An Engineer Keeps Climbing
Steve De Maio, P.Eng., Brings the Skills of a Mountaineer
To Generation of Electricity From Stranded Gas Sites
An ironman who once devised his own ultramarathon, Steve
De Maio, P.Eng., was lured from Burlington, Ont., to Calgary in 1986,
by the ready access to the Rockies. The muntainclimbing enthusiast stayed,
earning mechanical engineering and MBA degrees from the University of
Calgary and now hes reached a new kind of summit, a corporate
one, as president of Efficient Energy Resources Ltd.
During his 19-hour, one-man quadrathon in 1998, he scaled a 300-metre
frozen waterfall at Mount Rundle, made a 200-metre solo rock ascent on
the south face of Mount Yamnuska, then inline skated 80 kilometres back
to Calgary to hop on his bike for the return to the
Rockies to fetch his vehicle.
Not bad for a day off. His job at Renaissance Energy Ltd. was manager
of facilities and development engineering. Mr. De Maio supervised 19 technical
staff and a $100-million annual construction budget. He also oversaw applied
R&D. In the process, Mr. De Maio caught wind of the potential for
generating electricity with sweet natural gas from shut-in sites or solution
gas otherwise flared or vented. Like an inaccessible peak, the gas was
there but hard to reach. Using portable, gas-fuelled installations, in
effect mini-gas-plants delivering their energy by the kilowatt-hour rather
than the thousands of cubic feet per day,
Renaissance by 1998 had an installed capacity of 6,000 kW. It sold electricity
into the grid even before deregulation opened the door wider for small
A New Mountain
When Husky Energy Inc. acquired Renaissance in the fall of 2000, the new
owner asked Mr. De Maio to stay. But, he explains, it wasnt to be.
I had always wanted to go out and start a new venture and the timing
was right. He packed along some ideas about transforming
dormant gas into saleable electrons. Now his Efficient Energy Resources
Ltd., founded in 2000, is carving a niche of its own in the conversion
business, selling electricity through the Power Pool of Alberta. And the
37-year-old Mr. De Maio applies to business the attention to detail and
calculated risk-taking that have made him a mountaineering and rockclimbing
Using private capital, Efficient Energy soon teamed up with Ketch Energy
Ltd. to install a five-pack of 60-kW generators at a site west of St.
Albert. Shut in for 15 years, distant from pipelines but only 350 metres
from power lines, this well proved an ideal prototype Mr. De Maio and
his colleagues continue to search out stranded assets with the care of
mountaineers plotting their ascent. Information on well production, geology
and mineral rights leases
available through Calgary-based AccuMap EnerData Corp. provides an important
Efficient Energy staffers also prowl back roads casing out prospective
sites. Well and battery locations are correlated with the proximity of
three-phase, 25,000-volt power lines. Then follows the number crunching.
Reserve estimates and royalty charges (some otherwise flared gas enjoys
a royalty holiday) are factored in, along with costs of stringing power
at $25,000 a kilometre.
The Number Crunching
In the absence of ready markets for the shut-in gas, the electricity prices
to project viability. At 10 cents a kWh, the theres interest, negotiations
begin. Sometimes, producers make the first move, inviting a search of
their asset base by Efficient Energy. By early in 2002, the company expects
to have 6,000 kW of installed generating capacity, much of it near Red
Earth in north-central Alberta. Opportunities dont end there. A
study by the private consulting firm Optimum Energy Management Inc. counted
6,000 shut-in gas wells in Alberta (excluding run-down or solution-gas
sites) located within two kilometres of threephase power lines. Further
prospects await in Saskatchewan.
Farm-In Model Used
Efficient Energy is not alone in using flare or solution gas for electrical
generation. Several large and medium-sized oil and gas producers, among
them PanCanadian Petroleum and Northstar Energy Corporation, have installed
microturbines in conjunction with gas-gathering systems.
Power is either used on-site or sold. Another Calgary company, Mercury
Electric Corporation, which bills itself as an independent power producer,
has installed, owns and operates numerous 75kW microturbines in Alberta.
However, Mr. De Maio believes his firm
straddles the gas/power fence in a unique way. While Efficient Energy
and operate generators, the deal structures are mirrored after oil and
gas farm-ins. That is,
they capitalize the project, produce the gas to the generator, sell the
power and then share the revenues from these sales. Use of industrialized
8.1-litre V-8 reciprocating preserve these volumes for the host companies
and create a cash flow for them without any outlay of capital or manpower
on their part, explains Mr. De Maio.
Efficient Energy offers more than a financial lifeline, particularly as
producers face increased pressure from the Alberta Energy and Utilities
Board to curb flaring and venting. Often gas-gathering systems may be
distant but power lines close. Some older wells dont produce enough
to warrant collecting the gas but still yield enough to run a generator.
Utility Board regulations limit a producers inactive wells to half
its total. Keeping
wells in production or opening shut-in ones provides more leeway for drilling
Still, for most oil or gas producers, electrical generation is unfamiliar
territory, a realm they reluctantly enter without a guide. We bring
to the table the fact that weve been there, weve done it,
says Mr. De Maio. Weve got leading ideas that most people
dont know a lot about.
They dont have to proceed on the same learning curve as we did.
Others On the Team
This is not a solo climb for Steve De Maio. (He still tries,
by the way, to get in at least one actual mountain climb a week.) He has
gathered an impressive management team of mostly Renaissance veterans.
But the ranks also include a close mountaineering colleague.
These former Renaissance hands now with Efficient Energy are Rick Marshall,
chief operating officer; Kelly Horan, manager of corporate administration;
Tim Martindale, P.Eng. (a De Maio classmate from U of C), manager of engineering
and operations; and Roy Smitshok, an expert in reservoir engineering and
property acquisition, who is executive vice-president and
chairman of the board. Other directors besides Mr. De Maio are lawyer
Jay Park; Rex Kary, a climbing partner and former president of Continental
Gas Marketing; and Lyle Houston, a successful entrepreneur from outside
the oilpatch. Treasurer Allison Earl, CA, rounds out the officers team.
The particulars between climbing and succeeding at business may differ.
But the principles of teamwork and risk assessment that come to the fore
when dangling between a hard rock and thin air are certainly similar.
I go back and leverage off my rockclimbing and mountaineering experience
every day, says Mr. De Maio. We have a team of people that
trust and respect each other and everyone has a tremendous amount of fortitude.
Thats as important in a companys start-up as when youre
out on a rock face, 10 miles from the nearest road and 2,000 feet up a
rock wall. The people you align yourself with in risk management are important
both in climbing and starting a new venture. I consider myself fortunate
to have pillars of experience with me both in the mountains and downtown