SaskPower has spent more than two years celebrating the fact that the integrated carbon capture and storage (ICCS) project at the Boundary Dam Power Station was on time and on budget.
The project is still on schedule, but now the Crown corporation's president CEO, Robert Watson, concedes it will be about $115 million over budget.
The new carbon capture island is actually forecasted to come in under budget, Watson said. But the refurbishment of the 50-year-old Unit 3 at Boundary Dam has experienced some unexpected challenges.
Overall costs for the ICCS project are now projected to be about $1.35 billion, compared to the original price tag of $1.24 billion.
“We’ll be closely monitoring this figure monthly, and of course we will do what we can to minimize the increased costs,” said Watson.
Steel reinforcement in the building and boiler came in about $25 million over-budget. Lead paint and asbestos removal cost $30 million more than expected, and SaskPower had to spend an additional $35 million in engineering changes that were unforeseen until the Crown corporation found out what needed to be done.
“This is a complex project, one that has never been attempted anywhere else on this scale,” said Watson. “When you are pioneering technology, you are bound to run into challenges along the way.
“One of the biggest challenges is the fact that we’re rebuilding a 50-year-old power plant, and you can’t say with total certainly what you’re going to find in there until you start taking things apart.”
Watson compared the situation to home renovations. People make their plans and set their budget, and then he said the walls come down and residents find they’ve been “living in a house insulated with newspaper.”
The only choice is to spend the extra money to make sure the job is done right, he said.
SaskPower has also faced significant labour pressures, Watson said, just like many private sector companies undertaking major projects.
“We’re in a robust economic environment – there’s simply more work than there are workers,” he said.
Watson said SaskPower has been keeping a close watch on costs all along the way, and the over-expenditures couldn’t be avoided despite their best forecasts and ongoing management.
“When you’re doing something that has never been done before, as SaskPower is with Boundary Dam, there will inevitably be changes made and lessons learned,” Watson said.
The ICCS project was 90 per cent complete as of the end of September, he said, and it should be finished early next year.