March/April 2014

Nothing ventured, nothing recovered

SaskPower’s Boundary Dam project a test case for carbon capture and storage

By Graham Lanktree

In some parts of the world, the viability of coal as an energy asset is in doubt. The World Bank, the United Kingdom, and Nordic countries ended financial support for coal-fired plants in 2013, and the International Energy Agency has warned of coal reserves becoming “stranded assets.”

Yet, coal remains a cost-effective source of power. So all eyes are on SaskPower’s Boundary Dam Integrated Carbon Capture and Storage Demonstration project in Estevan, Saskatchewan as international firms and governments line up to learn from the $1.46-billion emissions-cutting venture that begins operation in mid-2014.

Billed as the world’s largest commercial-scale coal-fired power plant armed with post-combustion carbon capture and storage (CCS) technology, the CCS plant will scrub 90 per cent – around one million tonnes of carbon dioxide (CO2) annually – from the Boundary Dam plant’s Unit 3 emissions. It will be the equivalent of taking roughly 250,000 ve hicles off the road.

Some experts, though, are skeptical of the economics behind such projects, since success depends on strong government carbon regulations to quickly scale up the technology’s value and make it commercially viable.

The project resulted frotm a decade’s worth of studying CCS and $50 million in feasibility studies and engineering designs to retrofit Boundary Dam’s Unit 3 lignite-coal-fed generator. Inside, flue gas is filtered for sulphur dioxide (SO2), and then a powerful amine-based solvent absorbs the remaining CO2. The amine-CO2 complex is heated, releasing high-purity CO2 that is then liquefied through cooling and pressurization. The trade-off is that the filtering process will reduce the unit’s power output from 139 to 110 megawatts.

Cenovus Energy brokered a 10-year deal with Saskatchewan’s utility, SaskPower, to purchase the full volume of liquefied CO2, which will be piped 70 kilometres north to be used for enhanced oil recovery (EOR) at its Midale-Weyburn oilfield. Any liquefied CO2 that Cenovus cannot take will be injected 3.4 km below ground into a saline formation near the Boundary Dam plant to be studied by the Petroleum Technology Research Centre’s Aquistore project.

SaskPower has invested $1.11 billion in the project, with a further $240 million coming from a 2011 federal government grant. Cost overruns of $115 million to retrofit the Unit 3 generator have pushed the project’s overall price even higher.

Boundary Dam’s operations will, nevertheless, be in full swing as dozens of nascent CCS projects get underway around the world. In anticipation, SaskPower has launched a consortium that “should be of interest to any coal producer or any electric utility that has coal-fired facilities,” according to Bill Boyd, Saskatchewan’s minister of the economy. The consortium will share detailed information on the project’s progress for a price.

Last May, the U.K. government-funded Carbon Capture and Storage Research Centre signed a three-year research sharing agreement with the Boundary Dam project. According to a U.K. government analysis, successfully deploying CCS could cut the state’s cost of meeting its carbon targets by £32 billion ($58 billion) annually by 2050.

“CCS could be a game changer if we get it to be commercially viable,” said Edward Davey, U.K. secretary of state for energy and climate change, at a University College London Energy Institute talk in mid-December 2013. However, Davey is not convinced that the Boundary Dam project will necessarily prove out the business case.

For one, CCS technology is still clunky. Bill Spence, manager of strategic issues for Shell’s upstream international business and former CO2 vice-president for the company, likens it to cellphones that have rapidly improved over the past 15 years. “We’re building a first of its kind, so it’s not going to be the most cost-effective, but the second, third, fourth of a kind will see that cost come down,” he told participants at the 2013 Canada Europe Energy Summit of Shell’s CCS efforts, which include contributing the CO2 capture system for Boundary Dam as well as the Alberta Quest Carbon Capture and Storage project coming online in 2015.

Fluor did the front-end engineering for the carbon capture project. Along with Shell subsidiary Cansolv Technologies, SNC-Lavalin led the engineering, procurement and construction of the project, Stantec contributed engineering during the design and construction phases.

Since it needs to be competitive with renewables, the speed with which the technology can be ramped up will be a major factor in its success. SaskPower has already learned plenty of lessons from Boundary Dam for future CCS projects. “We’ve identified a number of efficiencies and we predict we can build our next capture plant for 30 per cent less,” said SaskPower spokesperson Heather Johnson. Depending on Unit 3’s success, Boundary Dam’s generating Units 4 and 5 could also be retrofitted, she added.

What Cenovus will pay SaskPower for liquefied CO2 is a carefully guarded secret. Worldwide, prices range from $15 to $45 per metric tonne, according to David Reiner, a senior lecturer in technology policy at the University of Cambridge and expert in the economics of CCS. The cost of enhanced oil recovery is balanced on the cost of crude oil and the amount of liquid CO2 needed to produce a barrel of oil. The plant also plans to sell the 60 tonnes of sulphuric acid it generates daily through SO2 capture.

Liquid CO2 has a wide range of other potential uses, including algae cultivation, enhanced coalbed methane recovery, mineral carbonation, concrete curing, liquid fuels, and as a chemical feedstock, although these are economically unproven.

What has made Boundary Dam viable, according to Reiner, “is a combination of the availability of EOR opportunities in southeast Saskatchewan, a grant from the federal government, and the facts that – for this region at least – coal (even with CCS) was more attractive than gas, and the Canadian government had an emissions performance standard that prohibits completely unabated coal-fired generation.” In June 2010, Canada introduced regulations on coal-fired generator emissions to cut 175 megatonnes of CO2 emissions between 2015 and 2030.

The carbon pricing regulations are essential to Boundary Dam’s success, since the rules promote investment to rapidly scale up the technology. “The federal regulations are an imperative,” said Johnson of SaskPower, adding, “it is an additional variable that supports the need for CCS.”

“As to when the combination of regulation, economics and technology will come together to make CCS more attractive,” said Reiner, “[that] will depend on technological progress, but also [the] government's willingness to underwrite the costs and the perceived relative attractiveness of other low-carbon technologies.”

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