them.” The deal may come with the warm feeling of homeowners knowing they are doing their part for the environment,

Regardless of where renewable sources of power are located, transmission lines are the essential link that transport electricity from where it’s generated to where it’s needed, providing green power to all Albertans.

but it also includes financial benefits. The homes are built to the R-2000 efficiency standard — effectively $30,000 in upgrades delivered for free. Each home pays a flat rate of $60 per month for space heating, funds that support ongoing operations of the solar power system, which Bolechowsky says one does not have to be an engineer to take care of. “It’s quite seamless in terms of operations. It’s a really well-built home; it’s really well insulated,” he says. “We’ve been warm in the winter, and that’s important…. If I didn’t tell you it’s a solar home, I don’t think you’d know.” That is, until one goes to the backyard, which is where Bolechowsky’s home becomes markedly different from others in the neighbourhood. His garage, which is detached from his house, is attached to those of all neighbours on the block, hosting a line of solar panels facing south at 45 degrees.

An antifreeze solution — a mixture of water and non-toxic glycol — is pumped through the solar panels and heated whenever the sun is out. The solar collectors are connected via an underground insulated pipe that carries the heated solution to the community’s “energy centre.” Once that solution reaches the energy centre — a small brick building at the entrance of the community — its heat is transferred to water and injected into the ground in an adjacent small field. Both the water and glycol are returned to the system in a designed closed-loop, while the designated underground field heats up and the energy is stored. The idea is to take heat from the sun collected in the summer and store it underground for redistribution through the same system in the winter. The location of the project is not random. The Calgary region receives more solar radiation from ❯❯ continued on next page


July/August 2010 • Energize Alberta 24 • May/June 2010 • Energize Alberta Continued from page 23

Under the Albertan Sun

June to October than Miami, Fla. The community of Okotoks is also recognized for its established environmental home standards. This year is the third in the five-year Drake Landing research project, and Sterling Homes’ Paget notes that the results so far are encouraging, even making world records. “It’s the very first large-scale seasonal storage community to deliver 80 per cent of community space heat requirements through solar energy,” he says. “It hit it early, so it’s actually overachieving.” Unfortunately, the small scale of the Drake Landing Solar Community system isn’t likely to be replicated commercially. “This isn’t supposed to be an economically viable project,” says Dawn Heffernan, environment and sustainability coordinator for the town of Okotoks. “This is purely a research project by the federal government.” Original funding for the project included $2 million from Natural Resources Canada, $2.9 million from the Federation of Community Municipalities and

The energy centre is the heart of the district heating system. Heated water is circulated from the centre to each home through an underground piping network. The borehole thermal energy storage system is an underground structure for storing large quantities of solar heat collected in the summer for use later in winter.

$645,000 from the Alberta government. Heffernan says the primary goal of the research is to determine the optimum design of solar housing systems. “This has been so successful scientifically that [the federal government] is going to take the research and look at how to make it actually work [economically].”

She says that economies of scale mean that solar housing will probably be more viable in multi-family housing complexes or similar applications. As for the people who live in the Drake Landing Solar Community, when the five years of federal experimentation are up they will find a way to thrive, Heffernan says.

“The residents have been assured they will be taken care of.” Solar homeowner Bolechowsky says that he is in for the long haul. “I’d like to stick around. I feel good about my house. I like having a lower environmental footprint. It’s one way I can make a difference.”

Where energy, the economy, and the environment intersect.

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Energize Alberta • May/June 2010 • 25 Energize Alberta • July/August Key Points To Ponder 1. Drake Landing Solar Community is the largest subdivision of R-2000 rated single-family homes in Canada, each being 30 per cent more efficient than conventional housing.

2. A made-in-Canada building standard, R-2000 homes are the most energy-efficient and environmentally responsible new homes on the market. 3. Fulfilling 80 per cent of each home’s space heating requirements from solar energy results in less dependency on fossil fuels. 4. Enmax’s program (see sidebar story at right) will see 8,300 solar panels installed throughout the province by 2016. 5. The Enmax program is funded by the Climate Change and Emissions Management Corporation (CCEMC) — an independent, not-for-profit organization in Alberta with a mandate to expand climate change knowledge, develop new “clean” technologies and explore practical ways of implementing them. Funding for the CCEMC comes from the provincial government, which collects it from industry. Since 2007, Alberta companies that annually produce more than 100,000 tonnes of greenhouse gas emissions are legally required to reduce their greenhouse gas intensity by 12 per cent. One compliance option is to pay into the Climate Change and Emissions Management Fund at $15 per tonne. Funds can only be spent on initiatives and other measures related to reducing greenhouse gas emissions and improving the ability to adapt to climate change. There were 223 organizations that applied for funding in response to the CCEMC’s initial request for project funding, of which 30 were invited to submit proposals, and 16 selected to receive a part of $71 million in funding. Players On The Stage 1. Drake Landing Solar Community (

2. Enmax ( Going Broader, Deeper 1. Climate Change and Emissions Management Corporation ( Your Feedback Email and let us know what you think about solar power development in Alberta. canwea-conf10-ad-half-energizealberta-print-v1.pdf 1


11:01 AM

Solar, wind for home-based generation gets funding boost “[We plan] to enable every Albertan to use home-based generation.” — Gary Holden, Enmax

lberta consumers will soon be able to incorporate solar and wind power into their homes, without having to shoulder all the costs. With $14.5 million in new funding from the Climate Change and Emissions Management Corporation secured, Enmax is launching a new program where it will lease solar panels and micro–wind turbines to its Alberta customers. “This funding will kick-start our plans to enable every Albertan to use home-based generation,” says Gary Holden, Enmax president and chief executive officer. “Over the last two years we have been running a pilot program with employees to test the technology. Now we’re in a position to offer these

environmentally sustainable products to our customers in an affordable way.” Holden says that outright purchase of the equipment can be cost prohibitive to many consumers. “We anticipate that the customer’s cost of renting the equipment will be partially offset by the savings of not purchasing one hundred per cent of their power from the grid.” The program is slated to launch in 2011 with a goal of installing 8,300 solar panels and 700 micro–wind turbines throughout the province by 2016. Enmax says that Albertans will have many opportunities to ask about the program and see the equipment first-hand at events throughout the province, starting with the Calgary Stampede on July 9–18.

CanWEA’s Annual Conference and Exhibition will bring together over 2,500 delegates and 250 exhibiting companies from around the world to discuss the latest developments and emerging opportunities in Canada’s fast growing wind energy industry.





Canadian Wind Energy Association Annual Conference and Exhibition November 1–3, 2010 • Montreal, Quebec

The event will provide an exclusive opportunity to network with industry leaders and generate new business.

Join us at Canada’s largest wind energy conference.





July/August 2010 • Energize Alberta 26 • May/June 2010 • Energize Alberta

Waste not, want not New biomass technology to be used at Alberta sawmill Lasia Kretzel Energize Alberta


housands of trees are cut down and processed in Alberta daily. As the trees are prepared before being sent to lumber yards across the province, the resulting waste, wood chips and sawdust can measure in the tonnes. While many lumber companies send their waste to nearby pulp and paper mills, if there are no such plants nearby, as is the case for Tolko Industries’ sawmill in High Level, Alta., many simply incinerate the waste on site, thereby losing all that potential energy and money. So what if there was a way to stop the inefficient process of burning valuable wood waste? This was the question Tolko asked as it started to think about phasing out its wood-waste burner. The answer came in the form of a new technology developed by Ottawa-based Ensyn Technologies and resulted in the formation of a partnership between the two companies, called High North BioResources Limited Partnership. Tolko energy supply and systems manager Michael Towers says there isn’t a pulp mill nearby. “That led us to Ensyn’s technology, which is…in the sweet spot of our size requirements and also integrates fairly well with our industry,” Towers says. Biomass technology Ensyn’s technology, called rapid thermal processing (RTP), is the rapid flash heating of biomass, such as bark and sawdust, in the absence of oxygen. Biomass is dried to eight per cent moisture content before being exposed to a whirlwind of heated sand. Friction with the sand vaporizes the biomass and produces char and gas. The gas is transferred to a cooling tank where it condenses into a pourable liquid known as pyrolysis oil. The RTP technology is capable of processing 400 bonedry tonnes of biomass per day into more than 230,000 litres of pyrolysis oil. “Off of the biomass you put in, we get about 70 to 75 per cent liquid of pyrolysis oil and the rest of the

products are gas and char,” says Randal Goodfellow of Ensyn Technologies. Excess char is separated from the gas and combusted by a small amount of oxygen to reheat the recycled sand in a closed circuit. “There is a very limited amount of outside energy required,” Goodfellow says. “A little bit at the start-up of the process, but then we run it 24-7 for weeks on end, based on the biomass. The only other outside energy required is to run pumps to take the liquid away and electricity for the fans to blow gas around that has the sand in it. So for all intents and purposes the biomass runs the process.” The entire process only takes two seconds. Best of all, Goodfellow says, the eco-friendly process produces a green, renewable biofuel that can be used for a variety of purposes, including electrical generation using medium-speed diesel engines. Chemicals in the biofuel can also be extracted to produce resins used for making wood-panel products. “It’s a good environmental story all around,” Goodfellow says. He adds that it’s also the best of both worlds for each company. “In any of these biomass projects it’s about making sure you have a good, consistent, long-term supply of biomass. At the other end [it’s also important to make] sure there is a market for what you produce and, in this case, the supplier of the biomass is also the user of the [resulting] product.” Tolko will be using much of the pyrolysis oil to run its own factory, allowing it to reduce its dependency on coalgenerated electricity. “We look at it as a good strategic fit for our existing business,” Towers says.

Community input John Thurston, chair of the Tolko Public Advisory Committee, says the partnership and the project have been well received by the community. A resident of the High Level area for 30 years, Thurston says the waste burner has always been a concern of the community. “People are not in favour of having the burner and all of the residue that comes down…on your vehicles and yards,” Thurston says. “There’s been quite a bit of talk and a favourable response [to the proposed technology solution].” Thurston says the project not only has environmental benefits, but employment and power generation opportunities as well. He says Tolko has done an excellent job of informing the community about the project by sending pamphlets to every residence in High Level, but he hopes to learn more about the actual process and how it has been applied in other communities. “It might be nice to have some background regarding this project in terms of how other communities and other organizations have received it, used it and appreciated it, and if there are negative sides we haven’t considered yet,” he says. Tolko has begun public consultations and is awaiting project approval from the province, but Towers says the company expects to begin construction in 2011. Meanwhile, Goodfellow says Ensyn has already begun discussions with other companies around the province about bringing RTP to their facilities. In addition, Ensyn is developing the technology that might one day have pyrolysis oil end up as green gasoline, diesel and jet fuel that is “indistinguishable, for all intents and purposes, from existing…hydrocarbons.”

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Each edition of Energize Alberta contains a listing of 10 topical energy stories — key trends, events, and initiatives — that are shaping the province’s energy future.

BP fallout Gulf of Mexico spill may affect sector’s social licence to operate



allout from BP’s massive Gulf of Mexico oil spill will be felt industry-wide as the North American oil and gas sector’s social licence to operate has been compromised, says an industry veteran. “I believe the industry is, because of the incident in the Gulf…, rapidly losing what they call a ‘social licence’ to operate,” says David Yager, chief executive officer of HSE Integrated, Canada’s largest national industrial safety services company with operations across the continent. He believes the incident will result in stricter safety and environmental regulations, especially in the United States. And with the industry in Canada already highly regulated, the playing field with the U.S. will level out as companies there will be forced to incur increased costs of compliance as a result of new government measures, Yager told the Petroleum Services Association of Canada’s investment symposium in late June. Why it matters: The April 20 blowout of the BP-operated well killed 11 people and sank the $560-million Deepwater Horizon drilling rig, and the widening spill is hurting coastal economies, harming wildlife and endangering fragile wetlands.

Money makeover Alberta oilsands royalties overtake gas revenue



ith natural gas prices in the doldrums and limited gas drilling, oilsands royalties surpassed gas last year as Alberta’s largest source of non-renewable resource revenue. The higher royalty payments contributed to a significantly lower budget deficit of $1 billion, down from the forecast $4.7-billion shortfall for the 2009–2010 fiscal year. Synthetic crude oil and bitumen contributed $3.16 billion to government coffers — more than triple the $1.01 billion budgeted for — the government said. Due mainly to higher oil prices, oilsands royalties also accounted for just under onehalf of total non-renewable resource revenue of $6.77 billion. Why it matters: Oil and gas royalties comprise a significant chunk of government revenue, and pay for education and health expenses. The growing exploitation of Alberta’s oilsands means it’ll play an even bigger role in funding the province’s programs and services.

When the wind blows Suncor to build wind project near Drumheller



uncor Energy has received regulatory approval from the Alberta Utilities Commission to proceed with the development of its largest operated wind project to date. The proposed 88-megawatt Wintering Hills project, located about 20 kilometres southeast of Drumheller, will consist of up to 55 1.6-megawatt turbines located on 16,000 acres of privately owned land. Why it matters: At peak operation, the Wintering Hills project is expected to generate enough clean electricity to power approximately 35,000 Alberta homes, displacing the equivalent of about 200,000 tonnes of carbon dioxide per year.


Guilty as charged Judge finds Syncrude guilty in duck case


n Alberta judge has found Syncrude Canada guilty on charges stemming from the deaths of 1,600 ducks that landed on a tailings pond. Syncrude faces a maximum fine of $500,000 for a provincial charge and $300,000 for a federal charge in the case. The company was supposed to have deterrents in place that would keep the ducks from landing on its tailing pond. Those were not in place, however. Alberta provincial court Judge Ken Tjosvold also noted that Syncrude had cut back its deterrents and staffing for bird protection. “Syncrude did not deploy the deterrents early enough or quickly enough,” the judge said. The ducks were killed in April 2008, when a snowstorm delayed deployment of bird-deterring sound cannons. The judge will decide on Aug. 20 whether to convict the company on both charges or just one, and will deliver his sentence then. Why it matters: Pictures of the oil-soaked ducks heightened and added to international concern about the environmental impacts of developing Alberta’s oilsands.

Power play Coal-fired phase-out could be boon to natural gas industry



he federal government plans to phase out coal-fired power plants in favour of cleaner alternatives in the next several years, a move that should prove beneficial to the natural gas industry as it seeks additional demand for growing supplies. Steve Snyder, president and chief executive officer of TransAlta, responded to the announcement by saying the company supports the need to lower emissions from Canada’s power sector. “We see opportunities to replace our oldest coal plants with a mix of natural gas generation, clean coal technology and renewable energy,” he said. Why it matters: Coal plants are responsible for 13 per cent of the country’s greenhouse gas output. The federal government believes the gradual phase-out of traditional coal-fired electricity generation will have a “significant impact” on reducing emissions.

Long, hot summer Summer drilling expected to warm up



hanks to relatively high oil prices, an improved royalty regime in Alberta and more favourable capital markets for producers, Canada’s drilling and service rig contractors are anticipating a busier summer than last year. A forecast by the Canadian Association of Oilwell Drilling Contractors calls for a doubling of activity between July 1 and Sept. 30 — 400 rigs at work — compared to the 200 rigs active it had predicted in an earlier estimate. Why it matters: Higher drilling rates leads to greater employment levels. But if the estimate for activity levels proves accurate, personnel will definitely be an issue and the industry may be “maxed out” for rig hands.

Loom and gloom Oilpatch will struggle to find employees this decade

Energize Alberta • May/June 2010 • 27 Energize Alberta • July/August



ooming workforce shortages are expected across the petroleum industry, says a new report from the Petroleum Human Resources Council of Canada. Right now the industry is still in recovery mode and some sectors may experience even more layoffs, but employment growth is expected to resume in 2011. Shortages could return as early as 2012 as new jobs are created and existing workers retire. According to the report, approximately 105,000 workers will be needed over the next 10 years to support new oil and gas activity and replace retiring workers. Of those, approximately 65,000 will be in the industry’s core occupations, such as engineers, trades, operators and field workers. The study also recommended attracting more women, immigrants, youth and aboriginal people to the sector. Why it matters: Workforce shortages would limit the industry’s future growth.

Atomic awakening?

Economics probably don’t support nuclear power in oilsands



lberta’s deputy premier and Suncor’s chief executive agreed at a recent conference that nuclear power probably isn’t a good fit for oilsands projects requiring steam to soften the molasses-like bitumen. Boilers for those projects currently consume enormous volumes of natural gas. “It’s very difficult to move this supersaturated steam over more than about 10 to 15 kilometres,” said Suncor president Rick George, alluding to the remoteness of oilsands projects. But regardless of its role in the oilsands, George said he’s “personally… in favour of nuclear. I do understand [there are] issues around handling of waste and how important that is to the overall equation.” A few proposals have been floated in recent years to build nuclear plants in Alberta and Saskatchewan, but none have proceeded. “I can tell you this: the Alberta government isn’t going to subsidize it,” said deputy premier Doug Horner. Why it matters: Nuclear proponents say it is a clean energy source that produces low greenhouse gas emissions. George argues it should be part of an overall energy strategy for Canada.

Contribution time IEA study cites oilsands role in North American crude oil increase



trong growth from Canada’s oilsands will offset large crude oil declines in the United States and Mexico for a total North American supply increase of 110,000 barrels per day by 2015 to 13.7 million barrels per day, says the International Energy Agency. Total oil supply in Canada will grow by 1.1 million barrels per day to 4.3 million barrels per day in 2015 from 3.2 million barrels per day in 2009, says the agency in a new medium-term oil and gas markets study. Why it matters: The growth in oilsands production will be offset by a reduction in conventional crude and natural gas liquids.

Solid plan ERCB conditionally approves Suncor’s tailings plan



lberta’s oil and gas regulator, the Energy Resources Conservation Board (ERCB), has conditionally approved a plan by Suncor Energy to improve its management of tailings ponds. The ERCB also approved the use of new technology designed to reduce fluid tailings volumes. Suncor’s Tailings Reduction Operations (TRO) process speeds up the conversion of fluid tailings into a solid landscape suitable for reclamation. Why it matters: The oilsands industry’s vast tailings ponds remain an all-too-visible reminder of the environmental effects of resource development. Suncor hopes a significant improvement in the speed of reclamation will help meet the changing expectations from stakeholders.

We are Albertans and we are energy. Recognizing the contribution of oil and gas to Alberta’s economy and communities allows us to address the important relationship between a thriving economy, a healthy environment and a high quality of life. Alberta is Energy showcases the men and women of Alberta, their careers, challenges and accomplishments. Our goal is to build awareness of how the energy industry touches our lives. Alberta is Energy is supported by several Alberta business associations, many of which are focused on the oil and gas sector.

C: 40 R: 96 M: 70 G: 57 Y: 100 B:19 K: 50

C: 29 R: 180 M: 0 G: 201 Y: 100 B: 43 K: 7

Energize Alberta July - August 2010  

Enmax’s new district energy system Natural gas touted as clean alternative July/August 2010 where energy, the economy, and the environment i...

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