Guest speaker at the Alberta Surface Rights Federation’s Annual Meeting on Feb. 21, Keith Hirsche, a former researcher in the oil and gas sector and now an entrepreneur and President of Elemental Energy, spoke about a potential new revenue source for property owners facing the end of lease payments in mature oil and gas fields.
Hirsche is originally from Taber and has been exploring the possibility of taking inactive well sites and repurposing some of them into small solar generation operations.
Today, the MD of Taber has 155,610 inactive wells or 311,200 acres of inactive real estate. As well, there is a heavy call for electricity by irrigation operators at the same time sunshine energy is at its peak.
Hirsche has proposed repurposing 10 per cent of the 311,000 acres. On a 2- to 2.5-acre lease, 700 kilowatts (kW) can be produced.
It’s not a transfer of liability, however, sites would only be used that are reclaimed by the operating company or the Orphan Well Association.
Viable sites for re-purpose would be those leases close to a road and transmission lines.
Forty-four per cent of inactive wells in the MD of Taber are within 100 metres of a 3-Phase transmission line.
Most important, it would be landowners making the decision to proceed with such an option.
It would be a lease agreement between equals.
The advantages are many. There is minimal impact to infrastructure and road usage in rural municipalities.
It would take a 5-man crew a few weeks to set up a small solar generation site.
Reclamation costs for the oil and gas industry could be reduced if roadways and electrical infrastructure were used for the new solar projects.
Rural Alberta would have leading-edge technology and future-focused companies that would be much more likely to pay their lease costs and municipal taxes into the future.
Landowners would have the power to say yea or nay to any offer to redevelop an abandoned site on their land.
For further protection, an attendee suggested leases include a nominal royalty payment to landowners to prevent the government from assuming ownership of the sun over our land.
Solar costs are now economically viable and over time solar energy will become even more cost efficient than oil and gas.
In a recent bid by Alberta Infrastructure for solar power, the most competitive bid was $0.048/kWh, 87.5 per cent less than it would have cost in 2010.
The major problem with solar energy is that large projects place an extreme burden on land use.
Solar energy requires five to seven acres to produce one megawatt (MW). It takes 2,500 acres to build a 400 MW project.
The same amount of energy can be produced in the MD of Taber with 25 per cent of the lands currently occupied by inactive wells.
The decentralization of power generation would also help mitigate the increased cost of electricity for Alberta consumers.
When Alberta’s electrical system was deregulated, the cost of electricity consumption decreased (the only competitive part of the system), but the regulated monopolies owning transmission and distribution were given a guaranteed eight per cent return on all their capital expenditures.
Costs for transmission and distribution have almost tripled in the last decade. This compensation structure promotes an unhealthy bias that encourages and rewards monopolies to build big and build expensive.
Whereas, smaller solar generation installations would tie into existing transmission and distribution infrastructure and keep consumer electricity costs reasonable.
Small solar sites make good neighbours. No moving parts, no noise, not the same type of construction efforts as oil and gas or a necessity for large land grabs.
These types of installations are dotted throughout Europe, impinging little on the landowner yet providing a secondary source of supplementary income.
Native grasses and native flowers, for pollination purposes, can be reintroduced on the site and sheep graze very well amongst solar panels—not cattle.
Landowners could set up co-ops and develop sites together.
A solar company could enter into a lease agreement with a landowner.
Even small oil and gas companies might want to convert their non-productive oil and gas sites to solar.
Sustainable energy development is consistent with most landowners’ values.
As abandoned wells (projected to exceed 5,000) and unpaid taxes by oil and gas companies to municipalities (currently $173M), rural landowners and municipalities could consider the viability of small scale solar projects.