SaskPower and Cenovus sign 10-year CO2 Supply Agreement

SaskPower has signed a 10 year agreement with Cenovus Energy for the purchase of carbon dioxide (CO2) from SaskPower’s $1.24 billion CAD carbon capture and storage (CCS) facility under construction at Boundary Dam Power Station, near Estevan, Saskatchewan.

The Regina Leader Post reports that under the terms of the agreement, Cenovus will purchase the full volume of the CO2 captured at SaskPower’s facility - approximately one million tonnes per year - and use it for the enhanced oil recovery (EOR) project operated by Cenovus near Weyburn, Saskatchewan. SaskPower’s facility is considered the world’s first and largest commercial-scale, coal-fired integrated CCS project.

SaskPower president and CEO Robert Watson said the CCS project at Boundary Dam’s Unit 3 was predicated on being able to sell the captured CO2 to oil companies for EOR projects, which would made the economics of clean coal comparable to that of combined-cycle natural gas power plants.
 
The value of the CO2 Supply Agreement is not being disclosed.

The Regina Leader Post further report that SaskPower anticipates more CO2 sales in future as additional capacity comes on stream from Boundary Dam and SaskPower’s $60 million CAD carbon capture test facility at its Shand Power Station. SaskPower will decide in 2016 or 2017 whether to convert Units 4 and 5 at Boundary Dam to clean coal facilities, which can reduce CO2 emissions by 90 percent.

Cenovus and its partners have been using CO2 from the Dakota Gasification Corp. (DGC) plant in Beulah, North Dakota, USA for 10 years in their Weyburn EOR field.

Cenovus expects to be ready to accept the CO2 when SaskPower’s integrated carbon capture and storage facility goes into commercial operation in April 1, 2014. Cenovus will likely start building the pipeline required for the CO2 immediately. Jessica Wilkinson, a spokesperson for Cenovus, said the company will start talking to landowners and stakeholders in the area prior to construction of the 70 km pipeline from Estevan to Weyburn. “The agreement includes the construction of an additional line that would go from SaskPower’s Boundary Dam facility to our Weyburn (EOR) facility. Cenovus would build and operate that pipeline."

Cenovus currently receives 5,500 tonnes of CO2 per day from DGC, which it injects into the reservoir, some of which is recycled. “To date, we’ve injected just over 18 million tonnes of CO2 in the reservoir,” Wilkinson said. “In 2011, we injected 4.2 million tonnes of CO2." The SaskPower contract would supply about one quarter of that amount annually.

Cenovus currently produces 27,000 barrels of oil per day from the Weyburn EOR project, of which 19,000 barrels a day is incremental production from CO2 injection and 8,000 barrels a day is from conventional production.

Source: Regina Leader Post