Premier, Saskatchewan, Canada
[Reprinted from Cornerston - The Official Journal of the World Coal Industry, January 2014]
When you think of natural resources on the Canadian Prairies, the first thing that likely comes to mind is wheat. While you wouldn’t be incorrect, Saskatchewan’s resource lineup isn’t limited to that one Prairie staple.
Although we’ve come a long way from our agrarian roots, it’s true that we still boast a strong agricultural economy. With more than 40% of the arable farm land in Canada, we are a leading exporter of wheat, barley, lentils, and mustard, among other things.
To help grow these crops, we have an abundant supply of fertilizer. In fact, as the world’s largest producer of potash, with roughly 45% of global reserves, we have a lot of it. Uranium is also plentiful in Saskatchewan, helping to power the global economy. We are the world’s second-largest uranium producer, accounting for nearly 20% of worldwide production.
With a major development in the early 1950s, we also became a player in the oil industry. Today, we are Canada’s second-largest producer of oil (after Alberta), and we are the sixth-largest oil-producing jurisdiction in North America. It may surprise some, but we export more oil to the U.S. than does Kuwait.
To that list of resources, you can also add coal. People have been mining coal in Saskatchewan since the 1850s, making it one of the earliest resources to be mined in the province. Although it may not be as well known to those outside of Saskatchewan, it’s just as valuable to those of us who live here. In the southeast corner of Saskatchewan, just north of our border with the U.S. (Montana and North Dakota), sits a 300-year supply of lignite coal that is affordable, abundant, and accessible, and has been fueling power plants in Saskatchewan for nearly a century. Today, it’s the baseload fuel of choice for SaskPower, our government-owned power utility, and currently accounts for about 50% of our total power production. It’s also the reason Saskatchewan is the largest per capita emitter of greenhouses gases in Canada.
Powering Our World
Fossil fuels have become an integral part of our society, throughout North America and around the world. They fuel our cars, heat our homes, and generate the electricity that keeps our lights on at night. However, we recognize the production of fossil fuels comes with an environmental cost, as the greenhouse gas emissions produced by these fuels contribute to climate change. Those of us from jurisdictions that produce fossil fuels are working hard to reduce our environmental footprint and develop new energy sources. But the transition from fossil fuels to renewable energy takes time, and the challenge of greenhouse gas emissions is one that we must tackle together.
As a result, SaskPower and our government had a decision to make a couple years ago. It was the same decision that many utilities and governments throughout the world are wrestling with today. The Government of Canada was preparing to introduce legislation calling for tougher emissions regulations for coal-fired power plants. These rules were expected to be so stringent that coal plants without a carbon capture system would eventually have to be shut down.
For us, the choice boiled down to this—natural gas vs. coal with carbon capture. Natural gas was the easy choice, as it offered the path of least resistance, particularly with prices dropping as new supplies came on stream. Yet, it was tough for us to dismiss coal, given the ease of access, security of supply, and stability of coal prices. With coal, we knew with certainty what our costs would be in the years ahead. On the other hand, predicting prices for natural gas can be a risky proposition, even with supplies expanding.
Compounding our decision-making difficulty was the proposed cost of the carbon capture and storage (CCS) project in Saskatchewan. Our share of the project was expected to be CAN$1 billion, which would have made it one of the largest capital projects in the history of our province. With just over one million people in Saskatchewan, our tax and rate payer base is relatively small compared to other places. Our cost for the CCS project would amount to approximately CAN$1200 for every man, woman, and child in the province. If we were to proceed with the project, it would be a large expense—and a potential burden—for us to bear.
Ultimately, we decided to proceed with the construction of the SaskPower Boundary Dam Integrated Carbon Capture and Storage Demonstration Project. Prior to making our decision, we took a variety of factors into consideration, including those mentioned above. We also factored in our pioneering spirit of innovation in Saskatchewan, which has led to breakthroughs in nuclear medicine, crop science, farm machinery…and carbon storage.
Saskatchewan Leading the Way
Unbeknown to some, Saskatchewan has been a leader in the storage of carbon dioxide (CO2) since the mid-1980s, when the first CO2 enhanced oil injection in the province began as a small pilot project, and it has grown from there.
Cenovus Energy has invested more than CAN$1.1 billion in Saskatchewan’s first commercial-scale CO2 enhanced oil recovery project (EOR) in an oil field near Weyburn in southeast Saskatchewan. As an example of cross-border cooperation, Cenovus buys CO2that would otherwise be emitted from a coal gasification plant in North Dakota. The project will produce 200 million incremental barrels of oil, and oil production has increased by 60% as a result. Our second commercial-scale project has enjoyed similar success. Apache Canada’s investments in a project in the Midale reservoir will produce 67 million barrels of incremental oil and store eight million tonnes of CO2. Together, the projects make an impressive contribution to the reduction of greenhouse gas emissions by storing more than 25 million tonnes of CO2 safely underground.
At the same time, the most significant global research project ever undertaken on CO2storage took place in the same reservoirs. The International Energy Agency (IEA) Greenhouse Gas Weyburn-Midale Carbon Dioxide Monitoring and Storage Project was the world’s largest monitored CO2 geological storage project and was set up specifically to monitor the CO2 stored by Cenovus and Apache. The project has provided scientists around the world with a better understanding of the geological sequestration of CO2.
In addition to establishing Saskatchewan as a leader in CO2 storage, the IEA, Cenovus, and Apache projects showed us that CCS could be done safely. We had proven it here in our province for more than a decade. Helping make our decision easier was the fact the Boundary Dam project was located close to oil fields that would enable SaskPower to sell captured CO2 to help defray costs. The final piece was a willing partner in the federal government which generously contributed CAN$240 million to the project.
Saskpower Boundary Dam Integrated CCS Demonstration Project
When our project begins commercial operation in the first quarter of 2014, it will be the world’s first commercial-scale power plant with a fully integrated carbon capture system. The project involves a retrofit of a 43-year-old generating unit at SaskPower’s Boundary Dam Power Station near Estevan in southeast Saskatchewan. It will generate 110 MW of electricity and capture and safely store one million tonnes of CO2, or 90% of its CO2emissions, which is the equivalent of taking 250,000 cars off the road every year. The CO2will be sold to Cenovus for injection in its Weyburn field. The cost of electricity produced from this unit will be equivalent to, or less than, the cost of combined cycle natural gas.
This is an exciting time for CCS in Saskatchewan, as SaskPower is also involved in another project that is set to open in 2014. The utility is partnering with Hitachi Ltd. to build a CAN$60 million carbon capture test facility at SaskPower’s coal-fired Shand Power Station near Estevan. The new facility will provide a venue for international researchers and companies to test their carbon capture technologies.
Reducing greenhouse gas emissions is not viewed solely as a local, provincial, or even national issue. Instead, it’s a global issue that we must overcome together, and that’s what we’re trying to do in Saskatchewan. SaskPower has established the CCS Global Consortium to share knowledge it has gained from the development of the Boundary Dam project. The consortium will provide unprecedented access to some of the world’s most advanced policy, research, and technical expertise, including SaskPower’s pioneering business case and technology platform. It will also serve as a conduit for global experts to explore environmental technologies together.
Some may ask why this all matters—especially in a province the size of Saskatchewan. Some may ask why we are doing this. The answer is bigger than SaskPower and Saskatchewan.
Coal power is not going anywhere, at least not anytime soon. Although some provinces and countries are shutting down coal plants or converting them to natural gas, many other jurisdictions are growing their coal resources. The World Resources Institute estimates nearly 1200 new coal-fired power plants have been proposed with an installed capacity of 1400 GW.1 Three-quarters of these plants would be built in China and India. According to the IEA, coal’s share of the global energy mix continues to rise, and will come close to surpassing oil as the world’s top energy source by 2017.2
Focusing on the Environmental Impact of Fossil Fuels
To some, the only way to address climate change is to immediately embrace renewable energy, such as wind, solar, and geothermal. For them, there is no need for a transition. Somehow we can go directly from fossil fuels to a new, more virtuous energy system. These people are well meaning and I acknowledge that CCS represents just one approach to help meet our shared goal of reducing greenhouse gas emissions and combating climate change. However, it’s time to turn away from this debate and focus on the task at hand—dealing with the environmental impact of fossil fuel use in a comprehensive fashion, which includes CCS.
To make this happen, we need more research in order to develop more efficient and lower cost capture technologies. We’re confident the economics of CCS will continue to improve, but as the IEA notes, governments throughout the world must do more to motivate industry to accelerate the development and deployment of CCS technology.
That’s why we believe Boundary Dam is such an important project. CCS has yet to be deployed on a large scale and Boundary Dam will provide that large-scale commercial application. It will give us a better understanding of the true costs and the full possibilities for CCS. Although our situation may be different from other jurisdictions—financially, geographically, etc.—it’s vitally important that we are moving in the right direction and going to a place where we can perfect the technology for the benefit of everyone.
As global partners, we have a common purpose—developing and deploying CCS technology on a large scale. That’s the only way we can reduce greenhouse gas emissions while still nurturing economic growth at home and around the world. Simply put, the world needs us to come together on CCS to ensure a green and prosperous energy future for us all.
- World Resources Institute, New Global Assessment Reveals Nearly 1,200 Proposed Coal-Fired Power Plants, WRI Insights, 20 November 2012,insights.wri.org/news/2012/11/new-global-assessment-reveals-nearly-1200-proposed-coal-fired-power-plants, (accessed 9 October 2013).
- International Energy Agency, Coal’s Share of Global Energy Mix to Continue Rising, with Coal Closing in on Oil as World’s Top Energy Source by 2017, 17 December 2012,www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.html, (accessed 9 October 2013).