We had the pleasure of being joined by Brian Fuchs, VP Revenue & Growth at Matrix Solutions, to discuss emerging technologies and the recent trends happening with hydrogen and lithium development. Brian and Dayna discussed what these technologies entail and implications for environmental, regulatory and stakeholder engagement. Below is some of that conversation!
Why Hydrogen?
Dayna: Emerging technologies in the energy sector is a big topic. What's the deal in Western Canada with hydrogen? Why are we hearing so much about it?
Brian: I think the why, as in “why people would want to have a zero-carbon fuel”, that motivation is relatively clear. I certainly see the effects of changing climate coast to coast, and there's a lot of desire to figure out how people can ideally live the same lifestyle we have now and do so with fewer greenhouse gas emissions. So, the idea of having a zero-carbon fuel that could be available is very appealing. There's interest in hydrogen across Canada and around the world. I think it's important to talk a bit about how hydrogen is produced and how it can be used.
Challenges With Hydrogen Development
Brian: One of the big challenges today is you don't have a demand - you don't have buyers for hydrogen. The reasons for that relate back to the physical properties of hydrogen as a fuel. One, when you burn hydrogen, it burns really hot, hotter than natural gas, and it’s a very reactive element. One of the challenges with that would be if you took an existing natural gas turbine that you had built for a power plant, and you switched it and put hydrogen through it right away, you would void the warranty on that unit. You would have a much harder time being able to use that turbine for as long as you would have intended, and it might cause some damage and some safety concerns along the way.
The second thing is around type of reactivity. If you took hydrogen and tried to put it through an existing pipeline on the ground that was designed for natural gas, it is going to react with those metals in that pipeline. It's going to find any imperfection, any flaw because it's also the smallest molecule we have, so it's going to find its way out. Then you're going to have potential leaks, potential corrosion in that pipeline that wouldn't necessarily apply if you're flowing natural gas through that same line.
The last thing is the safety concern. Hydrogen does have a broader range of explosive limits compared to natural gas, so there's a much different set of conditions under which hydrogen could explode. When you consider the existing structure we have around storage, distribution, and use of natural gas, they're not directly compatible with just plugging in hydrogen and going ahead. You'd have to develop your new or modified infrastructure along with that to enable hydrogen economy. These aren’t reasons not to transition from fossil fuels to hydrogen; but they are reasons why we haven't done this yesterday. Some people would love for this to be just an immediate transition, but there are some technical challenges to overcome first.
And when you're talking about a national hydrogen economy, to deal with the quantity of CO2 you would be generating through hydrogen production, the most viable technology today for that is subsurface sequestration. That's why you are hearing a lot about how CO2 would be injected underground and stored, to be able to facilitate a blue hydrogen project.
4 Ingredients needed for a Blue Hydrogen project
Brian:
1. Water: Need to be close to some water source where you can get long term continuous supply of fresh water.
2. Natural Gas Supply: Need to be close to a natural gas main line or near a natural gas field.
3. Carbon Sequestration: The volume of CO2 will likely require some sort of sequestration, which needs deep reservoirs with carbon storage taking up to 30 to 40 townships of land.
4. Customer: To reach customers we will need pipelines, and not using existing pipelines. New hydrogen and carbon dioxide pipelines will be required.
An Overview & Challenges with Lithium
Dayna: If we look at environmental challenges or regulatory challenges, what are you seeing in in that space for lithium?
Brian: When we talk about aquifers that are hundreds of meters deep, the intention of these plants would be to bring brine to the surface, extract the lithium, and reinject that brine back into the into the aquifer again. However, if you were to have a release of that kind of brine fluid, certainly it could cause impacts to the vegetation, wetlands, wildlife, groundwater, domestic water supplies, etc.
One of the other things, around landowners and how they view this, there are still some questions. Landowner understand lithium could be desirable, but what does that actually look like?
If you start producing brine fluid from a certain point in a large aquifer, then you separate lithium out, you’ve got this brine leftover and if you reinjected the brine back into the exact same location what you're doing is you're just further diluting the lithium concentration of what's left there. You've already got a challenge trying to figure out how to separate lithium, so you probably don't want to add more non lithium brine back to the same spot. Therefore, you inject that brine fluid back into a different location somewhere else in that aquifer. Essentially building pipelines to move this brine fluid somewhere else, reinjecting it in a different location to balance the pressure in the aquifer. Then as you keep developing you drill more wells, and this process continues for decades. What you end up building from the surface, at least, is going to look fairly similar to a conventional oil and gas field. You’re going to keep drilling wells, adding pipelines, and moving fluids, until you have a large network of a bunch of smaller individual drilling pads. Again, the environmental effects that come with large oil and gas fields are things we understand well, but certainly still have the potential to cause cumulative effects, habitat fragmentation, habitat disturbance, vegetation removal, or sensitive wetlands. Trying to figure out how to continue to add well pads and then reclaim the ones you're finished with over time is a well-known challenge, but it's a challenge that's not avoided through lithium development.
The Regulatory Landscape for Hydrogen & Lithium
Brian: I think regulators, in my experience, would much prefer things to be very clear and straightforward. They would love to have obvious precedents behind them to point to and say, here's how we do this. And we just don’t have that level of certainty (yet) around hydrogen and lithium development. The investment community wants to get behind this and wants to have that regulatory certainty for sure. There's this tension between a lot of interest and a lot of potential capital available to the marketplace. Yet, even with some of these programs, like that petrochemical incentive program that governments launched here in Alberta, it's still quite a bit of risk to take for an investor when you've got that level of uncertainty.
We have seen what happens when you have multiple parties who each have a different interest in the same square inch of land, and how you regulate that. It requires governments to prioritize what they plan to focus on, and can also lead to disputes among those different parties which will need to be figured out and regulated.
The Alberta government introduced Bill 82: The Mineral Resource Development Act in November 2021. It is designed to provide some clarity on the rare earth minerals space. This will mean we'll have another legislative mechanism in place to help lithium developers create a clear plan on how those projects can proceed.
Stakeholder Engagement & Land
Dayna: In our expertise, dealing with land access, negotiations with landowners and stakeholder engagement, we need to consider how to communicate this type of project with landowners and stakeholders, as there's a different set of questions that come up. Because there isn't a huge history of this type of development to fall back on, there will be a lot of education required, specifically on the health and safety side, which companies will need to work through with their stakeholders.
Overlapping interest will definitely be a hot topic for land professionals working with hydrogen and lithium developers, and other industries including existing oil and gas operators. There is curiosity around how the Government will issue pore space tenure rights and what that means for existing oil and gas tenure agreements who are within the same area. What will this look like from a subsurface and surface perspective? There will be hurdles and also opportunities for these overlapping interests. With a goal of reducing environmental footprint, there may be potential for shared use of surface infrastructure.
Brian: With carbon sequestration for blue hydrogen projects, Land professionals will need to understand the suitability of a sequestration aquifer and the large land base required. As well as understanding where the closest sequestration hub operator is/will be, and the potential challenge of a hub being ~120km away; that additional length of pipeline may be a project killer.
Another recommendation is if you're going to have a successful capital project in 2022, you must have strong relationships with the community. Including Indigenous communities, landowners and any other stakeholders or NGO's.