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When, Why and How About Natural Gas – A Canadian Tragedy in the Making – Mark Kuppe


Acero Natural Gas

By: Mark Kuppe

“Natural Gas” you say? “Isn’t that yesterday’s news?”

Why ‘yes, yes it is’… but rather than view that as a negative, I view it as a plus! Say what? Natural gas has been the backbone residential heating fuel for the Northern hemisphere for going on a hundred years now, it is the primary replacement for coal power generation and it is the primary input to the burgeoning petrochemical industry across the globe – for starters.   It has unlocked wealth and standard of living like no other resource has (except maybe oil and historically, coal).

In this tragic tale, natural gas is the maligned, mistreated and unloved princess with no ball to go to and no prince to save her. Her sisters have been invited to the ball where the price of admission seems to be green political endorsement; ask no questions; come on in!

This article will briefly outline all the truly fantastic merits of natural gas and as well, provide a brief commentary on the tragedy that is befalling this resource – and along with it, the livelihoods of current and future generations of Canadians.

I’ve never understood how or why the “change is good” mantra morphed into so many aspects of our lives: politics coming mind, but also where we eat, where we vacation, where we go for coffee… I guess I’m old school; “if it ain’t broke…”.   Especially when it comes to livelihood and energy security – the more significant aspects of our collective lives – to me, “tested, tried and true” holds crucial currency. The fact that it may be boring really doesn’t shouldn’t factor into the equation.

So when I read almost daily now, how “hydrogen” is going to save our lives, much like solar and wind were supposed to, I can’t help but question “why”? How? What has changed in the sciences of chemistry and physics such that what has been proven to work, no longer works? But I’ve already written about hydrogen and the limited role it may ultimately play in our lives so today’s focus will be on what deserves the most merit, especially here in Western Canada: NATURAL GAS!

Why Natural Gas?

1. Our Standard of Living

Natural Gas (along with Oil and Coal) have provided Canadians with the living standard that they now enjoy.

Energy development (and export) has been in the top 10 hit list as primary contributor to Canada’s wealth generation for most of the past century; without this abundance of cheap energy in fact, Canada would likely not exist as a country (source: numerous but let’s use “From Miracle to Menace” by David Yager).   Sadly, in 2020 “Public Administration” has edged out the energy sector in national spending; unfortunately, “public administration” adds nothing to the net wealth of Canadians as this is funded purely by tax dollars (source: https://www.statista.com/statistics/594293/gross-domestic-product-of-canada-by-industry-monthly/NaturalGas).

Taking our eye off of this ball is not some fashion trend for ‘change’; it is a real risk to our standard of living!  This fact seems to be lost on a lot of Canadians; sadly worst of all, many politicians.  

2. Natural Gas is Clean and Healthy

Of all the hydrocarbons that the world burns, natural gas is the cleanest; products of combustion being primarily CO2 and water vapor with a bit of NOx (note: NG combustion generates a fraction of the asthmatic NOx that is produced when burning the current panacea of the investment community – yes, ‘hydrogen’).

Somehow the fact that CO2 is produced when burning natural gas, has put natural gas into the “dirty” category by many special interest groups, most notably those pushing other energy products.  There’s no space or time to argue the ridiculousness of the “dirty” natural gas position except to say that perhaps we need to rethink what are our priorities as a society and then what are the root causes of the issues facing these priorities.  I for example, personally care more about the welfare of fellow humans on planet earth (many of which still to this day are literally starving to death), than I do about taxing people that burn natural gas as a fuel source!

This reminds me of the Salem witch hunts where whatever malaise was plaguing the village, would be attributed to the most vulnerable by-standers: in Salem, young women; in Canada, anyone supplying or using natural gas.

Excessive CO2 isn’t killing off species (at a record rate) on planet earth for example, in fact, excessive CO2 is directly linked to better, faster and stronger plant growth – harboring refuge for animals and species.  Excessive CO2 hasn’t caused major areas on many continents to submerge, although this was supposed to have happened by now according to the early pundits in the 80’s and 90’s.

What exactly is the “green” agenda then? How have we gotten so far off track?  Like I said though… no room to go into it here.

Besmirching the reputation of natural gas and labelling it as “dirty” however, is nothing short of misinformation, heresy, and… “…a Tragedy in the Making”.

3. Natural gas – in Canada – is environmentally friendly

from the cradle to the grave.  From the moment natural gas is harvested at the wellsite, to the point of usage in your home’s furnace, natural gas is mother nature’s friend! For example, in Canada the limits controlling venting at wellsites are now bordering on the absurd; currently down to 500 m3 per day at any given wellsite facility (source: Alberta AER Directive 60). Above this and the government shuts down the facility.  To put this in perspective, the state of Texas alone, vents 19,800,000 m3 per day! Ouch!  So the more natural gas production we exile from clean Canada, we transport to other, dirtier jurisdictions.  We are not solving the problem but rather, worsening and hiding it.

At the time of writing, jurisdictions in the Middle East and elsewhere are targeting ambitious expansions to hydrocarbon facilities while the cleanest place on planet earth is doubling down on carbon taxes and pipeline restrictions (the latest Federal carbon tax: the “clean fuel” standard – how is this “clean” when we’re just moving the energy extraction to other countries where they don’t follow the same enviro-prudence that we do in Canada?).  The “Clean Fuel Standard” really and truly is “the tax grab, out-of-sight-out-of-mind” double standard.

What a tragedy!

4. Natural gas is Versatile

Natural gas is the feedstock to everything!   This fact has not been missed by the current provincial government in Alberta and on Oct 6, 2020  Premier Jason Kenney announced a new natural gas strategy to develop not only the raw natural gas coming out of the ground, but to further develop its usage right here in the province; targeting for now:

  • Petrochemicals – as the name suggests, these are chemicals that are petroleum (in this context, “natural gas”) based, and they are everywhere! As such, the barrier to entry is essentially non-existent. It just makes basic business sense therefore that we get on this band-wagon; a century behind the pack but better late than never. The petrochemical industry is growing. “Demand for plastics – the most familiar group of petrochemical products – has outpaced that of all other bulk materials (such as steel, aluminum or cement), and has nearly doubled since 2000” (source IEA Technology Report, Oct. 2018)
  • LNG – Natural gas can be cooled and liquefied, thereby significantly reducing the volume within which this energy can be stored and amplified; for cost-effective and safe shipping around the globe.Canada has sadly, missed the boat on LNG. Blocked provincially and federally for reasons not fully understood by this author, we have been selling our natural gas locally (ie. to the U.S.) at less than half of the world price for decades now.  Countries such as Australia and the U.S. meanwhile, have been feeding the world’s thirst for LNG and ramping up production in lockstep with worldwide LNG usage growth, while Canada remains essentially idle.  At the time of this writing, the Japan / Korea benchmark for natural gas was at $6.50 per mmbtu while in Canada, it was $2.70 per mmbtu.  After covering fees imposed on the transport to the U.S. many Canadian producers often receive well under $1.00 per mmbtu.  The Kenney government (in Alberta) is targeting two to three large scale LNG projects to be online by 2030.  It’s a start, but by comparison for example, Australia (which has far less natural gas than Canada) already has eight (8) functioning LNG plants operating and exporting at world prices, primarily selling to Asia.  Canada has one (1) operating LNG terminal.  (Source: https://en.wikipedia.org/wiki/List_of_LNG_terminals#Australia).
  • Industrial Usage – support industries that require natural gas so that symbiotically, they can grow. Most industries cannot thrive in isolation.  They require support from the source, to services, to technical know-how, to investment and innovation.  We have the raw product and a lot of the technical know-how already right here.  This just makes sense!
  • Circular Usage – especially for plastics. Rather than shipping our waste (again, out of sight, out of mind), we can also do our part to truly recycle in a meaningful and real manner.  The only way to properly recycle plastics is to be able to regenerate them locally.  How is the Federal government’s current strategy anything but hypocritical, foolish and harmful?  How much fuel is being burned to ship our waste products to other 3rd world countries and how is this helping mother earth?  If we generate the waste, wouldn’t the ethical move be to clean it up ourselves? What is happening to that waste once it reaches its destination? Who is auditing this? Who cares… that’s not our problem right?
  • Hydrogen Development – Hydrogen likely has a place in the energy landscape but it is not a good replacement for natural gas if the intent is to burn it. It is also not a “zero emission” energy source as wrongfully stated by numerous uninformed sources, one of the latest being the Alberta provincial government (source – Edmonton Journal “Alberta’s natural gas strategy…” Oct 7, 2020).  Too many hydrogen pundits will not even bother to correct or dispel this shocking omission.  There needs to be a lot of learning by politicians and the public before all hopes and dreams (and our tax dollars) are thrown at this latest craze.  Do some reading people! At any rate, there will likely be a role for hydrogen and we might as well delve into it (but just control yourselves people!).

5. Expertise is a Premium Commodity in Any Market

Canadians are World Class at producing, handling and transporting Natural Gas – To be frank, Canadians are not world class at many things; but at energy development, we are, or rather, we were! The brain drain has been well underway for about five (5) years now (just look at the vacant offices in downtown Calgary for a ‘1000 words’ picture).   We have systems, regulatory framework, technical expertise, institutions and infrastructure (3 million kms of pipelines in North America) that have been built up by generations of blood, sweat and tears; it makes absolutely no sense to dispense with this for what?  for “change”?

Canadian expertise at handling, transporting, storing, distributing and working with Natural Gas and all of its add-on potential, provides significant benefits to the Canadian economy on numerous levels.  Canadian technical expertise gleaned by working at home, has been exported – to the benefit of all Canadians, home and abroad.

Recently however, the expertise is simply leaving the jurisdiction.  That is… you guessed it… a tragedy.

6. Natural gas is Abundant in Western Canada

I’ve got a magic bean that has just grown to the clouds and has provided access to the golden egg-laying goose.  In fact, the golden egg-laying goose has been living here for a good fifty years now.  What should I do?  Look for pheasants or ducks maybe?  Dig for turnips in the backyard?  We wouldn’t want to be too reliable on golden goose eggs now would we?

Here’s a novel thought: why don’t we nurture the golden egg-laying goose?

It’s a sad reminder of the state of affairs in Western Canada when we have to defend something as obvious as a golden egg-laying goose.  Somehow the story has been distorted and readers should ask themselves “why”?

I could go on and on about the wonderful benefits of natural gas, but I wanted to keep this brief.

As you may have gleaned from reading the above, I’m angry at what is happening to Western Canadians and its future generations; and believe it or not, if you feel like you’re removed from the problem and sitting perhaps on the other side of the country, this story will impact you too.  You may not be aware of this, but the manna from heaven that has blessed the west, has provided $600,000,000,000 in transfer payments to other regions in Canada; yes all those zeroes are correct (source: https://nationalpost.com/news/canada/how-alberta-pays-quebecs-bills-four-charts-that-show-alberta-picks-up-the-tab)… and the very clean, environmentally friendly, cost-effective and versatile golden goose that has converted that manna into the living standard that you enjoy, is being choked to death!

Merry Christmas.

 

Full disclosure: the author (Mark Kuppe) is CEO and unabashedly proud of working for Acero Engineering; a pipeline and facilities Engineering firm in Calgary, Alberta.  Call us, we’d love to help take care of and develop your manna from heaven!

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