‘Heat highway’: opportunity or danger?

Alberta needs to do more to protect farmers under proposed provincial legislation that aims to clarify the rules for the development of geothermal energy, says a surface rights advocate.

“We’ve told the government we’re very concerned about this new geothermal bill because it strips all the protection of oil and gas away from these (geothermal) wells and makes it like the Wild West, like solar and wind development,” said Daryl Bennett, director of the Action Surface Rights Association.

However, Catherine Hickson of Alberta No. 1, a geothermal project near Grovedale, Alta., south of Grande Prairie, said geothermal could benefit farmers and rural communities. The company aims to be the first in the province to generate electricity as well as heat, with a test well to be drilled in 2021.

Geothermal could help reduce natural gas costs for agriculture by providing abundant, carbon-free heat for everything from greenhouses and aquaculture to value-added agri-businesses, said Hickson. However, the provincial government “has kind of gone on the wrong track on this,” she said.

The proposed Geothermal Resource Development Act, or Bill 36, will “protect landowners and mineral rights owners,” said a provincial statement. Besides describing the processes and rules for geothermal, it will establish the legislative authority for liability management and land use, it said.

Geothermal uses boreholes or wells to extract naturally occurring heat generated deep within the Earth, said Hickson.

Alberta is the best-positioned province in Canada in terms of geothermal potential, she said. “There are definitely pockets in other provinces, but they’re not the same kind of resource that you have in Alberta.”

The provincial government could help create a kind of geothermal “heat highway” involving “larger scale district heating projects along with micro-grids to support small communities or industrial complexes,” said Hickson in a letter Oct. 29 to Energy Minister Sonya Savage.

Such initiatives could promote food security by providing heat for everything from crop drying and food processing, to creating soil enrichment products through worm castings and composting, she said.

Alberta No. 1 received $22.4 million in funding in 2019 under the federal Emerging Renewable Power Program. The project is being led by Terrapin Geothermics, PCL Construction, and the rural Municipal District of Greenview near Grande Prairie.

It will tap brine from natural reservoirs more than two kilometres underground, said a statement by Terrapin Geothermics.

“Once the thermal energy has been extracted from the brine and converted to electricity or used for heating, the brine is cycled back underground, where it will heat up again.”

The project aims to generate five megawatts per year of electricity, “enough to power 6,800 homes and reduce greenhouse gas emissions by approximately 20,000 tonnes per year,” said a federal government statement.

It will also pipe heat to a nearby light industrial park, said Hickson in an interview.

However, the provincial government seems to regard geothermal as a well-capitalized industry that doesn’t need any TLC, said Hickson, adding “this is not an industry. It’s a nascent industry.”

Problems with Bill 36 range from the application of royalties to geothermal heat to confusion over who actually owns the rights to it, she said.

“If you look at the wind and solar farms, in fact they don’t pay for the sunshine and they don’t pay for the wind,” she said. “This is a naturally occurring heat energy, and that heat we feel should not be taxed…. Adding a royalty is a burden, at least right out of the gate.”

Bennett said farmers who make legal agreements with geothermal companies to allow wells on their land won’t be covered under Bill 36 and the Alberta Surface Rights Board. The situation is similar to that for solar and wind projects, he said.

“They’re not under the Orphan Well Association, and so any landowner that allows one of these (geothermal) wells on his land cannot apply to the surface rights board for unpaid rental,” he said. Bennett also feared farmers will be stuck with the bill for everything from site cleanup to municipal property taxes if geothermal companies go bankrupt.

He called it a “horrible situation, and they just want to do it to stimulate the economy.”

The provincial government is already paying Alberta farmers millions of dollars for orphaned oil and gas wells, said Bennett. Thousands of farmers are not being paid annual compensation they say they are owed by oil and gas companies, sparking a class action lawsuit.

Provincial officials “want the short-term economic development, the jobs and everything, but they don’t want the long-term liability that will result when these companies go bankrupt, and you know, they’ve seen these companies go bankrupt for decades.”

Farmers should seek legal counsel before getting into any agreements with geothermal companies, said Allan Ingelson, a professor cross appointed in the Faculty of Law and the Haskayne School of Business at the University of Calgary.

But the problem lawyers face is “we don’t really have much in the way of litigation in terms of geothermal because we haven’t really developed the resource,” he said.

The complex legal tangle faced by geothermal is reminiscent of Alberta’s early oil and gas industry during the discoveries at Leduc in the 1940s, said Ingelson.

Alberta No. 1 was named as a tribute to Leduc. No 1, the oil well that changed the province’s destiny. The geothermal initiative has been “really struggling to get the capital that we need into the project to move ahead,” said Hickson.

Despite the potential for geothermal at a time when Alberta’s oil and gas-fuelled economy is ailing and demands to cut carbon emissions are growing, there are only three projects under development, she said.

Turning those numbers “into 30 projects or 300 projects is going to take work on the part of the province to attract the capital to get these early projects going, and prove that they can be commercial in the Alberta context,” she said.

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