Natural Resources Committee on May 29th, 2018

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

It is a great motion. Thank you, Ted. Ted thinks it's a great motion.

It is a great tie, too.

Vote in favour, get this study going, and talk about investment in Canada.

Thank you, Mr. Chair.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Schmale.

Ms. Ng, you are next on the list.

Do you want to say anything before we move on?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Yes, Mr. Chair.

I would like to move that the debate be now adjourned.

[The Chair, Liberal, James Maloney]

We'll vote on Ms. Ng's motion that the debate be now adjourned.

(Motion agreed to)

I'd like to invite the witnesses to come and join us at the table, please.

We have Alison Thompson and Zack Harmer from the Canadian Geothermal Energy Association.

Thank you for your patience and for sticking around. We have a little bit more time than we thought. You can have your 10 minutes to do your presentation, if you want, and we'll even have time for some questions, too.

[Alison Thompson, Chair of the Board, Canadian Geothermal Energy Association]

I think we will try to hold to the five minutes. I'm a speed-talker and a speed-reader. We'll weave in the story of some of the first nations along the Kinder Morgan pipeline as well, just to keep it relevant for this morning.

Bonjour. The Canadian Geothermal Energy Association, CanGEA, would like to thank the committee for today's invitation to discuss the need for national geothermal data.

We'd also like to acknowledge that we are on first nations traditional territory. Many of our members are first nations themselves or are part of the supply chain, or are working with first nations on their traditional territories.

We're a member-based association and represent the full supply chain of the industry. We're also the front line when it comes to accessing geothermal energy data. In reading the transcripts from other witnesses, we see that many have supported the idea of a national energy organization, a data organization, and we do as well. We'd like to spend our time with you today discussing the benefits of geothermal energy data.

I'm on slide 4, for anyone following along.

Our members are actively developing or are part of the supply chain and projects all across Canada. That includes Yukon, the Northwest Territories, British Columbia, Alberta, Saskatchewan, and Nova Scotia.

In particular, for the town of Hinton, the village of Valemount, the Simpcw First Nation, and at Borealis GeoPower, where I'm part of the management team, these different areas, villages, towns, first nations, and companies are all developing geothermal projects along the Kinder Morgan pipeline. We'll do our level best to ensure that the pipeline is as green as possible in its energy needs, in both power and heat.

CanGEA also recently assisted the Government of Nunavut with a better understanding of the benefits of geothermal and why they should also have favourability maps.

To go to slide 5, as you've heard from us before, geothermal is in some ways the least understood renewable energy. The resource itself is like oil and gas or mining, in that it has many different types of source rock. If you'd like to ask questions about geothermal in particular during the Qs and As, we can take those then. I'll just keep moving along to slide 6. This fact makes mapping the resource and resource estimates of high value to the industry and requires reservoir engineers, as well as geologists and geophysicists.

We are complicated. We have a lot of data and, obviously, a lot of data needs. The different rock reservoirs also dictate the power plant technology—the drilling and completions approach—and that then affects regulatory and permitting approaches. Again, many users—or the developers themselves—and governments rely upon this data.

Some of the features that CanGEA has to support national geothermal energy data include the creation of a Canadian national geothermal energy database. We have done that—not the Geological Survey of Canada. CanGEA currently hosts the Canadian national geothermal database. We also developed a Canadian code for public reporting for companies wanting to list on the Toronto Stock Exchange in order to keep the inherent trust and investor confidence high.

Geothermal favourability maps have been prepared by CanGEA for Alberta, British Columbia, and Yukon. We influenced the one in Nunavut, which should be released soon. We've also helped Nunavut understand that even though they may not have geysers, volcanoes, and hot springs like some other parts of Canada, because of their cold weather and the delta temperature between the cold weather and the heat inherent in the ground, even Nunavut has geothermal potential through its delta temperature.

My favourite slide is slide 7, and for an odd reason: we expect that 2018 will be the last year that there is no geothermal power in Canada. We believe that there's one project in British Columbia, in the village of Valemount, and also some in Alberta that have the potential to produce power in 2019, with Saskatchewan's following closely in 2020 or 2021.

As shown on slide 8, most geothermal-producing countries have ample publicly available data, what I'll call metadata. In our submission, we use the United States as an example of the value of the prospector tool and also of favourability maps. It's this metadata and this ability to search maps and publicly available websites that really add value to the industry.

In our country, it's actually unusual, compared to other geothermal countries, that oil and gas and mining data is logged with the government. Other industries can go into that information and actually see what the temperature is and what the rock is. These are pre-exploration tools for the geothermal industry, so we can leverage other industries a great deal, given the data that is available. If it were more easily accessible and organized, obviously that would cut costs and make projects go a lot quicker.

I'm at slide number 9. In our country, the data gaps are very clear. We'll go through a few of them.

First, there is a lack of the feasibility maps. I mentioned that only a few territories and provinces have them. We'd like to see the rest of the country have those as well.

We'd also like to see more federal support for energy funding. In particular, the Geological Survey of Canada does not yet have a mandate to support geothermal energy, yet it's the most well-positioned to be a partner in developing the industry and supporting it with hosting the data, and also in coming up with the metrics around how data should be collected.

We feel that metrics such as dollar per megawatt or dollar per megawatt hour are not picking up the benefits of geothermal. Geothermal has a very small footprint. It also has ancillary benefits such as heat. Because we're basal, we contribute power or heat 24 hours a day. These types of extra benefits aren't picked up when you compare geothermal against a natural gas peaking plan or wind or solar project if you're just using a dollar per megawatt metric. We encourage the use of a variety of metrics. The United States uses something called avoided cost metrics. Those are the ones that truly compare apples to apples, and not apples to oranges.

We're also looking at more awareness of what geothermal energy is. I quickly went through a slide earlier that talked about the different types of source rocks. There is still a lack of understanding between geo exchange, which is a very shallow type of geothermal energy that's used to heat homes, versus more proper geothermal that CanGEA represents, which is drilling typically one to three kilometres, much like oil and gas, into rocks to access steam or a hot water resource.

I'm going to skip ahead to slide 12 and talk about how, on government websites, particularly Environment Canada and NRCan themselves, geothermal is not mentioned, ping-ponging back to CanGEA being the front line. We don't receive funding to be that public awareness data source. We'd like to partner with the Geological Survey of Canada, and certainly with Environment Canada and NRCan, to at least be depicted on the website so that when the general public goes searching for information, there is a government face to this and not just an industry face to the industry.

I want to read into the record our four recommendations:

One, the Geological Survey of Canada should receive funding and a mandate to support geothermal exploration and development: the metadata, the maps, the database, and support programs.

Two, increase the number of risk-reduction programs, such as a prospector tool that the United States is using for geothermal developers. We've included a case study in our brief.

Three, evaluate renewable projects using levelized cost and levelized avoided cost models that really compare apples to apples and the features of the energy, not just the dollar per megawatt installed, which can be misleading in our case.

Four, raise public awareness and knowledge on geothermal energy and heat.

Those are our specific recommendations for the national data submission. However, we have four general industry recommendations as follows:

One, continue the excellent progress we've made so far with this committee's help and with the finance committee, in co-operation with NRCan, to allow geothermal projects to claim similar tax benefits. I would point out that it was this committee and other committees like yours that functionally changed our industry in 2017, and we're deeply grateful for that. When you go back and look at all the different projects that are being developed now, it's directly because of some changes that were made in rooms such as this, so I convey our thanks to you.

Two, move the Government of Canada towards becoming net zero from a procurement point of view for power and heat. Obviously the geothermal industry would like to participate in that.

Three, continue the direct government contributions to geothermal projects. Let's get some of these off the ground.

Four, initiate more federal geothermal heat programs. The renewable heat is still a yet-to-be-supported initiative on the larger scale. Electricity has been supported greatly over the years, and we're looking to now move beyond just electricity to renewable heat as well.

Thank you for your time today.

[The Chair, Liberal, James Maloney]

Thank you very much.

Ms. Ng, I think you're going to start us off.

[Mary Ng, Liberal, Markham—Thornhill, ON]

We're going to have Mr. Whalen.

[The Chair, Liberal, James Maloney]

Nick.

[Nick Whalen, Liberal, St. John's East, NL]

Thank you very much, Ms. Thompson and Mr. Harmer, for coming today to help us with our study on energy data.

It's very interesting to know that Canada will finally have some geothermal in production in short order, which is great news. It seems to be possibly the cleanest of the energy sources. Even the heat dissipated from the use of the heat, either as electricity or to heat homes, or however, is then just recycled back into the earth. Very little of it is going to be expelled into space. It seems to be a no-brainer.

You've talked about certain types of data being of use to your industry. Can you explain a bit more? We already have some maps that you've provided. What additional mapping data should be made available? What additional survey should be made available? Is this something that the Government of Canada should undertake or something that it can simply compile from other people who are undertaking these geological surveys?

[Alison Thompson]

I think there are really two ways to achieve the data, and different countries make use of both methods. There are really three things our industry wants: the flow rate, the permeability, and the temperature of the source rock. Those three things can help you with the economics of a project.

For example, in some of the government-funded projects I spoke about, one of them being the Borealis project in Valemount, which is sustainable and a demonstration, certainly we would like to see the government-funded programs have to submit their data so that other developers can use it as well. One way to get a whole bunch of data all at once, if you're going to support projects with federal dollars, is to have them actually share their data so other people can learn quickly from it.

Another way for them to do it is to instead invest money in the Geological Survey of Canada themselves to drill their own wells. That's actually been done in the Yukon. The Yukon Geological Survey has drilled two wells in the past six months. You see both styles of that approach happening.

Really, though, we just need to get more data. It's a big country, so we need to prioritize different regions, fill in the gaps in the metadata, and the developers will take over. We truly are the last country in the world. We love geothermal, and we want to get onto it, but the risk still is fairly high with the wildcatting of the wells.

[Nick Whalen, Liberal, St. John's East, NL]

We heard from Nalcor, the Newfoundland and Labrador energy corporation. It has a NESS project, which is meant to exchange seismic data.

Newfoundland and Labrador is in the process of trying to categorize, log, and digitize its three million metres of core sample data from mining exploration and make that publicly available. Is this the type of data you're talking about, from the other types of geo sampling that is done by industry, and you're saying, “Okay, you guys have had it as private data now for long enough. Make it available to the public, through a website”? Would that be considered energy data?

[Alison Thompson]

That would be energy data, so in terms of rock types, for example, with hot springs, you actually find gold. It's called epithermal geothermal. You find gold in old hot springs. Therefore, where mining companies are, usually geothermal companies are as well.

There's an incredible overlap between the oil and gas industry and mining. We're not really looking for any further data, but just kind of filling in those gaps and sharing.

[Nick Whalen, Liberal, St. John's East, NL]

In terms of the expected value of this resource to Canada, when most people think about geothermal, they are thinking about a heat pump in their own home. They're not really thinking about essentially boiling water to pass it through turbines, which is the type of geothermal you're talking about. When one of these hot spots is found, is there a limit to how much power can be generated from it? Is that something you calculate, or is it that once you find one of these, you can slap as many pipes down as you want and there's enough heat for an unlimited supply? What's the science?

[Alison Thompson]

It's a lot like oil and gas. There is a reservoir. Everyone is going to have a different sized reservoir, but you want to match the production with the injection. To make it renewable, you need to balance that.

If you want to sprint, you can take more and maybe slap on some more plants at the beginning, but then you'll run the reservoir down. That balance is really why a reservoir engineer is needed, much as in the case of oil and gas techniques. Some utilities shy away from geothermal because they don't have a resident reservoir engineer.

Those are the types of interplay between the oil and gas industry and the mining industry that we need to make with the utility company. They don't have these technical staff members. I think having data and by proving to them that these are measured resources—they may have been measured by another industry, but they are completely transferable to the data geothermal needs—would help.

[Nick Whalen, Liberal, St. John's East, NL]

One of the previous presenters today talked about collecting environmental risk factors and measuring those as part of the energy data. I'm not necessarily sure I agree with that, but it's on the table.

In your particular case, geothermal is a relatively new technology, and I wonder whether or not there are environmental risk factors associated with that that we can measure. If we try to cool down the Yellowstone caldera, and we do, what happens? Is there going to be some type of net detriment to the overall ecology because of something like that? Is that something scientists are working on? Is there some way we can measure geological risk associated with these projects?

[Alison Thompson]

The industry is going to be regulated by, for example, the Alberta Energy Regulator, the BC Oil and Gas Commission, or the Mackenzie Valley Land and Water Board. I think we're really fortunate that the oil and gas industry has led in the sense that the regulators already have in place things like monitoring seismic activity from drilling wells.

With my example in British Columbia, in Valemount, we've had 10 passive seismic stations installed since last August. It's a hub of information, and it can measure more than just information on our project. It can measure earthquakes around Canada and obviously the ones off Vancouver. We share our data too, so it's not a one-way street; it's a two-way street. Because the other industries are so mature, the regulators themselves understand very well how to regulate the industry for environmental hazards.

[Nick Whalen, Liberal, St. John's East, NL]

With regard to my final question, I'm not sure if it's a $100-million question or a $100-billion question. What do you expect the value of your industry would be if we developed 10% of our hydrothermal resources?

[Alison Thompson]

A good rule of thumb is about $4 million to $5 million per installed megawatt. I'll give you a real-life example, and I'll used the Valemount project again. One hundred million dollars would build you a 15 to 20 megawatt electricity plant that would operate constantly. It would give you about 100,000 tonnes a year of CO2 offset. It would give you about 30 full-time jobs and about 2,000 person years of construction time. There are a lot of benefits that accrue from a very focused investment.

[Nick Whalen, Liberal, St. John's East, NL]

Well, a place like Newfoundland and Labrador is 98%—

[Alison Thompson]

Hydro.

[Nick Whalen, Liberal, St. John's East, NL]

—hydro, so we wouldn't get the CO2 reductions in our market. Is it as compared to using coal or as compared to using natural gas? When you talk about your CO2 reductions, are you talking about a worst-case scenario or a normal one?

[Alison Thompson]

It would be as compared to coal or diesel, absolutely. A lot of our focus would be on the three territories. They're exclusively on diesel. Even small microprojects—we call one megawatt or less a microproject—have very large positive impacts. The country of Iceland is, obviously, a very big geothermal country to begin with, but it recently purchased 100 mini turbines. It's going to put these all over the country and take care of even more electricity needs in the remote villages that have been on diesel.

Nothing's too small and nothing's too big. We have all this in Canada, and 2018 will be the last year that we sit here and say that there's nothing left. We're going to move forward, and 2019 will be a breakout year for us.

[The Chair, Liberal, James Maloney]

Thank you.

Thanks, Mr. Whalen.

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chairman.

I have no motion to carry forward, so I'll just dive right into the questions if that's okay with you.

[The Chair, Liberal, James Maloney]

The suspense is killing us.