Co-produced geothermal power project in Swan Hills, Canada starts operations

Co-produced natural gas and geothermal power project in Swan Hills, Alberta, Canada (source: FutEra Power Public Report, January 2023)

Razor Energy Corp. (Razor) and fully-owned subsidiary FutEra Power Corp. (FutEra) have announced the successful construction, commissioning, and start of operation of Canada’s first co-produced natural gas and geothermal power project in Swan Hills, Alberta. The Project is held within FutEra’s wholly owned subsidiary Swan Hills Geothermal Power Corp. (Swan Hills Power).

First announced in 2019, construction of the hybrid natural gas-geothermal power project started in 2021 and partial plan operation was recorded on September 2022.

The Project combines an Organic Rankine Cycle (“ORC”) Turbine, which captures geothermal heat from the production fluid, and a Natural Gas Turbine (“NGT”). The NGT began operations on September 8, 2022 and the ORC began operations on January 29, 2023. Both the ORC and the NGT have grid interconnections which enable direct sales of electricity to the Alberta electricity grid at merchant power prices. Neither the ORC or NGT are subject to hedging for pricing or to commitments to any level of power generation beyond voluntary dispatch commitments. Both the NGT and the ORC systems have been running in steady state while optimization efforts are underway to get to design capacity.

The final construction cost of the Project is estimated to be $49 million.

The Project was privately financed by Razor and Arena Investors. Arena Investors is an institutional asset manager with US$2.2 billion of committed assets under management that specializes in providing innovative capital solutions for middle market companies. Razor and FutEra are appreciative for their direct support of the Project and for the vision of partnering in geothermal power generation in Canada.

The Alberta Investment Management Corporation, (“AIMCo”), on behalf of certain of its clients, is Razor’s largest shareholder and prime lender since inception in 2017. Razor and FutEra recognizes the ongoing capital support and vision that AIMCo has and continues to provide. AIMCo is a true partner in showcasing what a small Alberta based oil & gas company can achieve in transforming legacy assets into new and renewable sources of low emission electricity generation.

Through the Natural Resource Canada’s Clean Growth Program, this geothermal “first” received $7.75 million for the geothermal development aspects of the Project. A further $2 million contribution from Alberta Innovates also provided important early support for the Project. Emissions Reduction Alberta (“ERA”) contributed $10 million to the Project, ensuring that an Alberta company would construct and operate the first commercial co-produced geothermal power project in Canada. ERA’s funding was sourced from the Government of Alberta’s Technology Innovation and Emissions Reduction (TIER) fund. As trusted partners, Natural Resources Canada, Alberta Innovates and Emissions Reduction Alberta work together to facilitate collaboration and co-funding of projects.

The Project development also required regulatory support and both FutEra and Razor would like to congratulate all the regulatory bodies involved, with special commendation to the Alberta Energy Regulator (“AER”). The AER took the lead on facilitating the path forward, and during the Project announced the Geothermal Resource Act, which provides clarity for future projects.

Future Projects

FutEra’s next phase of the Swan Hills Project will see the addition of solar, and potentially carbon capture with usage and/or sequestration, with the objective to create a net negative carbon emitting traditional oil and gas asset.

FutEra’s development efforts will now focus on larger, lower emissions natural gas and renewable electricity generation projects with similar themes – leveraging Razor and other oil and gas producer’s operations to create financial and tactically advantaged development scenarios and prospective competitive returns to investors.

FutEra and Razor will continue geothermal energy development with a second co-produced geothermal power project under design, and ready to construct in 2023/24.

Source: Razor Energy Corp.