March 13, 2013

Alberta defers some major construction projects

RICHARD GILBERT

staff writer

The Alberta budget's focus on balancing the books is having a significant impact on infrastructure maintenance and the construction of several proposed major projects.

“We must continue to make prudent choices, as we have done with the comprehensive review of approved capital projects,” said Finance Minister Doug Horner during the budget speech on March 7.

“Some projects are cancelled and some are being delayed beyond 2016.”

For example, the Alberta Public Safety Law Enforcement Training Centre in Fort Macleod was cancelled in August, 2012.

Solicitor General Jonathan Denis cancelled the project a few weeks after the Alberta government awarded the construction contract to build the $122 million college. About $1.9 million was spent developing the site and design. The long-awaited training centre was promised to Fort Macleod after an intense bidding process in 2006.

Construction was scheduled to begin in 2007 and provide a major boost to the town’s economy.

Initially, consultation with law enforcement agencies showed a market for a facility to provide training for police departments and other agencies in Western Canada and the northwestern U.S.

However, Denis said discussions with the Alberta Association of Chiefs of Police over recruiting and training raised serious concerns about whether the college was required.

In addition, the TransAlta Project Pioneer and Swan Hills Synfuels carbon capture and storage (CCS) projects are no longer included in the Capital Plan.

Late last month, the provincial government and Swan Hills Synfuels agreed to discontinue their $285 million CCS funding agreement.

Swan Hills Synfuels was planning to use access wells to convert the coal in its original seam, about 1.4 kilometres beneath the earth’s surface near Swan Hills, into a synthetic gas known as syngas.

The syngas would have generated 300 megawatts of new clean power capacity, which is enough for about 300,000 homes for a year.

The project intended to capture up to 1.3 million tonnes of CO2 per year that was going to be used for enhanced oil recovery in the area.

The project was estimated to cost about $1.5 billion.

TransAlta, Capital Power, and Enbridge abandoned their plans for the construction of the $1.4 billion Pioneer carbon capture and storage facility in April 2012.

The energy companies in partnership with the federal and provincial governments were proposing to build a facility to capture, transport and store carbon dioxide from the Keephills 3 coal-fired generation plant west of Edmonton.

The project involved using chilled ammonia to strip carbon dioxide out of emissions from the new 450-megawatt power plant.

The CO2 was to be transported for enhanced oil recovery in nearby oil fields as well as for permanent storage in deep saline formations.

TransAlta estimated the technology would reduce one million tonnes of greenhouse gas a year.

“There is always a concern when projects in the books have been removed,” said Peter Pilarski, who is the southern vice president of Merit Alberta.

“But, it is important for government to reprioritize when things are tight. It seems that the focus has shifted to building schools, health facilities and critical road infrastructure.”

The Alberta Budget 2013 plans to invest about $3.4 billion over three years on the highway network and other transportation infrastructure.

“We are happy the government is borrowing for the infrastructure projects,” said Gene Syvenky, CEO of the Alberta Roadbuilders & Heavy Construction Association.

“The only remaining concern from our side is that the existing network is not what it should be.”

Syvenky said the $130 million allocated in the budget for provincial highway rehabilitation or maintenance is inadequate.

He said there are 35,000 kilometres of highway in the province.

By his calculations, about 1,400 kilometres of roads would require rehabilitation each year, which would cost an estimated $375 million.

At the current levels of public sector investment, the province is generating an infrastructure deficit of about $245 million a year on roads alone.

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