Pipeline spill spoils geothermal project announcement for oil company

CALGARY — A junior oil company is announcing government funding for an environmentally friendly geothermal power project at the same time that it is cleaning up a spill of oil and water from a pipeline in northern Alberta.

Calgary-based Razor Energy Corp. said Thursday it will receive $5 million from Natural Resources Canada’s Clean Growth Program and $2 million from Alberta Innovates to assist in development of a $15-million to $20-million geothermal plant capable of generating three to five megawatts of electricity.

The announcement had been planned for some time and it’s a coincidence the company reported the spill of more than 10,000 litres of oily water on Wednesday to the Alberta Energy Regulator, said CEO Doug Bailey.

The pipeline leak was discovered after a routine aerial inspection found dead vegetation in the right-of-way above the buried pipe, he said, adding it may have been leaking for some time and the total amount spilled isn’t known yet.

“We do flyovers with helicopters and drones for anomalies, for salinity in soil and so on. And for whatever reason, this wasn’t caught,” Bailey said in an interview.

“It’s not linked to this press release at all. This is a press release that we had planned to do before the long weekend sets in so we can get people’s attention.”

Regulator spokesman Shawn Roth said preliminary estimates indicate the spill affected an area of about 2,000 square metres but no impacts to wildlife have been reported.

“The AER is on site assessing the incident and working with the company to ensure all safety and environmental requirements are met as the company cleans up the release,” he said in an email.

Liquids produced from the company’s wells near the town of Swan Hills are 95 to 99 per cent water — the oil is skimmed off the top in an oil battery and the water is pumped back into the underground formation, explained Bailey.

The oil-water mixture is at a near boiling temperature at the wellhead, which makes using its geothermal energy potentially viable, said Lisa Mueller, Razor’s vice-president of new ventures, in an interview.

“You put your hand on the pipe and feel how hot it runs and you realize this heat energy has value,” she said.

“We believe (the project is) technically viable and economically sustainable at this time.”

The company is also planning to build a 15-megawatt natural gas power plant to try to match total generation to its electricity needs at its oilfield, although the power would be sent to the provincial grid and withdrawn as needed.

Razor plans to have the two generators up and running within the next six to 12 months, she said.

Follow @HealingSlowly on Twitter.

Companies in this article: (TSXV: RZE)

Dan Healing, The Canadian Press

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