Alberta cancels carbon capture funding agreement

Swan Hills Synfuels CCS Delays stem from low natural gas prices making synthetic gas uneconomic, postponing carbon capture and storage in Alberta beyond government funding timelines, while projects like the Alberta Carbon Trunk Line proceed.

The Alberta government and Swan Hills Synfuels have agreed to discontinue their $285 million carbon capture and storage CCS funding agreement.

Lower than expected natural gas prices have pushed back timelines for Swan Hills Synfuels’ production of synthetic gas and associated carbon capture plans. “At present, it’s more economical to purchase natural gas than it is to manufacture synthetic gas,” said Swan Hills Synfuels CEO Martin Lambert. “It’s a market reality, tied to the high cost of carbon capture for such projects, that has led to significant delays on the CCS side of the project.”

Deferred project timelines move the carbon capture components beyond the scope of the government’s funding requirements. To date, no money has been advanced by the province for the project, despite a funding kick-start in other carbon capture initiatives.

In 2011, the province committed $285 million over 15 years, as Alberta needs CCS to work to meet emissions goals, for Swan Hills Synfuels to capture the carbon dioxide CO2 from the gasification of underground coal and sell it for use in enhanced oil recovery.

“Persistent low prices for Alberta’s natural gas have driven this business decision,” said Energy Minister Ken Hughes. “CCS remains a key part of Alberta’s commitment to reducing greenhouse gas emissions and the responsible development of our energy resources, even as some oilsands producers opt out of such initiatives.”

Government is moving forward with two oil sands related CCS projects, the Alberta Carbon Trunk Line and Shell Quest. Combined, they are expected to deliver significant emission reductions of 2.76 million tonnes annually by 2016, the equivalent of taking 550,000 cars off the road. “Alberta’s unprecedented commitment of $1.3 billion for these projects speaks to how serious we are about climate change and reducing our impact,” added Hughes. No decisions have been made with respect to re-allocating the funding.

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