The new cogeneration facility produces enough heat to make steam for the 30,000-barrel-a-day Mahkeses expansion and generates more than enough power to meet all the electricity needs of the entire Cold Lake operation. In fact, only about 60 percent of the electricity generated is consumed within the site; the rest is sold to Alberta's power utility at the prevailing market rate. In total, the 170 megawatts of electricity that the facility is capable of producing would meet the power needs of about 100,000 typical Canadian households – the equivalent of a medium-sized city – even during peak demand periods.

"The decision to build a cogeneration facility at Cold Lake was made possible, in part, by deregulation of the electricity industry in Alberta, which began in 1996," explains Alan Newell, senior business adviser with Imperial's oil sands business development group in Calgary. "Deregulation made it economically attractive for independent industrial generators to sell power in excess of their needs to the provincial utility. And by creating this market opportunity, deregulation also opened the way for new private sector electricity-generating facilities equipped with modern, efficient and environmentally beneficial technologies, of which cogeneration is a prime example. In addition, generating our own power means not having to pay transmission costs."

These considerations – coupled with the fact that it requires less capital to have one facility using one fuel, natural gas, to generate both electricity and heat for steam production than it does to have separate facilities – made construction of the cogeneration unit an economically attractive proposition for Imperial, Newell adds.

A key attraction of cogeneration is improved thermal efficiency – in other words, reduced energy consumption. The Cold Lake cogeneration facility will consume about 10 percent less energy than the next best power-generation alternative. When compared with other possible generating technologies, the energy savings resulting from cogeneration are even more substantial – in the 30 to 35 percent range.

This increased efficiency also leads to reduced emissions of greenhouse gases, notably carbon dioxide, and other compounds that result from the burning of fossil fuels. More than half of Alberta's electricity is generated by coal-burning plants, while the Cold Lake cogeneration facility uses clean-burning natural gas. If power for the Cold Lake operation were to be generated using coal, carbon dioxide emissions would be as much as 20 percent higher. Given that oil sands development and production is critical to Canada's energy security and future economic growth, energy and emissions reductions of this scale represent a major advancement.

The real key to lowering global greenhouse gas emissions is to develop, on a global basis, innovative, commercially viable technologies to improve energy efficiency and reduce emissions…. Investments of the scale required to develop and implement these environmentally beneficial technologies can only come from a healthy and growing economy.

Tim Hearn, Imperial's chairman, president and chief executive officer, made this remark at the company's annual meeting of shareholders in April 2003. He also noted that Imperial has improved the energy efficiency of its petroleum refining operations in Canada by about 40 percent over the past 30 years. Refining now consumes about seven percent of the energy contained in a barrel of crude oil. "The energy we have saved in our refineries is equivalent to the energy needed to provide heat, light and power to about 400,000 Canadian homes every year," he said.

"The important thing to remember about cogeneration is that it is not just a win-win situation but a triple-win proposition"

As was the case at Cold Lake, economic considerations – primarily the difficulty in coming to satisfactory terms with local utilities – prevented cogeneration from being a major contributor to improving the energy efficiency of Imperial's refineries.

But that is about to change. In the summer of 2002, Imperial began construction of a 95 megawatt cogeneration facility at its integrated refining and chemical manufacturing plant in Sarnia, Ont. Scheduled for completion in the spring of 2004, the new unit will use a natural gas fired turbine and a heat-recovery steam generator to produce electricity and steam simultaneously. Using about 50 percent less energy to produce steam and power than conventional power generation methods, the new facility will make about 40 percent of the steam consumed at the Sarnia site – the plant produces and uses some 300,000 pounds (about 136,000 kilograms) of steam per hour – and about 80 percent of the electricity it requires, with the remaining 20 percent to be purchased from the provincial utility.

"The important thing to remember about cogeneration is that it is not just a win-win situation but a triple-win proposition," says Curt Riley, who, as Imperial's engineering services manager, is overseeing the development of the new cogeneration facility in Sarnia. "It results in operating, economic and environmental benefits – and not only for Imperial. Consumers, the local community and society as a whole all gain from it."

Riley points out that cogeneration has, in fact, been used in petroleum refineries in various parts of the world since the 1950s. But for many years, regulated electricity markets in Ontario, as in Alberta, presented complicated economic and regulatory barriers to companies generating their own power. Since deregulation began in North America in the early 1990s, however, those barriers have been gradually disappearing, while at the same time, cogeneration technologies, notably the turbines, have become more efficient and less costly to construct and operate.

"Simply put, in a deregulated market environment and with recent technological advances, it has become more economical for us to produce most of the electricity we need within the plant," Riley says. "The conditions and energy cost savings made the timing right for an investment of this magnitude."

The major environmental benefits that will result from cogeneration at Sarnia will come, says Riley, from significant reductions in the plant's emissions of sulphur dioxide and nitrogen oxides, both of which are components of urban smog, as well as other pollutants such as compounds of nickel and vanadium. These reductions will occur as the unit takes over much of the plant's steam production from existing boilers that burn petroleum coke and heavy fuel oil. It's estimated that emissions of sulphur dioxide will be reduced by as much as 50 percent, and emissions of nitrogen oxides by about one-quarter.

Cogeneration at Sarnia will also reduce greenhouse gas emissions in Ontario. The fact that the Sarnia plant will generate most of its own electric power rather than buy it from an outside supplier means that the plant's actual emissions will go up rather than down. However, since much of the electricity the plant currently purchases is generated by coal-fired facilities, it is fair to say that on a net basis, greenhouse gas emissions resulting from the Sarnia operation will be significantly reduced. In fact, it is estimated that replacing coal-burning generation outside the plant with efficient gas-burning cogeneration within the plant will reduce greenhouse gas emissions in that region of Ontario by about 500,000 tonnes a year.

When the Sarnia cogeneration unit begins operating in 2004, cogeneration facilities owned by Imperial, including the company's share of Syncrude, will have the combined capacity to generate almost 400 megawatts of electricity, an amount that is equal to one-fifth of the total generating capacity of the province of Nova Scotia.

"There are some who believe that oil companies aren't interested in conserving energy, but nothing could be further from the truth," says Brian Fischer, Imperial's senior vice-president, products and chemicals. "Paradoxically, it takes a lot of energy to produce energy, and we are acutely aware of the fact that energy consumed in our operations – to run pumps and to heat crude oil for processing and to make steam – is energy that is not available for sale. Every litre of fuel that we can save in our operations is another litre that we are able to sell.

"Cogeneration is part of that ongoing search for efficiency," Fischer adds. "The fact that Imperial is investing $250 million in cogeneration at Cold Lake and Sarnia confirms our belief that technological solutions can be found to meet the challenge of consuming less energy and reducing emissions without sacrificing our basic lifestyle or expectations. We think this is a good sign for the future."