An oil rig drills a well under moon light near Cremona, Alta., on Sept. 24, 2023. Drilling expertise runs deep in Alberta owing to the province’s long history with oil and gas, but industries that can lower greenhouse-gas emissions also rely on the technology.Jeff McIntosh/The Canadian Press
Alberta is hoping to attract geothermal, critical mineral, helium and carbon-capture companies to the province through a major new drilling hub.
The public-private partnership, announced Monday, would become Canada’s first technology-agnostic, industry-led drilling hub. The province has earmarked $50-million from Alberta’s carbon tax on large emitters to develop the project, which is envisioned as a place where companies can test new drilling techniques and technologies to accelerate their development.
Major companies in the drilling sector, including geothermal company Eavor Technologies Inc., Calgary-based Tourmaline Oil Corp. TOU-T and global oilfield service company Halliburton Co. HAL-N have already expressed interest in becoming anchor tenants.
No binding contracts have been signed, but Premier Danielle Smith told media that tens of millions of dollars in private-sector capital investment could potentially be secured through the project.
Drilling expertise runs deep in Alberta owing to the province’s long history with oil and gas. But industries that can lower greenhouse-gas emissions – including geothermal energy and carbon capture – also rely on the technology.
So, too, does the production of critical minerals and helium – sectors that have been eyed as potential economic boons for Alberta and other provinces.
The site for the Alberta Drilling Accelerator hasn’t yet been selected, but an April feasibility study led by Calgary-based Eavor, in partnership with the Canadian Association of Energy Contractors and the Canadian Geothermal Energy Association, identified various options.
The province expects to announce the location in early 2025.
Geothermal energy accounts for a mere 0.5 per cent of renewables-based electricity generation, heating and cooling globally, according to the International Renewable Energy Agency. However, geothermal electricity generation grew around 3.5 per cent in 2021, and the technology’s use for heating and cooling grew by around 9 per cent annually between 2015 and 2020.
The International Energy Agency has identified geothermal as an energy source with untapped potential, and in recent reports has underscored the need to rapidly increase support for the technology to help the world meet goals for net-zero greenhouse-gas emissions.
While global growth in geothermal mostly stalled in 2022, according to the agency’s 2023 renewables report, the Paris-based energy watchdog says that’s likely to change, driven by a mix of market interest and government policy.
That’s where Canada has a unique opportunity to repurpose existing oil and gas skill sets, as the world pivots to cleaner energy. A recent analysis by energy consultancy Wood Mackenzie estimated that investment in geothermal through 2050 could hit US$1-trillion, should there be broad global adoption of the technology.
Eavor chief executive officer John Redfern said Monday there is something of a global “geothermal arms race” under way, exemplified by recent announcements about new geothermal test facilities in China, the United States, New Zealand, Iceland and others.
The drilling accelerator would play a crucial role in Canada securing some of that global investment, he said.
Drilling accounts for up to 90 per cent of geothermal project capital expenditure. Those high costs have been a major roadblock for the broad global adoption of geothermal energy, but Mr. Redfern said the hub could help address that barrier while attracting investment to the province.
“There are incremental improvements we’re making with geothermal, but through things like the accelerator, we’re talking about fundamental new technology that can drastically reduce the cost of it,” he said.
Ms. Smith said Monday that industries that rely on drilling are vital for Alberta to achieve its goal of net-zero by 2050, which is why the new accelerator is so important.
“We’ll be expanding our already vast knowledge base, keeping Alberta out in front of the preferred global energy provider, and supporting the development of technology the world desperately needs to support a sustainability goal,” she said.
She said the project would also support the long-term economic goal of operators being able to scale up and sell their homegrown expertise by developing and manufacturing drilling technology that can be used around the world.
“There’s major interest in this project among Alberta’s industry players,” she said.
The drilling accelerator is slated to begin operations in 2026, managed as a non-profit by a new industry association.