As the oil and gas industry faces increasing demands to reduce emissions, Calgary-based Steel Reef Infrastructure Corp. is betting on a solution that turns waste into energy. The company is focusing on converting flare gas from oil wells into electricity, providing power for nearby communities in Saskatchewan.
Steel Reef, a privately held company operating a network of oil and gas pipelines, processing plants, and storage facilities in Saskatchewan and North Dakota, has signed a series of power purchase agreements with SaskPower, Saskatchewan’s Crown utility. The agreements will see the company supply 100 megawatts of electricity annually to the province’s grid, enough to power 100,000 homes by late 2027.
This electricity will come from flare gas — a byproduct of oil production that is typically burned off, or "flared," at well sites. Steel Reef’s CEO, Scott Southward, highlighted the inefficiency of this practice, stating, “If you're flaring, you're missing out on an opportunity. That's a valuable product that can be used.”
Flaring occurs when natural gas associated with oil extraction is burned off due to a lack of nearby infrastructure to transport or process the gas. Steel Reef has been capturing this waste gas since 2012, turning it into useful products like propane and butane. Now, the company is venturing into power generation, investing $265 million to install turbines and electrical substations at five of its Saskatchewan gas plants to convert flare gas into electricity.
Southward emphasized the environmental and energy benefits of this shift. “The demand for electricity is growing, and we feel this is a good first step to becoming a market leader in the flare-gas-to-power space,” he said. “Flaring is wasting possible energy when, as a society, we're crying out for more.”
The environmental impact of flaring has come under increasing scrutiny. The World Bank has called the practice “wasteful and polluting,” pointing to studies that suggest flaring may release more methane than previously thought. Canada’s updated methane regulations aim to reduce methane emissions from oil and gas production by 75% from 2012 levels by 2030, putting additional pressure on companies to find alternatives to flaring.
Amanda Bryant, a senior oil and gas analyst with the Pembina Institute, praised Steel Reef’s initiative, calling it an example of the type of investment that will be essential in the future. “Capturing waste gas and putting it to productive use is a good thing,” Bryant said. “Solutions like this are, and will continue to be, increasingly important.”
Steel Reef’s project positions the company at the forefront of a growing effort to turn waste gas into valuable energy, while addressing the environmental concerns surrounding oil and gas emissions.