Jim Prentice says to wind down carbon capture fund in Alberta, new projects …

CALGARY – The day after Saskatchewan fired up the world’s first commercial-scale carbon capture and storage (CCS) project, Alberta’s new premier said he aims to wind down funding for such projects in his province.

On Friday, Alberta Premier Jim Prentice said the province “has done more than its fair share at this point in terms of very significant public investments in CCS.” To date, the provincial government has committed $1.3-billion to two projects that capture carbon dioxide from industrial operations and store it underground.

“If you take the investments that we’ve made as Albertans and compare them on a global basis, it’s 10% of all the money invested worldwide in large-scale CCS projects,” Mr. Prentice said.

Prudence dictates that we should ensure that we begin to see some commercial viability to these investments

“This is a very sizeable investment of taxpayers’ money and prudence dictates that we should ensure that we begin to see some commercial viability to these investments.”

A day earlier, Saskatchewan’s provincially owned electric utility SaskPower celebrated starting up its CCS facility at the Boundary Dam coal-fired power plant.

The total cost of Saskatchewan’s Boundary Dam CCS project is $1.4-billion and climbing. SaskPower spokesperson Tyler Hopson said, “That’s the current estimate,” though the utility expects that once all invoices are collected, the final bill will be $150 million to $200 million higher than that figure.

The Boundary Dam CCS project will sequester a million tonnes of CO2 per year from the smallest of of the power plant’s four generating units and then compress that CO2 into liquid form before either storing it underground or shipping the liquid to Cenovus Energy Inc.

Cenovus has a 10-year agreement in place with SaskPower to purchase liquid CO2 from the Boundary Dam facility, and the energy company will pump that compressed CO2 into its producing oil wells in Weyburn, Saskatchewan in a process called enhanced oil recovery. Mr. Hopson confirmed that the utility piped its first shipment of liquid CO2 to Cenovus on Oct. 1.

THE CANADIAN PRESS/Michael Bell

Mr. Prentice called carbon capture and storage a “science experiment” while he was campaigning to lead Alberta’s Progressive Conservative party over the summer. He said that as premier, he would move the province away from investing large sums of public money in CCS projects.

On Friday, Mr. Prentice reiterated that his government would not support the CCS program, with the exception of the two projects that are already under construction. “We will honour commitments that have been made,” Mr. Prentice said, but “further projects are on hold.”

In July 2008, Alberta’s then-premier Ed Stelmach announced the creation of a $2-billion fund for CCS projects. Of the four projects the province initially agreed to fund, only two are expected to be completed – Shell Canada Ltd.’s Quest project and the CCS component of the now-under-construction 50,000-barrel-per-day Sturgeon Refinery.

Shell’s CCS technology at Quest is nearly identical to what is already in use in Saskatchewan because SaskPower purchased the system from Shell Cansolv, a Quebec-based subsidiary of the energy producer.

The Boundary Dam CCS project, which is owned by the Saskatchewan government, was built with $240-million worth of funding from Ottawa.

Similarly, Shell’s Quest project is expected to capture 1.2 million tonnes of carbon from its Scotford oil sands upgrader near Edmonton at an estimated cost of $1.35-billion. The province is contributing $745-million from the fund established under Mr. Stelmach to that project. Ottawa is kicking in $120-million.

Shell spokesperson David Williams said Friday that the project is 70% complete and will begin operating toward the end of 2015.

Unlike the project in Saskatchewan, Shell will not be using any of the carbon it sequesters and liquefies for enhanced oil recovery. Instead, the company will simply store the CO2 underground.

The Alberta government is providing funding to another CO2 infrastructure project – a $1.2-billion pipeline carrying the liquefied gas sequestered at the Sturgeon Refinery to old, under-producing oilfields in east-central Alberta. The province is contributing $495-million to the pipeline, called the Alberta Carbon Trunk Line, while Ottawa has committed $63.3-million.

Enhance Energy president and CEO Susan Cole says the trunk line is expected to be in operation in 2016. “We’ve got a unique situation in Alberta that we can use the CO2,” she says.

@geoffreymorgan

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