Sask. carbon capture facility coming back online after issues

SaskPower unveiled the world's first large-scale coal-fired power plant with carbon capture and storage at Boundary Dam Power Station near Estevan on Oct. 2, 2014.

A carbon-capture facility in Saskatchewan is coming back online and officials say it will be fully operational -- even if it's not operating full time.

SaskPower CEO Mike Marsh says many components have been replaced at the $1.5-billion facility at the Boundary Dam power plant near Estevan.

"We have a plant that is fully operational. We continue to fix it. It's on overhaul and has been for two months. Today, we're bringing it back up online," Marsh said Monday at the legislature in Regina.

Marsh said the plant won't run at full capacity -- or even half-capacity -- all the time, but it's still considered fully operational.

"We will run that plant where we need to run it. We will run it at half load. We will bring it up to full load. We will drop it back. We're going to run it through all kinds of operating regimes. That's what we do," he said.

"Fully operational means the plant is now running."

The carbon-capture facility opened with much fanfare in October 2014. It was to have opened the previous April, but faced construction delays.

The goal is to reduce carbon-dioxide emissions by one million tonnes annually. The facility has removed 400,000 tonnes so far this year.

Premier Brad Wall has said it was accurate for him to tweet "Sask, we're fully operational" when the facility opened, because at that moment it was capturing carbon dioxide.

SaskPower and the government have been facing criticism from the Opposition NDP for boasting that the plant is fully operational. Documents leaked to the NDP show the facility has been working 45 per cent of the time.

One document says SaskPower has incurred additional costs of about $80 million to fix "construction deficiencies." Marsh said last week that the amount is a little higher now, but he would not confirm the new number because SaskPower is trying to recoup the costs through legal means.

The delays also have financial implications for SaskPower, which has a contract to sell captured CO2 to Cenovus Energy (TSX:CVE) to be used for enhanced oil recovery.

SaskPower had to pay $12 million in penalties to Cenovus last year, because the utility couldn't deliver enough carbon dioxide. SaskPower might end up owing Cenovus about $5 million this year as well, but officials say that will be offset by $11 million that Cenovus is paying for the CO2.

Marsh said it takes time to get a major facility up and running and the industry considers it normal.

He acknowledged the situation could have been better communicated to the public and said things will be clearer going forward.

"There's no question that over the past year, there's been statements made that were missing a word or two and things were taken out of context. And, yes, an overly optimistic and enthusiastic team, um, this is where things happened.

"It's something that we don't want to see again. We want to make sure it's cleaned up."