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Solutions
| 02/18/16

Hydro could power oil sands, but at a hefty price

TCE

Hydropower could be used to power Alberta’s oil sands instead of natural gas-fired electricity, but would probably not be viable without a price on carbon, according to a new study.

The Canadian Energy Research Institute has released the results of an analysis of different hydropower options in British Columbia, Alberta and Manitoba that could be used to supply electricity to bitumen extraction from oil sands.

The options considered include two different long-distance electricity transmission technologies that would connect Alberta to British Columbia’s proposed Site C dam or to a hydro project on the Slave River in northeastern Alberta. They also include a connection to Manitoba’s potential Conawapa hydro power site and a reinforcement of the existing BC-Alberta grid links to allow more hydro electricity to flow east from BC.

Each of these six hydro power options can deliver sufficient electricity to satisfy the demand of in-situ bitumen extraction operations with production capacity of 0.5 million barrels per day (BPD) to 1.1 million BPD.

But the cost of delivering hydroelectricity to the oil sands would range from $81 to $162 per megawatt hour, compared with just $57 per megawatt hour for gas-fired cogeneration.

Thus without a price being imposed on greenhouse-gas emissions, either through a direct tax or indirectly through carbon trading, the likelihood of hydro power options reducing the cost of oil-sands operations is low.

The study found that reinforcing the grid interconnections between BC and Alberta would be the least expensive option, while transporting hydro power from Manitoba’s potential new site would be the best choice because it is in the advanced planning stage and Manitoba Hydro has already completed feasibility assessments. Furthermore, the Conawapa project site is on the Nelson River, which has already been impacted by six upstream hydroelectric dams, thus additional development minimizes further environmental impacts. The main strike against transmitting electricity from Site C is the high forecast for electricity demand growth in BC, which could reduce the amount of electricity that available for export to Alberta.

Such interconnections are not a new concept in Canada, though the idea has never amounted to much. But in an op-ed for the Edmonton Journal, Trevor McLeod, director of the Centre for Natural Resources Policy in Calgary, argued now might be the time to look more seriously at the possibility.

“Alberta has announced intentions to replace coal-fired electrical plants with renewable generation and Saskatchewan is increasing renewables, too,” he wrote. “By 2030, 30 per cent of Alberta’s emissions are to come from renewables. Saskatchewan is aiming to produce half of its power from renewable sources by 2030.”

Alberta announced its Climate Leadership Plan last November. According to the plan, the province will phase out all pollution from coal by 2030 and will implement a province-wide carbon tax in 2017

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