Pipelines Adapt to Energy Transition

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North American midstream companies are sharpening their focus on carbon emissions reduction and advancing their energy transition strategies, targeting new opportunities that will help position them in the rapidly evolving energy sector. And in many cases that will mean replacing natural gas with renewable sources to power their operations. Among the latest movers, Calgary-based pipeline giant TC Energy recently issued a request for information (RFI) for potential opportunities to source or invest in wind energy projects that could generate 620 megawatts of zero-carbon energy to power some of its US pipelines. TC will issue the RFI to around 100 renewable development companies for US-based wind projects in Texas, the Southwest and the Midwest. After the RFI closes on May 10, TC will move toward a formal request for proposals from a shortlisted group of players. The move underscores how the energy transition and pressure to decarbonize is unfolding across the energy sector, and complicating the legacy businesses of companies that transport hydrocarbons. TC lags behind rival Enbridge in the drive to cut emissions and diversify into emerging energy sources. Enbridge, also Calgary-based, previously set ambitious goals on emissions reduction, pledging to reach “net zero” by 2050, with an interim target of slashing emissions by 35% by the end of this decade. Enbridge has already started “self-powering” some of its pumping and gas-compression stations with solar and has several additional projects to do so in the queue. It has identified 15-20 projects totaling “several hundred” MW of clean power, with some C$500 million (US$399 million) in investments planned through 2023. The result is not just lower emissions, but ultimately cost savings, Enbridge CEO Al Monaco says. “Power costs are one of the largest operating expenses we have,” he told investors in February. “To the extent we can effectively deploy capital and earn a good return to reduce cost and emissions, we're going to do that.” The company is also looking at options in the carbon capture and storage market, potentially using its network of pipelines throughout North America as a future network of carbon pipelines, especially in highly industrialized areas such as the Canadian oil sands. The potential exists to capture "a significant amount of carbon [and] move it by pipeline to a series of storage areas," Dai-Chung Yu, senior vice president at Enbridge said recently (NE Feb.18'21). Renewables Over Gas Enterprise Products Partners, which owns over 50,000 miles of pipelines in the US, has also turned to renewable power. It currently sources about 17% of its electricity needs from clean power and expects that to rise to 25% by 2025. It recently signed a deal to buy 100 MW of solar to power its operations. Ivan Zirbes, Enterprise’s vice president of environmental, health, safety and training, said the move to electrification -- including the installation of more than 1 million horsepower of electric drives rather than gas-fired turbines -- has “directly resulted” in the company’s 19% improvement in carbon intensity since 2011. “If we would have gone with gas-driven turbines for the 1 million horsepower ... our carbon emissions would have increased by 30% over that period,” Zirbes said last month in a presentation laying out Enterprise’s environmental, social and governance strategy. Midstream companies are further looking for ways to diversify their businesses as the energy transition takes hold. Enbridge has run a renewable-power business for many years and is looking to expand it through investments in offshore wind in Europe. Most midstream companies also have storage assets and expertise, which positions them for the upstream push into carbon capture, utilization and storage. Their transportation and storage capabilities also line up well with the demands of the nascent hydrogen economy. TC, which plans to issue emissions-reduction targets later this year, is taking a more measured and deliberate approach to the energy transition but sees its power business as a platform for future growth and diversification, CEO Francois Poirier told a recent conference. “There is some variability on the pace of the energy transition and also the direction it will take, and so it’s up to us to make sure we have the organizational capabilities to prosecute opportunities wherever they are,” Poirier said. Luke Johnson, Houston An earlier version of this article appeared in Energy Intelligence's Natural Gas Week.

Gas Pipelines, Oil Pipelines, Carbon Capture (CCS), Hydrogen, Energy Storage, Corporate Strategy , Midstream Companies
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