SASKPOWER CCS BUSINESS EXECUTIVE STRATEGIC CASE ASSESSMENT PLANNING SESSION

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Eric Francis
8 years ago
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1 Carbon Capture and Storage Initiatives SASKPOWER CCS BUSINESS EXECUTIVE STRATEGIC CASE ASSESSMENT PLANNING SESSION Doug Daverne Director, CCS Initiatives,

2 SASKPOWER CCS COST UPDATE SaskPower decision making environment BD3 business case Original Updates based on experience to date SaskPower future CCS opportunity BD4/5 CCS Option Regulatory Equivalency Options Transferability to other jurisdictions

3 SASKPOWER DECISION FACTORS SaskPower: Crown Corporation obligation is to customers Lowest electricity costs over long term while meeting high standards for reliability, environmental performance and affordability Conventional coal no longer an option Diverse power generation fleet has been a proven strength External economic considerations

4 FIRST OF A KIND BUSINESS CASE Unique project characteristics High capital cost Government financial support Non-electricity revenue Additional engineering/hardware to minimize new technology risk Older unit requiring SOx/NOx emissions control Baseload generation cost competitive alternative was Natural Gas Combined Cycle Significant economic benefits outside of SaskPower 4

6 OFF-SETTING COSTS WITH OFF-TAKERS Sale of sulphuric acid, used primarily for industrial purposes including fertilizer. Sale of fly ash for concrete production 100%. Sale of CO2 to oil company for EOR.

7 SASKPOWER NET ZERO DECISION CRITERIA Net Clean Coal Costs CO2 & Byproduct Sales $/MWh BD3 Capital Costs Cost BD3 Net Costs O & M Fuel Capital Subsidy BD3 Revenues BD3 CCS DEMO BASELOAD NGCC

8 CAPITAL COSTS Overall Project Total...$1,467M Canadian Federal Government Paid Amount...$239.6M Net Cost to SaskPower $1,227M *Approx. an 18% increase CCS FACILITY CONSTRUCTION COSTS: $905M POWER PLANT REFURBISHMENT COSTS: $562M *Most of cost increase was in power plant rebuild IE: Brown Field work As with any major infrastructure project, we are still finalizing outstanding financial arrangements with some vendors.

9 BOUNDARY DAM COSTS One time staffing/training/commissioning costs higher than expected First of a kind Increased up front staffing while experience is gained in operation Unanticipated effort required to address a greater number than expected of mundane technical issues One time consumable supply costs have been higher than expected

10 BOUNDARY DAM COSTS Most deficiencies corrected ash interaction still being worked on Major chemical costs expected to moderate now Other operating costs still need to be optimized - additional steady state run-time needed likely to late

11 REVENUES CO2 sales expected to increase with many significant technical issues now corrected. Similarly with Sulphuric acid production. Plant has generated greater than expected electricity. Greater than expected flexibility has also allowed capture plant to perform electrical system spinning reserve function. 11

12 OPPORTUNITIES FOR FUTURE PROJECTS 12

13 OPPORTUNITIES FOR FUTURE PROJECTS Unit Initial Investment Final Investment In Service BD 4/ * 2025* BD * PR * PR * Shand * New Build New costs more than rebuild today * Fixed by regulation

14 OPPORTUNITIES FOR FUTURE PROJECTS Federal government requirements set the schedule for unit retirement or CCS retrofit Over capture not necessary hit 420 mark Must be competitive with natural gas and wind Still depends upon enhanced oil recovery (EOR) market diversified customer base likely needed

15 OPPORTUNITIES FOR FUTURE PROJECTS Configurations under consideration, reflect upon savings from. Two generating units or one for capture Equivalence needed by larger units Capital cost reduction Initiatives Capture at 420; not 140 kg/mwh Economies of scale Lower integration costs risks known Numerous BD3 technical learnings Increased modularization Avoid natural gas price volatility

16 NATURAL GAS PRICES

17 OPPORTUNITIES FOR FUTURE PROJECTS REGULATORY EQUIVALENCY Federal-Provincial discussions on coal fired CO2 equivalency Requirement to eliminate coal fired CO2 emissions would be unchanged, however could allow for capture from alternative units if meets same overall requirement Could allow SaskPower to capture from one 300 MW unit rather than BD4/5 Significant savings in power plant refurbishment costs

18 BD3 CCS ECONOMICS O&M Fuel Capital $/MWh 0 BD3 COSTS BD3 REVENUE BD3 NET NGCC BD3 COSTS BD3 REVENUE BD3 NET NGCC BD4+5 BD4+5 REVENUE BD4+5 NET CO2 & Byproduct Additional MW Federal Grant Net Cost BD 4+5

19 ECONOMIC BENEFITS OUTSIDE OF SASKPOWER EOR ONE OIL INDUSTRY STUDY EXAMPLE $850M capital investment over years year project life 47M barrels incremental oil recovery $481M (est.) in crown royalties and production $241M in corporate income taxes $65.7M in resource surcharge 4,850 person-years of direct employment COAL INDUSTRY LONG TERM FUTURE AT STAKE

20 ENHANCED OIL RECOVERY Around 30,000 bbl/day: a 35-year high 20,000 bbl/d are due to the CO2 flood CO2 stored equivalent to removing more than 8 million cars off the road a year

21 APPLYING CCS BUSINESS CASE TO YOUR ENVIRONMENT Cost of alternative sources of generation varies widely natural gas prices in particular High natural gas prices favour CCS

22 SAMPLE GLOBAL NATURAL GAS PRICES

23 APPLYING CCS BUSINESS CASE TO YOUR ENVIRONMENT Capital costs vary significantly with local conditions productivity and labour rates highly variable. Many locations have an advantage BD3 initiated in anticipation of regulations but not yet in place. Regulations not essential for business case Equipment, consumables, operating requirements will be similar to BD3 *Adapting BD3/SaskPower results to each specific project circumstances is essential*

24 Carbon Capture and Storage Initiatives SASKPOWER CCS BUSINESS EXECUTIVE STRATEGIC CASE ASSESSMENT PLANNING SESSION Doug Daverne Director, CCS Initiatives,

SaskPower CCS Global Consortium Bringing Boundary Dam to the World. Mike Monea, President Carbon Capture and Storage Initiatives

SaskPower CCS Global Consortium Bringing Boundary Dam to the World Mike Monea, President Carbon Capture and Storage Initiatives 1 Purpose of Today A. CCS around the world B. What SaskPower is doing C.