Cenovus inks deal to buy CO2 from Saskpower
Cenovus Energy has signed a 10-year agreement to purchase carbon dioxide from SaskPower’s $1.24-billion carbon capture and storage facility under construction at Boundary Dam Power Station, near Estevan, Sask.
The Calgary-based firm will purchase the full volume of the CO2 captured at SaskPower’s facility — approximately one million tonnes per year — and use it for its enhanced oil recovery project operated near Weyburn, Sask. 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 carbon capture project at Boundary Dam’s Unit 3 was predicated on being able to sell the captured CO2 to oil companies for enhanced oil recovery projects, which would make the economics of “clean coal’’ comparable to combined-cycle natural gas power plants.
“With this sale of the CO2 and the guaranteed contract, it does take us to that,’’ Watson said in an interview Wednesday.
“We’re very happy to get the guaranteed contract for the sale of the liquid CO2.”
Watson said the value of the contract is not being disclosed for “competitive reasons,’’ but he said CO2 can be purchased for $15 to $50 per tonne, depending on its potential use. “Probably, to start with, it’s at the lower part of the range ... because this is the first full-production (CCS) facility,” Watson said.
But he anticipated more CO2 sales in the future as additional capacity comes on stream from Boundary Dam and SaskPower’s $60-million carbon capture test facility at its Shand Power Station.
SaskPower will decide in 2016 or 2017 whether to con- vert Units 4 and 5 at Boundary Dam to “clean coal’’ facilities, which can reduce CO2 emissions by 90 per cent.
Watson also noted that Cenovus and its partners have been using CO2 from the Dakota Gasification Corp. plant in Beulah, N.D., for years in the Weyburn field.
“There’s no uncertainty at all about using CO2 safely for enhanced oil recovery. ’’
Watson said Cenovus expects to be ready to accept the CO2 when SaskPower’s facility goes into commercial operation on April 1, 2014.
“They’re going to start building the pipeline required for the CO2 immediately.”
John Brannan, Cenovus’s executive vice-president and chief operating officer, said ensuring a consistent and adequate supply of CO2 is critical to maintaining and expanding the EOR project near Weyburn.
“Cenovus’s agreement with SaskPower provides us with a second reliable supply source of CO2 for our Saskatchewan operations.”
Cenovus spokesperson Jessica Wilkinson said the company will start talking to landowners and stakeholders in the area prior to construction of the 70-kilometre pipeline from Estevan to Weyburn.
Cenovus currently receives 5,500 tonnes of CO2 per day from North Dakota, which it injects into the reservoir, and some of it is recycled.
“To date, we’ve injected just over 18 million tonnes of CO2 in the reservoir,” she said. “In 2011, we injected 4.2 million tonnes of CO2.’’
The SaskPower contract would supply about onequarter of that amount annually.
“For us, the big goal was making sure that we have an adequate supply of CO2. It’s always better to have couple of different suppliers just in case something happens.’’
Cenovus currently produces 27,000 barrels of oil per day from the Weyburn project, of which 19,000 barrels a day is incremental production from CO2 injection and 8,000 barrels a day is from conventional production.