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Cenovus Energy has reached a new agreement with SaskPower for the purchase of carbon dioxide (CO2) for their enhanced oil project in the Weyburn Oil Field.

The CO2 will come from SaskPower's carbon capture and storage facility now under construction at the Boundary Dam Power Station near Estevan.

Cenovus is planning to purchase the full volume of CO2 to be produced at the power station, which will be approximately one million tonnes per year. This is about half of what Cenovus uses each year to enhance the recovery of oil from the field.

The CO2 is used as a solvent as it is injected into oil wells and helps them produce more of the oil from the reserves than would have been otherwise possible from the aging oil field.

The SaskPower facility will be the world's first and largest coal-fired integrated carbon capture and storage project, and will be used in the world's largest CO2 oil project, one which has been studied by Canadian and international scientists interested in the technology used to store the CO2 underground.
"This agreement is a major step towards increasing commercialization of carbon capture and storage," said SaskPower CEO Robert Watson.

The long-term contract with Cenovus was signed at the completion of an extensive sales process. Cenovus expects to be ready to accept the CO2 when SaskPower's integrated carbon capture and storage facility goes into commercial operation on or about April 1, 2014.

"Ensuring we have a consistent and adequate supply of CO2 is critical to maintaining and expanding our enhanced oil recovery project near Weyburn," said John Brannan, Cenovus executive vice-president and Chief Operating Officer.

"Cenovus's agreement with SaskPower provides us with a second reliable supply source of CO2 for our Saskatchewan operations. We look forward to working together," he added.

Cenovus operates the 210-square-kilometre field in southeast Saskatchewan, and the company has a 62-per-cent stake in the field. When discovered in 1954, the field was estimated to hold about 1.4 billion barrels of oil in place, one of the largest medium-sour crude oil reservoirs in Canada.

After years of waterflooding to increase oil production, starting in 1964, the company introduced injection of carbon dioxide (CO2) in 2000.

The production has now reached about 27,000 barrels of oil a day, which is an estimated 19,000 barrels more than would have been possible without the CO2. About two million tonnes of CO2 are injected underground each year; in the contract with SaskPower, Cenovus will now source up to one million tonnes from the Boundary Dam project.

The original source of CO2 is from Dakota Gasification's Great Plains Synfuels plant in Beulah, North Dakota; they ship about 125 million cubic feet of CO2 every day by a 323-km pipeline from Beulah to the Cenovus plant at Goodwater.

The CO2 extended the life of the Weyburn Field by an estimated 30 years, and possibly longer with improved technology. It is estimated the reservoir in the Weyburn Field is capable of storing as much as 55 million tonnes of CO2. So far, about 17 million tonnes of CO2 is stored underground.

Cenovus and their partners have spent about $1 billion to upgrade the Weyburn facility for the CO2 flood, with improvements including pipelines to increase CO2 injection and oil production, and compression capability to recycle the CO2 produced during operations.