Alberta pulls funding from carbon-capture project

Mon Feb 25, 2013 3:35pm EST
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* C$285 mln had been committed to Swan Hills Synfuels

* Low natural gas prices make coal-to-gas uneconomical

* Second major carbon-capture cancellation

By Jeffrey Jones

CALGARY, Alberta, Feb 25 (Reuters) - The Alberta government said on Monday it canceled C$285 million ($278 million) in funding for a carbon-capture project tied to a proposed synthetic natural gas plant, the second withdrawal of such an environmental initiative in less than a year.

Alberta said the privately held company planning the project, Swan Hills Synfuels, has delayed it because lower-than-expected North American gas prices have made producing coal-to-gas fuel uneconomical.

The cancellation comes at a tricky time for the Alberta government, which is trying to convince the Obama administration it should approve TransCanada Corp's Keystone XL pipeline, which would move oil sands-derived crude to Texas refineries.

Alberta Premier Alison Redford was in Washington this past weekend trying to send the message that her government and the energy industry have made serious moves to reduce greenhouse gas emissions as they seek a green light for the pipeline.

Five years ago, former Alberta leader Ed Stelmach set aside C$2 billion in funding for carbon capture and storage projects.   Continued...