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Shell Canada signs deal with Kitselas Geothermal in northwest B.C.

Energy giant invests in Lakelse Lake geothermal potential
Fieldwork undertaken by Kitselas Geothermal to explore the feasibility of a geothermal power project at Lakelse Lake. (Photo courtesy Kitselas Geothermal)

One of the world’s largest energy companies is investing in the ongoing effort to determine if there’s a commercially-feasible geothermal energy development using hot underground waters at Lakelse Lake south of Terrace.

Shell’s money with Kitselas Geothermal Inc., a partnership of the Kitselas First Nation’s Kitselas Development Corporation and Calgary-based Borealis GeoPower, will further determine the viability of drilling wells to a reservoir of hot water so that it can then be pumped up to be a source of heat or as steam to turn turbines to create electricity.

Kitselas Geothermal has been active in the Lakelse Lake area for nearly 10 years, exploring the long-talked about possibility that the geological properties of the area that produced the hot water which once filled the pools at the Mount Layton Hotsprings development could also replace fossil fuels as a local energy source.

In a typical geothermal project, water pumped up for conversion into a heat or energy source is then pumped back down for re-heating.

Company president Alison Thompson said the joint development agreement with Shell will “de-risk” the project to determine the potential for more investment.

“The drilling to be done … with Shell’s funding assistance is to intersect the M’Deek Reservoir with production sized wells. If the well tests look good, the wells could be used to produce geothermal energy,” she said. “The wells drilled previously were not intended to be used for production.”

Current plans call for the drilling program to start within the next year.

“We are nearing completion of the field work and data analysis necessary to site the wells in the drilling program,” said Thompson.

Shell official Stephen Doolan said the Kitselas Geothermal investment is a first of its kind for the company.

“We are exploring a number of lower-carbon business opportunities in Canada and geothermal is one of many,” he said.

“The joint development agreement funding will advance activities to understand the potential for geothermal in the region.”

Thompson would not disclose the location of the M’Deek Reservoir other than to say it was south of Terrace.

Previously-released information indicates there was drilling on the west side of Lakelse Lake, across the water from Mount Layton Hotsprings and that licences had been obtained for drilling within an area of approximately 2,800 hectares on traditional Kitselas territory extending from south of Lakelse Lake and up the east side of Hwy37 South.

Kitselas Geothermal earlier this year was also the recipient of $500,000 from the provincial government’s First Nations Clean Energy Business Fund, the maximum amount that the program can provide.

That’s enabling the company to do necessary fieldwork.

At the time the grant was announced, Thompson said it would also serve to attract further financing.

At one time, a potential small liquefied natural gas project at the Skeena Industrial Development Park south of the Northwest Regional Airport had been tagged as a prospective customer for Kitselas Geothermal. But that project has since been shelved.

The latest potential customer is Skeena Bioenergy, the pellet plant right next door to Skeena Sawmills.

It sees value in an eventual pipeline from a geothermal hub to its plant so that heat from the water would replace natural gas in drying fibre before being turned into pellets and so reduce its carbon emissions.

Shell is best known in the region as the majority owner of the LNG Canada liquefied natural gas export plant now under construction at Kitimat.

And this would not be the first time a major energy company has expressed an interest and put money into geothermal energy at Lakelse Lake.

In 2014 Enbridge struck a deal with the Kitselas First Nation and Borealis Geothermal to form a company as a foundation to explore the area. A $100,000 payment was then made to the province to secure sub-surface rights.

At that time, Enbridge was embroiled in a battle with First Nations, environmental and other groups opposing the company’s effort to build oil-carrying pipeline from Alberta called Northern Gateway to a planned export terminal at Kitimat. That plan has since been cancelled. Records indicate the company formed by Enbridge, the Kitselas and Borealis Geothermal was dissolved in 2019.

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