We are witnessing the “dawn of a new industrial age – the age of clean energy technology manufacturing.” – the IEA, 2023
It’s a truism that during disruptive change, industry incumbents resist change while nimble startups drive innovation. Alberta is no exception. What’s interesting in Alberta’s case is that plenty of those startups feature management teams or technology from the incumbent oil and gas industry. Is this the future of Alberta energy?
Hydrocarbon extraction is dominated by a few majors, almost all of them clustered in the oil sands. Five years ago, “energy transition” was a dirty word in the Alberta oil patch. Now, the big players at least pay lip service to what can no longer be denied, though they tend to understand the concept as lowering emissions to meet regulations while keeping current business models afloat as long as possible. It’s not hard to understand why. The oil patch has never been as profitable, at least for the big producers.
Why fix something that ain’t broke, right?
These are the stories of two clean energy startups with a different perspective. Both have roots in the oil patch. Both are pursuing clean energy technologies that could be rapidly adopted outside Alberta. One is already enjoying success, while the other is still a few years away, but together they symbolize a quiet revolution in the Alberta energy sector.
Oil and gas team repackages 40-year old clean energy tech
Donny Bobocel settles in for our interview dressed in the Petroleum Club uniform – grey suit, open shirt, no tie – looking every inch the oil patch veteran.
“Through the downturn of the last few years, it became exceedingly evident that capital was evaporating from our traditional businesses in a very big way,” he says, echoing stories about the collapse of the once vaunted junior producers and the precarious situation of some intermediates. “Attracting capital for traditional energy plays was becoming near to impossible, except for the very few select teams.” The video below explains Innova’s technology.
More importantly, Bobocel and his team accepted that the global energy transition was well underway and gathering steam. Governments and regulators around the world were committed to lowering greenhouse gas emissions, which didn’t augur well for hydrocarbon extraction.
“We wanted to do something meaningful and new and maybe be part of this transition,” he said.
Bobocel asked an old friend, a chemical engineer with hydrogen experience, if he could suggest a clean energy opportunity worth pursuing. The friend recalled research, shelved in the early 1980s, that he thought might show promise.
The technology is methane pyrolysis, an electrochemical process that splits methane’s lone carbon atom from its four hydrogen atoms, producing clean hydrogen and graphite, both products with commercial markets. No need to waste energy creating heat or capturing and sequestering CO2 underground, as with steam methane reforming that makes “blue” hydrogen. No need for massive amounts of water, as with the electrolyzers that make “green” hydrogen. And the technology can be scaled small enough for a truck filling station or big enough to replace coal or gas for industrial processes like steel-making.
“We rejuvenated it, we reproduced it, and we are now in the process of scaling it. In that process we’ve had some step changes and some derivations of the original technology, but that was the seed of it,” explains Bobocel. The new company is named Innova Hydrogen.
Some aspects of Innova’s methane pyrolysis technology are ready to be commercialized now, while others are a few years or more away, according to Bobocel. With a little help from generous government funding, like those announced in the recent federal budget, Innova could be just a few years from making a splash in the clean energy space.
Alberta drilling expertise powers geothermal firm
A clean energy company using oil and gas tech that’s already turning heads is Eavor Technology. Paul Cairns, Eavor’s director of business development, is a smooth-talking storyteller with a compelling argument about why his company is the answer to the energy transition.
Much of the startup’s technology comes from the oil sands, especially SAG-D (steam assisted gravity drainage) well drilling that was developed in Alberta. One of them is “magnetic ranging,” which allows two well bores to be connected deep underground, a key part of the geothermal closed loop system to mining the earth’s heat.
“It’s one of the many borrowed technologies that we’ve re-imagined or used in a different way from Alberta’s oil sands,” says Cairns. The video below explains how the Eavor-Loop works.
Traditional geothermal energy taps pockets of hot water deep underground. Where conditions are right, such as in Iceland, this type of geothermal provides reliable heat and electricity. But the technology hasn’t fared well in Western Canada. Alberta’s open wholesale power market makes it difficult for geothermal to compete, according to Dr. Catherine Hickson of Alberta No. 1.
Cairns says Eavor-Loop solves the problem by conducting heat from rock formations deep under the earth’s surface and warming the water inside pipes. The fluid then expands and rises to the surface, where it can be distributed for industrial and districting heating use or run through an ORC (organic Rankine cycle) generator to create electricity. Eavor drilled a successful test project near Rocky Mountain House in Alberta, but the big news is the first commercial project in Germany.
“In Germany, the price of electricity, if it comes from a geothermal source, is supported by a 251 euros per megawatt hour feed-in tariff by the German government,” says Cairns. “Compare that to Alberta where the price will bump around between 35 and 90 Canadian dollars.”
Thanks to Russia’s invasion of Ukraine in early 2022 and the resulting energy crisis when Europe lost 40 per cent of its natural gas, Germany is desperate to build electricity generation. So is the EU, which recently awarded Eavor a 91.6 million euros grant from the European Innovation Fund. Last week the company signed a “cooperation agreement” with Sonoma Clean Power to develop up to 200 megawatt equivalent of power and heat in the California counties of Sonoma and Mendocino.
The company is on a roll, in part because Eavor-Loops can be installed anywhere at any scale. With ORC generators installed, they can provide the clean, dispatchable electricity prized in today’s rapidly changing power grids. Throw in heat for industrial processes or building space heating and the technology’s value proposition is impressive.
Alberta Clean Energy Startups
Clean startups tied to the oil and gas industry one way or another are sprouting like mushrooms. The province has a large and competitive cleantech sector. About 75 per cent of the companies service oil and gas firms. But Innova and Eavor signal an emerging trend: clean energy industry.
According to the International Energy Agency in its Technology Perspectives 2023 report, the rapidly emerging clean energy economy is “changing the industries that supply the materials and products underpinning the energy system, heralding the dawn of a new industrial age – the age of clean energy technology manufacturing.”
China leads the new industrial age, but the $369 billion US Inflation Reduction Act demonstrates that the Americans intend to compete toe-to-toe with the clean energy giant. Canada is keeping pace with the US, as the recent federal budget, loaded with billions in funding to stimulate Canada’s clean energy industry, demonstrates. The video below explains Canadian clean energy industrial policy.
The time has never been better for startups like Innova and Eavor to commercialize their technology and, if successful, rapidly scale-up to compete on the global stage. They are not the only Alberta companies in the race. Watch for more Energi Takes video stories, as well as video and Energi Talks podcast interviews, about Alberta startups like Carbon Upcycling and Westgen Technologies.
Given global trends, there could come a time in the not too distant future when energy technologies rather than commodities like oil and gas are the foundation of Alberta’s energy sector. If that day comes, then it will be companies like Innova and Eavor leading the way.
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