Canadian oil company Cenovus will take up to 50 percent less CO2 from the SaskPower Boundary Dam 3 carbon capture and storage project than previously anticipated under the two companies’ original contract, according to reports this week.
The deal had called for Cenovus to buy all the carbon dioxide collected by the facility in Saskatchewan, the Regina Leader-Post reported Monday. However, under the deal SaskPower would have owed $91.8 million (CAN) to Cenovus due to the delayed start of operations in 2014 at the CCS facility.
The two companies have renegotiated the deal so that SaskPower does not have to make the payment, but now Cenovus will buy some level above 50 percent of the plant’s CO2 output, SaskPower President and CEO Mike Marsh told the newspaper. He declined to cite a specific amount or other details of the revised agreement.
“I’m not sure why that was agreed to in the first instance, but it was,” Marsh said. “Not being able to make that (start) date put that particular contract in breach and we negotiated a revision to that particular clause and we did not pay $91 million.”
The CO2 would be used for enhanced oil recovery. In 2015, the facility captured 425,000 metric tons of CO2. Its current daily output of 2,700 to 2,800 metric tons of CO2 is roughly 90 percent of total anticipated capacity, Marsh said.
Cenovus must provide no less than seven days’ notice regarding how much carbon it will obtain and for how long, Global News reported.
While the provincial New Democratic Party cited the development as the latest problem in the CCS project, Saskatchewan Economy Minister Bill Boyd expressed optimism that buyers would be found for the carbon not bought by Cenovus. Talks with other players are already underway, he told Global news.
“I think that the oil companies look at this as an opportunity,” Boyd said.
