A second major CCS demonstration project withdraws

By Richard Adamson
CMC Managing Director

On February 25, 2013, it was announced that the Swan Hills in-situ gasification demonstration project with Carbon Capture and Storage (CCS) would not go ahead.  The synthesis gas product was essentially directly competing with natural gas.  With the present value and prospects for gas prices, it is not surprising that the project economics are not strong enough to proceed.

All of the large-scale Carbon Capture and Storage demonstration projects that were chosen for support by the Governments of Alberta and Canada are long-term projects, each somewhat exploratory.  The province wisely chose a broad spectrum of different types of projects.  This portfolio approach has proven to be robust against a number of unforeseen and unforeseeable changes in the environment including regulatory changes, an economic downturn, the dramatic drop in natural gas prices, and delays in increasing the value of CO2 (either for enhanced oil recovery or through regulatory mechanisms).

That Alberta still has two out of four projects on track has us punching above our weight on a global basis.

None of these projects have died because they are technically infeasible, nor because they were poor choices at the time given what was known.

Premier Redford is absolutely right, as she has declared, to want to find better, more cost effective solutions.  CCS was never considered to be a long-term solution to GHG mitigation and shouldn’t be thought of as a silver bullet. But we need to start from where we are, using the technologies that are sufficiently proven to have a strong probability of success reducing carbon emissions in the near-term at sufficient scale to be relevant. At the same time we must continue to invest in methods to both improve the economics of these near-term viable technologies and to identify more attractive strategies that may ultimately replace them.

Allowing the concentration of CO2 to increase in our atmosphere indefinitely will have consequences, regardless of which atmospheric model you follow or how you interpret the data.  Therefore it is absolutely necessary for Canadians and Albertans, as responsible global citizens who derive considerable benefit from the fossil energy sector, to actively engage in mitigating any negative impacts that might arise from it.