Monday, May 2, 2011

CCS project has its skeptics

By Bruce Johnstone
May 2, 2011

A bulldozer pushes coal towards the SaskPower Boundary Dam power station.
Photograph by: Troy Fleece, Leader-Post, Leader-Post
Last week's announcement of a $1.24-billion 'clean-coal' demonstration project at SaskPower's Boundary Dam power station near Estevan - the first commercial-scale carbon capture and storage (CCS) project of its kind in the world - has been greeted with both enthusiasm and skepticism.

Certainly, proponents were effusive in their praise of SaskPower's plan to reduce its greenhouse gas (GHG) emissions by one million tonnes annually - equivalent to taking 250,000 vehicles off the road for a year.

Rob Norris, minister responsible for SaskPower, said the project to convert 45-yearold Unit 3 at Boundary Dam into a 110megawatt "clean-coal'' unit with "near-zero" GHG emissions is a "world leader.'' Robert Watson, president and CEO of SaskPower, described the project as a "game-changer'' and "world class.''

It may be all of these things, but one thing it isn't is cheap. Nor is it risk-free.
The rationale for building what Norris called "the very first commercial-scale power plant, with a fully integrated carbon-capture system'' is to show that it can be done - technically and economically.
Watson noted that the corporation, the consultants it hired to advise them on the project and the consultants who reviewed the project's financials, all believe the CCS project will work. "You don't spend $1.2 billion on anything unless you make darn sure it's economically viable for us to do that.''

Watson also insists that SaskPower will be able to recoup the $1-billion project costs partly through the sale of carbon dioxide and sulfuric acid to industry. And he's confident the Boundary Dam project won't lead to a sharp increase in electrical rates.

But some observers question the economic rationale behind the project.

David Keith, a University of Calgary physicist who has studied CCS technology, said carbon capture only makes economic sense if companies are forced to do it - either by climate-change legislation, a carbon tax or government regulation. "If there is no price for using the atmosphere as a waste dump, then there's no reason to waste your time on it,'' Keith told the Globe & Mail.

And some environmental groups, like the Saskatchewan Environmental Society, oppose clean coal as an expensive, unproven technology that simply allows society to continue producing and burning fossil fuels.

So why did SaskPower decide to invest $1 billion into CCS, despite the fact that federal regulations on GHG emissions from coal-fired generating stations haven't even been published yet? What forced SaskPower's hand in committing to an as-yet-unproven technology to remove CO2 from one of its coal-burning power units?

The answer is tied to SaskPower's ambitious plan to spend $10 billion over the next 10 years to rebuild its aging fleet of thermal generating stations.

SaskPower has three thermal generating stations - Boundary Dam and Shand, both near Estevan, and Poplar River at Coronach in south-central Saskatchewan - generating about 50 per cent of SaskPower's own-source generating capacity of 3,513 MW.

Boundary Dam, with six units generating 824 MW, is the largest of the three and also the oldest. Units 1 and 2 were built in the late 1950s to early 1960s and are due to be taken out of service in 2013 and 2015, respectively. Unit 3 was built in the mid-1960s and is slated for retirement in 2014.

Last December, SaskPower announced it would be proceeding with a $354-million rebuild of the 150-MW "power island" at Unit 3, including the world's first "carbon captureready" turbine built by Hitachi.

But the Crown corporation put off making a decision about the CCS portion of the project due to the lack of certainty about federal regulations regarding GHG emissions from thermal generating stations. SaskPower fully expected the federal regulations to be in place by April, but the federal election call put those plans on the shelf.

Facing the possible delay of up to a year and a sizable increase in costs if the decision was deferred any longer, SaskPower recommended to the government that it proceed with the CCS project. Any major delay in rebuilding Unit 3 would also upset SaskPower's plans to take Units 1 and 2 out of service, throwing the corporation's 10-year capital program off track.

But SaskPower had another important reason for proceeding with the CCS project.

Back in 2007, after years of study, the corporation walked away from a state-of-the-art, but extremely expensive, clean-coal technology, known as oxyfuel. While oxyfuel promised to reduce emissions at a proposed new 300-MW power unit at Shand to virtually zero, oxyfuel's estimated $3.8-billion cost was just too much for a relatively small power utility like SaskPower.

Fortunately, SaskPower had Plan B - a $1.2billion demonstration CCS project at Boundary Dam, to which the federal government contributed $240 million.

This CCS project would remove CO2 and other GHG emissions after combustion, rather than during combustion, at a fraction of the cost of oxyfuel. Besides lower cost, the other big advantage of post-combustion CCS is that it could be retrofitted to SaskPower's remaining fleet of coal-fired stations.

That leads to another strong argument in favour of CCS, at least for Saskatchewan.

The province has several hundred years' supply of lignite coal in southeastern and south-central Saskatchewan.

By retrofitting its existing thermal generating units with CCS technology, SaskPower will be giving a new lease of life to what would otherwise be considered a dirty, low-intensity energy source.

"This decision (to proceed with the CCS project) is to ensure that SaskPower and the province (are) securing our extensive coal assets, with more than 300 years of reliable, affordable energy right here,'' Norris told a news conference.

And Saskatchewan isn't alone in having to decide what to do with its substantial coal reserves.

"Governments around the world share the view that coal will remain an indispensable fuel for decades to come,'' Norris said, adding that 40 per cent of global electricity supply comes from coal-fired generation, including 50 per cent in the U.S. and 80 per cent in China.

Any commercially proven technology that could be used to retrofit existing coal-fired plants or to build new "clean-coal'' plants would be extremely valuable, according to the Calgary-based Pembina Institute.

Carbon capture and storage is one of a "few big hammers" to quickly reduce harmful emissions, Ed Whittingham, executive director of the Pembina Institute think-tank, told Reuters. "We see the decision SaskPower has made to go ahead as encouraging," he said.

Another factor in favour of the CCS project, strangely enough, is cost. According to Watson, the $1-billion CCS plant, when you include the revenue stream from the CO2, would actually cost about the same as a natural gas-fired plant.

"With the CO2 and comparing it against (natural) gas prices going forward, the (CCS) project became the same as putting in a gas plant," Watson told reporters.

That's another advantage of coal: It's cheap and can't be used for anything else, except electricity generation. "We know where the coal is, we know where to get it, and we know how much it costs to get," Watson said. In fact, he said coal is cheaper than any of the alternatives as a source of baseload power, including natural gas and nuclear.

Of course, that's assuming CCS will actually work on a commercial scale. Mike Monea, vicepresident of integrated carbon capture and sequestration for SaskPower, has no worries on that score.

"It's an amine process that's been used in the oil and gas industry for many years. This is just a more advanced type of solvent they're using now.''

Monea said the industry is "very close'' to signing contracts for the delivery of CO2 in 2014 when the CCS project comes on stream.

"The oil companies are waiting for this announcement . I'm sure they'll be very excited.''

Boundary Dam Unit 3 will produce about 10 per cent of the CO2 SaskPower could produce from coal. So multiply the one-million tonnes of CO2 coming from Unit 3 by 10 and you have an idea of the potential CO2 production SaskPower could have.

In fact, Monea believes the CCS project could be the beginning of a new era for the oil industry in southeastern Saskatchewan, with several enhanced oil recovery projects injecting CO2 into mature oilfields to increase production and recovery rates.

The investment in infrastructure for EOR - pipelines, compression stations, injection and production wells - will be similar to the cost the CCS project.

"That cost will be roughly $1 billion,'' Monea said. "It's significant. You have pipelines, compressors, injection wells. And you have to do that over a 20-year period."


  1. "David Keith, a University of Calgary physicist who has studied CCS technology, said carbon capture only makes economic sense if companies are forced to do it"

    How does forcing companies to do it suddenly make it economical when it wasn't before? This is a physicist saying this? BTW, instead of speaking to physicists about economic issues, why not speak to geologists about carbon capture. Almost every geologist I know says carbon capture doesn't work in reality because the CO2 simply leaks to the surface. The more Co2 you pump down under pressure, the more it leaks up. Reality hits when the CO2 leaks into someone's home and kills everyone sleeping inside. That's reality. But to keep the green masses quiet, continue to talk to physicists and economists, that's right.