Canadian Energy Centre
Canadian renewable propane could be a fuel of the future
From the Canadian Energy Centre
‘We want to make sure we reduce emissions while keeping in mind affordability and reliability’
Four years ago, Craig Timmermans’ two Ontario radio stations became Canada’s first to go on the air from off the grid.
Faced with an $80,000 connection fee and ongoing electricity delivery costs, Timmermans opted for another solution: solar and propane.
“I did our power calculation: five staff, hot water tank, heating system, etc., right down to a coffee maker…then we need a heating source, so it made sense to go with propane,” he said.
“When I looked at all the different heating systems, I found that propane is hands down the most efficient.”
Now Timmermans is building a new home that will run exclusively on propane. He says he wanted propane appliances due to their efficiency.
Ontario radio operators KT and Craig Timmermans power their off-grid business with propane and solar. Photo supplied to the Canadian Energy Centre
“A propane cooking stove is the best cooking appliance…The heat is continuous, it’s instant. It just works so well.”
Lower environmental footprint
Propane serves many purposes in Canada, from supporting mining and oil and gas operations to fueling heating, cooling, cooking and power in remote, off-grid communities.
In these communities, propane can replace diesel with a lower environmental footprint. Propane’s carbon intensity is estimated at 72 grams of CO2 equivalent per megajoule, compared to 100 grams for diesel.
That could be slashed by more than half with a move to renewable propane, according to the Canadian Propane Association (CPA). The CPA has commissioned a new report that looks at potential pathways to producing renewable propane in Canada.
Propane storage tank. Getty Images photo
Pairing with heat pumps and hybrid energy systems
The report serves as the foundation of the CPA’s roadmap for scaling up renewable propane production in Canada.
The CPA says the fuel is ideal for pairing with electric heat pumps to provide back-up heat in low temperatures, especially in remote regions that are not near natural gas grids.
It’s also promising for hybrid systems where solar or wind provides baseload energy and renewable propane provides support when renewables are not available.
Part of propane’s appeal – renewable or otherwise – is that it’s easily liquefied and stored in pressurized cylinders, making it a versatile energy source used almost anywhere, the CPA says.
“We want to make sure we reduce emissions while keeping in mind affordability and reliability as key pillars in any energy transformation,” said CEO Shannon Watt.
“Propane goes where other fuels can’t go.”
Producing renewable propane
Today, most propane produced in Canada comes as a byproduct from natural gas processing.
Among other sources, renewable propane can be co-produced with renewable diesel and sustainable aviation fuel, made primarily from plant and vegetable oils, animal fats or used cooking oil.
Cost is the barrier to renewable propane production – about double what it takes to produce conventional propane, the CPA says.
The United States is offering incentives for renewable propane that are not available in Canada.
Through the Inflation Reduction Act, Renewable Fuel Standard and Low Carbon Fuel Standard, renewable propane producers can receive C$20 per gigajoule (or more than C$30 per GJ in California).
Through Canada’s Clean Fuel Regulations, the incentive is just over C$5 per GJ, or about C$10 per GJ in British Columbia.
“In order to attract investment the same way as the U.S. under the Inflation Reduction Act, we need to have competing measures in place,” Watt said.
“We’ve got the technology and we’ve got the feedstocks. We’ve got a lot of those big puzzle pieces that we need. Now we need the dollars to flow.”
The Ridley Island Export Terminal in Prince Rupert, B.C. ships Canadian propane to overseas markets. Photo courtesy AltaGas
Exporting renewable propane to the world
A large-scale renewable propane industry wouldn’t just benefit Canadians, she said.
That’s because global demand for propane is growing.
Market research firm IMARC Group projects world propane use will rise to nearly 250 million tonnes by 2032, more than one-third higher than demand last year.
The transition to cleaner energy sources is a major factor propelling growth, analysts said.
Until recently, Canada’s only propane exports went to the United States. That changed with the startup of two export terminals at Prince Rupert, B.C.
Since 2017, Canada’s propane exports outside the U.S. have grown substantially, reaching 42 per cent of total propane exports in 2023, according to the Canada Energy Regulator.
“We export more and more propane to non-U.S. locations,” Watt said.
“Now, roughly 50 per cent of Canadian propane is shipped to South Korea, Japan and Mexico, displacing higher emission intensity sources, namely coal and timber.”
Exporting renewable propane would take the benefits a step further, she said.
“That carries the conversation on about reducing global emissions and not just what’s happening in our own backyard.”
From the Canadian Energy Centre
By Will Gibson
Alberta oil sands projects poised to grow on lower costs, strong reserves
As geopolitical uncertainty ripples through global energy markets, a new report says Alberta’s oil sands sector is positioned to grow thanks to its lower costs.
Enverus Intelligence Research’s annual Oil Sands Play Fundamentals forecasts producers will boost output by 400,000 barrels per day (bbls/d) by the end of this decade through expansions of current operations.
“Existing oil sands projects deliver some of the lowest-breakeven oil in North America at WTI prices lower than $50 U.S. dollars,” said Trevor Rix, a director with the Calgary-based research firm, a subsidiary of Enverus which is headquartered in Texas with operations in Europe and Asia.
Alberta’s oil sands currently produce about 3.4 million bbls/d. Individual companies have disclosed combined proven reserves of about 30 billion barrels, or more than 20 years of current production.
A recent sector-wide reserves analysis by McDaniel & Associates found the oil sands holds about 167 billion barrels of reserves, compared to about 20 billion barrels in Texas.
While trade tensions and sustained oil price declines may marginally slow oil sands growth in the short term, most projects have already had significant capital invested and can withstand some volatility.
Cenovus Energy’s Christina Lake oil sands project. Photo courtesy Cenovus Energy
“While it takes a large amount of out-of-pocket capital to start an oil sands operation, they are very cost effective after that initial investment,” said veteran S&P Global analyst Kevin Birn.
“Optimization,” where companies tweak existing operations for more efficient output, has dominated oil sands growth for the past eight years, he said. These efforts have also resulted in lower cost structures.
“That’s largely shielded the oil sands from some of the inflationary costs we’ve seen in other upstream production,” Birn said.
Added pipeline capacity through expansion of the Trans Mountain system and Enbridge’s Mainline have added an incentive to expand production, Rix said.
The increased production will also spur growth in regions of western Canada, including the Montney and Duvernay, which Enverus analysts previously highlighted as increasingly crucial to meet rising worldwide energy demand.
“Increased oil sands production will see demand increase for condensate, which is used as diluent to ship bitumen by pipeline, which has positive implications for growth in drilling in liquids-rich regions such as the Montney and Duvernay,” Rix said.
From the Canadian Energy Centre
“We’re focusing on the opportunity that Canada has, perhaps even the obligation”
It was not a call he wanted to make.
In October 2017, Kevin O’Donnell, then chief financial officer of Nisku, Alta.-based Banister Pipelines, got final word that the $16-billion Energy East pipeline was cancelled.
It was his job to pass the news down the line to reach workers who were already in the field.
“We had a crew that was working along the current TC Energy line that was ready for conversion up in Thunder Bay,” said O’Donnell, who is now executive director of the Mississauga, Ont.-based Pipe Line Contractors Association of Canada (PLCAC).
“I took the call, and they said abandon right now. Button up and abandon right now.
“It was truly surreal. It’s tough to tell your foreman, who then tells their lead hands and then you inform the unions that those three or four or five million man-hours that you expected are not going to come to fruition,” he said.
Workers guide a piece of pipe along the Trans Mountain expansion route. Photograph courtesy Trans Mountain Corporation
“They’ve got to find lesser-paying jobs where they’re not honing their craft in the pipeline sector. You’re not making the money; you’re not getting the health and dental coverage that you were getting before.”
O’Donnell estimates that PLCAC represents about 500,000 workers across Canada through the unions it works with.
With the recent completion of the Trans Mountain expansion and Coastal GasLink pipelines – and no big projects like them coming on the books – many are once again out of a job, he said.
It’s frustrating given that this could be what he called a “golden age” for building major energy infrastructure in Canada.
Together, more than 62,000 people were hired to build the Trans Mountain expansion and Coastal GasLink projects, according to company reports.
O’Donnell is particularly interested in a project like Energy East, which would link oil produced in Alberta to consumers in Eastern and Atlantic Canada, then international markets in the offshore beyond.
“I think Energy East or something similar has to happen for millions of reasons,” he said.
“The world’s demanding it. We’ve got the craft [workers], we’ve got the iron ore and we’ve got the steel. We’re talking about a nation where the workers in every province could benefit. They’re ready to build it.”
The “Golden Weld” marked mechanical completion of construction of the Trans Mountain Expansion Project on April 11, 2024. Photo courtesy Trans Mountain Corporation
That eagerness is shared by the Progressive Contractors Association of Canada (PCA), which represents about 170 construction and maintenance employers across the country.
The PCA’s newly launched “Let’s Get Building” advocacy campaign urges all parties in the Canadian federal election run to focus on getting major projects built.
“We’re focusing on the opportunity that Canada has, perhaps even the obligation,” said PCA chief executive Paul de Jong.
“Most of the companies are quite busy irrespective of the pipeline issue right now. But looking at the long term, there’s predictability and long-term strategy that they see missing.”
Top of mind is Ottawa’s Impact Assessment Act (IAA), he said, the federal law that assesses major national projects like pipelines and highways.
In 2023, the Supreme Court of Canada found that the IAA broke the rules of the Canadian constitution.
Construction of the Coastal GasLink pipeline. Photograph courtesy Coastal GasLink
The court found unconstitutional components including federal overreach into the decision of whether a project requires an impact assessment and whether a project gets final approval to proceed.
Ottawa amended the act in the spring of 2024, but Alberta’s government found the changes didn’t fix the issues and in November launched a new legal challenge against it.
“We’d like to see the next federal administration substantially revisit the Impact Assessment Act,” de Jong said.
“The sooner these nation-building projects get underway, the sooner Canadians reap the rewards through new trading partnerships, good jobs and a more stable economy.”
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