Alberta Cancels Carbon Storage Funding Agreement

The Alberta government and privately held clean energy firm Swan Hills Synfuels have agreed to discontinue their $285 million carbon capture storage funding agreement as lower than expected natural gas prices have pushed back timelines for production of synthetic gas and associated plans for carbon capture.

In a statement released earlier this week, Swan Hills Synfuels CEO Martin Lambert said the decision has been brought about by market conditions.

“At present, it’s more economical to purchase natural gas than it is to manufacture synthetic gas,” Lambert said. “It’s a market reality that has led to significant delays on the CCS side of the project.”

Referring to the cancellation as a business decision driven by persistently low prices for the province’s natural gas, Alberta Energy Minister Ken Hughes said the province remains committed to carbon capture storage.

Hughes said the provincial government is moving forward with two oil sands related CCS projects – the Alberta Carbon Trunk Line and Shell Quest – which combined are expected to reduce greenhouse gas emissions by 2.76 million tonnes annually by 2016, the equivalent of taking 550,000 cars off the road.

Alberta’s government says the province’s geology makes it an ideal location for CCS because it has a layer of rock deep down with spaces to hold the carbon dioxide and a solid layer of caprock to permanently seal it in.

In 2011, the Alberta committed $285 million over 15 years to help Swan Hills Synfuels to capture the CO2 from the gasification of underground coal and sell it for use in enhanced oil recovery.

Deferred project timelines, however, have moved the carbon capture components of the project beyond the scope of the government’s funding requirements. As such, the government has not advanced any money for the development.

By Andrew Heaton