The government of Alberta and Swan Hills Synfuels have agreed to cancel an agreement under which the province was to have helped fund a carbon capture and storage (CCS) project.
Alberta in 2011 committed to pay $285 million over 15 years for the capture of carbon dioxide produced by the underground gasification of coal. The CO2 was to have been sold for use in enhanced oil recovery.
Swan Hills Synfuels, Calgary, operates an in situ coal gasification demonstration plant 17 km southwest of Swan Hills, Alta.
Energy Minister Ken Hughes said, “Persistent low prices for Alberta’s natural gas have driven this business decision” to discontinue the agreement.
Swan Hills Synfuels Chief Executive Officer Martin Lambert explained, “At present, it’s more economical to purchase natural gas than it is to manufacture synthetic gas. It’s a market reality that has led to significant delays on the CCS side of the project.”
The province has made no payments to the project.
It is supporting two other CCS projects, both related to oil sands development: Alberta Carbon Trunk Line, a 240-km pipeline that will collect CO2 from upgraders in the Industrial Heartland area of Alberta for transport for use in EOR, and Shell Quest, which will capture CO2 from the Scotford upgrader near Fort Saskatchewan and sequester it in the subsurface.