Author of the article:Joel Schlesinger  •  Postmedia Content Works
Proton Technologies sees a bright future in old oil and gas wells. The Calgary-based company has developed an environmentally sustainable way to extract hydrogen — a clean form of energy — from mature oil and gas reservoirs.
Proton has chosen Saskatchewan as its base to pilot test its patented technology under operational conditions by purchasing a decommissioned oilfield near Kerrobert, Sask.
“The basic concept of what we aim to do is to produce very low-cost hydrogen from existing oilfields,” says Grant Strem, chief executive officer and chairman of Proton Technologies Inc.
Hydrogen produces no carbon dioxide emissions when used to power vehicles. At this time, hydrogen is being used to power a few vehicle models, including the 2020 Toyota Mirai — the first mass-produced, hydrogen-powered car. As well, the gas can be used to fuel electricity generation plants, it can be blended with natural gas for consumption, mixed with coal dust to lower emissions at coal-fired power plants, and used in fertilizer production.
Proton’s ground-breaking method for extracting hydrogen involves the injection of oxygen into the mature oil and gas fields to induce a reaction that releases the hydrogen, which can then be extracted. This innovative method of hydrogen extraction aims to produce the resource without generating greenhouse gas emissions.
Proton plans to not only use the oil and gas industry’s old fields, but also its infrastructure.
“The produced hydrogen can be mixed into existing natural gas pipelines or used at higher concentrations at electricity assets such as coal and natural gas power plants,” says Strem. “Proton is structuring contracts to supply hydrogen at the same energy price as natural gas and is thus targeting baseload power and heating using existing infrastructure.”
The company is undeniably ambitious and innovative, and its early-stage efforts illustrate how Saskatchewan is fertile ground for big, bold, world-changing ideas.
“Saskatchewan is just a great place to do business,” says Strem, a former oil and gas geologist, citing a long list of positives including the province’s many supportive programs for industry. The provincial government has developed a number of competitive tax credits and incentive programs to encourage responsible resource development and technological innovation.
In Proton’s case, the Saskatchewan Petroleum Innovation Incentive (SPII) was particularly attractive, offering transferable royalty credits for qualified innovative projects at a rate of 25 percent of eligible project costs. Strem says the incentive is “a win-win for the province” and companies such as Proton that need to protect their investment and access cash flow early in a project’s development cycle.
Another Calgary company has also seen the benefit of developing new technologies in Saskatchewan by using the SPII. LiEP Energy Ltd. has undertaken a pilot project in partnership with Regina’s Prairie Lithium Corp. to extract lithium — a key component in batteries — from brine water in Saskatchewan oilfields.
It’s not just incentive programs that make Saskatchewan attractive for new ventures, Strem says. “It’s really easy to work with the government here,” he notes. For example, each time Proton has had a question for a government official, it received a quick, decisive answer, not just a ‘yes’ or ‘no.’ Officials informed the company what exactly was required to receive approval to proceed, he says.
The company had many regulatory questions, given the novel nature of its endeavour. Strem says Saskatchewan’s government gets it. For one, it recognizes the potential to produce clean energy at a fraction of the cost of conventional energy.
“Hydrogen is a way to deeply decarbonize our entire energy system while saving a lot of money because its price can drop meaningfully lower than the price of natural gas,” Strem explains.
Piloting a new technology can be costly and risky. Strem found the province’s stable and transparent regulatory environment helped mitigate that risk. Saskatchewan promises less red tape, and that was a promise kept, he says. “The government stands by its word, and that stability is attractive to investors.”
The province also has another desirable trait: great people. “Experienced” and “reasonable” — these words aptly describe the labour pool Proton has drawn upon locally, Strem says. All the workers and services that are normally needed in the oilpatch are also needed in the hydrogen patch,” he explains, adding the company relies on local services almost daily.
Proton has proven its technology works in an operational environment and is preparing to move to Phase 2 of its operations. The company plans to build a mid-sized hydrogen plant, capable of producing 500 tons of hydrogen per day, which could produce 400 megawatts of electricity and power 260,000 homes.
Going forward, Proton intends to apply for Saskatchewan’s Oil and Gas Processing Investment Incentive, which offers transferable royalty credits worth 15 percent of eligible project costs for greenfield or brownfield value-added processing projects.
“We’re hoping to use that for the larger capital expenditures,” Strem says. While the risks remain high, the payoff is worth the gamble, he adds. The world needs more clean energy, and the province understands hydrogen can be an “excellent” addition to the mix of solar, wind, geothermal and other sources for a decarbonized economy.
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This story was created by Content Works, Postmedia’s commercial content division, on behalf of the Government of Saskatchewan.