Wednesday, Oct. 28, the Boundary Dam carbon-capture project in Estevan took over as the top issue at the legislature.
Debate on the subject dominated the session of Question Period. Opposition leader Cam Broten raised the issue with Premier Brad Wall, and a lengthy exchange ensured. Here is some of what was recorded from that day’s exchange in Hansard.
Mr. Broten: On Nov. 28, 2012 the Premier received a briefing note from SaskPower. At the top it says, confidential for Premier’s use only. It talks about how the relationship with Cenovus is, “very good.” It says Cenovus didn’t need our CO2 until 2016, which is interesting given the contract this government entered into, which now has us paying penalties. And it says this: “The sale of CO2 was critical to the business case for this project to proceed.”
Now, Mr. Speaker, I’m sure the Premier receives a lot of briefing material, so perhaps he doesn’t remember this particular note that he received. But will the Premier at least admit that he has known for years that the sale of CO2 is critical to the business case for the carbon capture experiment?
The Speaker: I recognize the Premier.
Hon. Mr. Wall: Of course, Mr. Speaker. Mr. Speaker, we know that roughly a third of the world’s successfully stored CO2 on Earth is stored here in Saskatchewan. Credit a project that was undertaken early on by the previous government, the federal government of the day, oil companies that were involved, and the U.S. Department of Energy.
Mr. Speaker, we built on that expertise with respect to that particular technology around storage to the point where the United Nations recognizes CCS [carbon capture and storage] as an efficacious way to help deal with the climate change issue around the world, Mr. Speaker. This particular plant, this carbon capture and sequestration plant, clean coal plant at Boundary Dam 3, relies on and will continue to rely on the sale of CO2, Mr. Speaker, to Cenovus or whoever the highest bidder is, remembering that Cenovus was chosen in a public process.
Mr. Speaker, this is one of the largest research and development projects on Earth, frankly, in the last number of years. It’s the only successful commercial application of carbon capture and sequestration.
… The scientific community around the world is heralding this as a project that’s transformational in the industry, Mr. Speaker. We’re going to get through all of the technological issues that currently present to get to that 80 to 100 per cent capacity very soon, Mr. Speaker, as it was when the plant originally opened about a year ago.
The Speaker: I recognize the Leader of the Opposition.
Mr. Broten: … There’s another briefing note from 2012 with the heading, CO2 sales initiative, and it says this: “The economics for BD3 ICCS was developed around the one million tonnes being sold at a starting price of $25 per tonne, escalating by two per cent per year.” And it says that delays in completing a contract for CO2 sales would seriously compromise the project.
So the Premier, Mr. Speaker, knew that the economics of this project were extremely shaky at best and that selling one million tonnes of CO2 every year was critical, was critical to the government’s argument to proceed.
So you’d think, Mr. Speaker, if the Premier heard that we are actually paying Cenovus money instead of earning money, you’d think, Mr. Speaker, that he would pay a lot of attention to that. When exactly did the Premier learn that his government is paying Cenovus instead of earning money?
The Speaker: I recognize the Premier.
Hon. Mr. Wall: Mr. Speaker, the original model certainly, and remains, predicated on the sale of one million tonnes of CO2, Mr. Speaker. That’s the environmental advantage of the project.
Mr. Speaker, I’m not going to get into the price because that’s very commercially sensitive, and I’d invite members to be circumspect about that. That’s a confidential agreement between SaskPower and this company. We’re going to want to continue to sell CO2 maybe to other companies as they bid.
But I would just say this. A government will then also ask, OK, that’s if the plant is running at 100 per cent efficiency capacity from day one, which is not likely, which is not likely. This would have been a conversation that happens. And so then the question comes from the minister and the government: what happens if it’s not running at capacity, Mr. Speaker?
Well I can tell members what one of the scenarios would be if it wasn’t running at peak efficiency. Mr. Speaker, at the current rate that we’re seeing the plant operate at, we’re talking about the capture of 400,000 tonnes of CO2, and at the rate that we’re on, at the pace that we’re on right now, at the pace we’re on right now, we’re going to make money. SaskPower makes $5 million even at the 400,000 tonne level that is existing today. And, Mr. Speaker, the good news is this. Here’s . . .
[Interjections]
The Speaker: I can wait if the members want to keep talking, but they asked the question, so listen to the response. I recognize the Premier.
Hon. Mr. Wall: Thank you very much, Mr. Speaker. We know that members opposite, I think they’re cheering for this project to fail. They’re the only ones, by the way. There are countries around the world that are still burning coal, that are building coal plants, and this presents real hope for the project.
So even with the challenges it’s faced in year one, like any other conventional facility would face, we’re going to end up in the year making money on the CO2 sale at 400,000 tonnes. The other good news is that we’re correcting those problems at SaskPower. The engineers are correcting them, and we’ll be at 80 to 100 per cent efficiency, Mr. Speaker, as per the original plan.
Mr. Speaker, any project like this, especially when it’s groundbreaking and is transformational, is going to meet technological challenges in year one. And we have, and those are being overcome. And even at that, Mr. Speaker, we’re still making money on the sale of CO2.
The Speaker: I recognize the Leader of the Opposition.
Mr. Broten: Mr. Speaker, we are cheering for transparency for Saskatchewan ratepayers. We are cheering, Mr. Speaker, for a project to work, and we are cheering, Mr. Speaker, for the facts so that Saskatchewan people, Mr. Speaker, can exactly know what they are on the hook for.
… SaskPower only earned $3 million on CO2 sales last year, but this government paid Cenovus $12 million in penalties. That means we were $9 million in the hole, Mr. Speaker, when it comes to CO2 sales last year. And we know from the many internal documents that we’ve obtained, as early as September the government knew it would have to fork over a massive cheque to Cenovus because it wasn’t delivering CO2.
So again, Mr. Speaker, back to my earlier question about what the Premier knew and when he knew it, Mr. Speaker. How long has he known that the government is paying Cenovus instead of earning money?
The Speaker: I recognize the Premier.
Hon. Mr. Wall: My hon. friend says he’s cheering transparency. Well, Mr. Speaker, all of this reported … The subject that has been breathlessly raised first by the member for Nutana, now by the Leader of the Opposition, was hidden away in the annual report, Mr. Speaker. And well, he kind of laughs that off and that’s not good enough.
How about this? It was in a Moose Jaw Times-Herald story, Jan. 12, 2015. He should cheer that transparency. The Leader-Post, Feb. 17, 2015, there’s transparency. Estevan Mercury story, Feb. 17, 2015; at a presentation to the Pacific Northwest regional forum on July 13, 2015; in a SaskPower press release from Sept. 14, 2015; a Leader-Post story from Sept. 14, 2015. The Estevan Mercury again had another story — we’ll get him a subscription if he likes — Sept. 16, 2015. Oh and, Mr. Speaker, the National Geographic magazine reported it, October 2015. This has been reported by SaskPower. It will be… We’ve made sure, Mr. Speaker, that it will continue to be reported …
Broten then introduced a line of questioning that took issue with Wall’s characterization of the Boundary project as “fully operational.” The exchange with Wall went back and forth until Broten said this:
Mr. Broten: …You know, it’s very bizarre to have the Premier of the province saying that the project is fully operational and that it captures — present tense — captures 90 per cent of emissions, when that’s not even close to accurate. Here’s a news release, Mr. Speaker, a headline from earlier this year. It says, “CCS performance data exceeding expectations at world-first Boundary Dam Power Station Unit #3.” Exceeding expectations, that’s what the news release said. It goes on:
Unit #3 is now producing affordable coal power for more than 100,000 homes and businesses for at least the next three decades, and it’s doing so 10 times more cleanly than other coal units and four times cleaner than a comparable natural gas unit.
Again all present tense, Mr. Speaker, and now we know, Mr. Speaker, entirely inaccurate, Mr. Speaker. When that information was sent out in that news release, did the Premier know that it was false?
At this point Minister for the Economy Bill Boyd stood up to respond.
Hon. Mr. Boyd: Mr. Speaker, the facility is up and running. It’s operational, fully operational. They indeed have had some difficulties with the facility. That’s been disclosed on a number of occasions, Mr. Speaker, press release after press, interview after interview, article after article. They have said that they’ve had some difficulties with the facility, Mr. Speaker, but they have made money in 2015, about $6 million that they will make, 5 to $6 million in 2015, Mr. Speaker. I think that’s important to note.
I think the larger question though that we should be asking, and I think that was answered by the University of Regina from Lisa Watson. And she said, “of course people are going to be upset” when there’s issues around Boundary Dam. But the bigger question is whether there should be the plant built at all. And I think that’s the question that we would ask the member opposite, the leader opposite. In his leadership he said it should be built, but does he understand the fact that what has happened with respect to it, that there is going to be operational issues? That’s been disclosed on a number of occasions, Mr. Speaker, and clearly now we are seeing that SaskPower expects we will see fully operational …
The Speaker: I recognize the Leader of the Opposition.
Mr. Broten: Mr. Speaker, first of all, a very strange definition of fully, when you look at what they claim they’re fully operational. Also very telling, Mr. Speaker that the Premier will not say what he knew and when he knew it in terms of when they were paying Cenovus. Also interesting, Mr. Speaker, why they were pumping out news releases saying that they were exceeding expectations, when the reality was anything but that, Mr. Speaker…
So again, when the news release went out earlier this year, saying the project was on target to capture one million tonnes in 2015, did the Premier of the province of Saskatchewan know that that was not accurate?
The Speaker: I recognize the Minister for the Economy.
Hon. Mr. Boyd: Mr. Speaker, all of the information — the what, the when, all of that kind of stuff that the Leader of the Opposition raises — has all been disclosed, hidden away in the annual report, hidden away on the Internet, Mr. Speaker, hidden away in the Moose Jaw Times story on Jan. 12, hidden away in the Leader-Post in February, hidden away in The Estevan Mercury. All of that information has been disclosed.
And even though the plant isn’t operating at the efficiency that we would like to see, and that SaskPower would like to see, they still made $5 to $6 million in 2015, Mr. Speaker, and I think that’s important. So the choice would be, what would you do? Would you rather just shut it down? Would you rather have not started it in the first place, Mr. Speaker?
The exchange on the carbon capture issue continued on, and ended only when speaker Dan D’Autremont declared question period to be over.
