The SaskPower Boundary Dam carbon dioxide capture project is coming in $115 million over budget due to a variety of uncontrollable circumstances.
That was the word coming from SaskPower's president and CEO, Robert Watson during a telephone conference call last Friday morning.
"The good news is the actual carbon capture island is within budget," said Watson. "And the entire project is on time and will be ready to collect carbon dioxide and other noxious substances while pumping out over 110 megawatts of electrical power into the Saskatchewan grid system within five or six months."
The cost overruns have been experienced in the rebuilding of Unit 3 at Boundary Dam, the unit that has been completely refurbished to accept a new turbine built to accommodate the carbon capture process.
"The power plant itself will be ready to start the commission process by new year, but it's about nine per cent over budget," said Watson.
"BD3 is an old system, and it's like an old house renovation, you really don't know what you'll find until you take things apart and start to rebuild."
Watson said the actual building and boiler rebuild is taking up about $25 million more than originally expected due to the need to remove some old lead paint among other things. Then there was the delay in the process with the discovery that there might have been some airborne asbestos released during a rebuilding phase. A month was spent in removing, checking and monitoring air quality before workers could return to that particular area again. No airborne asbestos was found but that delay came with an unexpected price tag of about $30 million.
There were further delays when pipefitters and welders couldn't be found on an "as needed" basis. Ten fitters and welders from the United States were brought in on a temporary basis to fill the gap before the main contractors were able to procure the services of those tradespeople from the Lloydminster area. Watson said the actual wages weren't hiked, no bonuses were paid, but the waiting cost money.
Then there were some engineering changes that needed to be made during the turbine installation period when it was discovered that the original plans had to be reconfigured.
"The first design called for pipes to be coming into Unit 3 from both sides while the new turbine was going to be inserted in the middle. We learned that couldn't really be done, so when the turbine was installed, the pipe work had to start at one end and then continue on to the other end," Watson said.
SaskPower has been very happy with the overall work and conduct of the major partners in the project, and Watson said he's been on site twice in recent months to view the work in progress, including the operations centre and the first delivery of chemicals for the capture process.
"The whole project is about 90 per cent complete. Quite frankly, the asbestos incident slowed things down, and that's beyond anyone's control, and we erred on the side of caution and brought in independent consultants and monitors to check on everything while we did the homework," Watson said.
The additional funds will come from SaskPower's contingency framework and won't mean any additions to consumer electrical bills.
The BD3 clean coal project is now being referred to as a $1.35 billion effort.
Watson said there are many companies and countries who are very interested in what is taking place at Boundary Dam, as evidenced by the numerous industrial tours of the site over the past year.
"We'll take any inquiries and any visitors, and we have a lot of interest in potential partnerships," he said.
The major hurdles are being overcome and Watson said efficiencies in the process might mean a reduction in the budget overrun estimate in the final accounting.
"It's a darn good project and you have to see it before you can appreciate it all," he said.
The accompanying storage system at the nearby Aquistore has provided world class geology and a location to store captured carbon dioxide underground and SaskPower will be well set for the new environmental regulations for coal fired power plants that are coming into effect in July of 2015.
"We'll be able to handle this. SaskPower has a good balance sheet, we won't be paying dividends to the government so we can build and maintain what we need to within the current 10-year plan," he said in conclusion.
