Abby L. Harvey
GHG Monitor
4/10/2015
While no firm decision has yet been made, if Boundary Dam Unit 3 proves to perform well consistently after being retrofitted with carbon capture utilization and storage technology, SaskPower may consider retrofitting Units 4 and 5 at Boundary Dam as well, newly appointed SaskPower President and CEO Mike Marsh said during a keynote address at the spring meeting of the National Coal Council, held in Washington this week. “With the performance that we’re seeing now, which is better than we’ve expected, it’ll help us as we look toward the next decision point that we have to make on Units 4 and 5,” Marsh said. The units are 150 megawatt units, like Unit 3, and are slated for retirement in 2019. “We want to have a full year of operation at full load performance … in order to really prove out the economics of this plant and be able to build a proper economic case. We expect to have the decision at the end of 2016, beginning of 2017 and make that decision on whether we are going to go ahead with retrofitting two more units in our fleet,” he said.
The company is predicting that any future projects will be much less expensive than the first-of-its-kind Unit 3 retrofit. “We do know, based on our experience and some of the issues we had that developed during the construction of this facility, … that we could build another facility like this for 20, some of my engineers are saying maybe up to 30, percent less than we currently experienced here, which is very very promising,” Marsh said.
The project came in at a total cost of around $1.4 billion, up from the original estimation of $1.24 billion. Cost overruns and construction delays were attributed to an asbestos scare and unanticipated engineering work. The asbestos scare alone halted nearly all construction work for almost a month, costing SaskPower $30 million, the utility reported. New engineering specifications cost an unanticipated $25 million to build in boiler reinforcement for Unit 3, and SaskPower also paid about $30 million to remove lead paint from the power unit. Other unforeseen engineering work cost the company another $35 million.
SaskPower does not foresee any additional government funding for future projects. The Canadian government had pitched in $240 million for the first-of-its-kind endeavor. “We are not anticipating any more federal money being available to us so we will have to make a much more solid business case without the $240 million,” Marsh said. “Being the first-of-its-kind it was certainly a big demonstration project for the country and that’s the reason the federal money was available but we’re not going to be seeing that for Units 4 and 5.”
Unit 3 Exceeding Expectations
Unit 3 has been operating since October 2014 and has outperformed the conservative estimates for the project in several areas, according to Marsh. “When we designed this facility, we based it on a net output of 110 megawatt hours, that’s what our economic calculations were based on. We’re getting less parasitic load than what we originally had estimated which is a very, very good thing. It’s going to help make the economics much more positive as we look to the next decision,” Marsh said.
The quality of carbon being produced is also very good, Marsh said, and may open the company up to new potential sources of revenue. “We’re producing 99.99 percent pure CO2, very close to food grade. We’re looking at actually now installing a slip stream process and taking out whatever is left there in order to make it food grade quality and then we would sell that product at a premium price and earn a little more revenue than we’re earning today,” Marsh said.
Currently the majority of the CO2 captured at the sight is being sold for use in Enhanced Oil Recovery, which has made all the difference in developing a business case for the operation, Marsh said. “With the proper utilization of carbon capture technology, the proximity of oil and gas reserves and our ability to enter into a contract to sell that CO2 we have an economic case that we were able to take to our board of directors and we were able to get this project approved,” he said.
Plant Expected to Reach Full Capacity This Summer
The plant is not yet operating at full capacity. but is expected to reach that point in coming months. “At this point in time I can say that we are achieving better that expected operation out of the plant, but we’re still in the first six months of operation. We haven’t quite reached full capacity yet,” Marsh said. “Just like any other power station that goes in, it takes several months to work out a lot of the issues and we continue to work on that and we expect to be in full capacity by about June this year.”
