REGINA – Saskatchewan Energy Minister Bill Boyd admits the province’s much-touted carbon-capture facility isn’t going as well as planned.
The goal was to reduce carbon-dioxide emissions from the coal-fired Boundary Dam power plant near Estevan by one million tonnes annually.
But the facility is only operating at about 40 per cent capacity and has only removed 400,000 tonnes.
“Clearly that is not acceptable. The government simply is not of the view that that’s acceptable. We want to see much higher efficiency from this facility,” Boyd said Tuesday.
“And as a result of that I believe that SaskPower officials are working very, very hard, the contractors are working very, very hard to increase that efficiency, to get it up to the levels that were anticipated at the beginning.”
The $1.4 billion facility opened with much fanfare last October.
Background notes prepared for the government show that officials knew about issues at the facility when the grand opening was held. The notes, obtained by the Opposition NDP and provided to media Tuesday, refer to concerns with the contractor, SNC Lavalin (TSX:SNC).
One note says: “SNC has serious design issues with our plant that has caused millions of dollars of new contractors to fix, SNC has neither the will or the ability to fix some of these fundamental design issues.”
SaskPower officials say they hope to have the facility operating at 100 per cent efficiency by the end of 2016.
Opposition New Democrat Cathy Sproule says there are a lot of concerns.
“I mean, we see these grandiose announcements and wondrous beasts that are producing 100 per cent capacity and now we see trouble with the construction contract. We see us paying large penalties to an Alberta-based oil company,” said Sproule.
SaskPower has a deal to sell the captured CO2 to Cenovus Energy (TSX:CVE) to be used for enhanced oil recovery.
The utility was supposed to start delivering the gas in April 2014, but construction delays meant the facility wasn’t ready until October that year. SaskPower ended up having to pay $12 million in penalties to Cenovus last year because the utility couldn’t deliver enough carbon dioxide.
“I think there could have been more disclosure around that,” acknowledged Boyd.
“We still believe that this facility is a good facility. We still believe that it’ll meet its targets going forward. Obviously there were some startup problems with respect to it.”
SaskPower may owe Cenovus about $5 million this year as well. However, Boyd says that will be offset by $11 million that Cenovus is paying for the CO2.