Government requests full feasibility study from Sargas
Government requests full feasibility study from Sargas over its concerns regarding proposed cheaper-energy biopaste technology proposal.
Government calls on Sargas to present full feasibility study to clear its six main concerns regarding the cheaper-energy generation biopaste technology proposal.
The finance ministry today said that it needed Norwegian firm Sargas's consent to disclose the findings of a pre-feasibility study that government carried out on its proposal for carbon-capture storage.
"As a result of KPMG's findings, the government has informed Sargas SA that for it to consider its proposal further it requires Sargas SA to provide a full feasibility study which analyses and addresses the major issues outlined above," the ministry said.
Carbon-capture storage industrialists Sargas had proposed a 30-year power purchasing supply agreement for Enemalta, to which government replied with a request for a full feasibility study of the proposal.
Sargas's proposal consists of a power plant that will be accompanied by a coal-fired steam plant on a barge dry docked at Marsaxlokk Bay, complete with emissions abatement and equipped to capture carbon dioxide emissions for eventual storage.
The plant would be fuelled with a mix of coals and bio-fuels, and the CO2 emitted carried out by tankers to be stored in depleted oil wells outside Malta.
Sargas SA have proposed to export the captured carbon dioxide to be disposed of in depleted offshore oil wells for enhanced oil recovery. Initially, this was included in the business proposal as a zero revenue item. Eventually it was included at €8 per tonne. According to KPMG, there is some public opposition with respect to underground storage of CO2 in certain European countries.
KPMG also said it could not verify Sargas's claims that it could sell the by-product ash to concrete producers at €40-€60 per tonne.
KPMG outlined various issues on the CCS option: carbon capture storage depends on adequate carbon prices and guarantees that it will be viable in the long term. Since Sargas proposed a 30-year agreement with Enemalta, the price of coal and the availability of biopaste would have a significant impact on the viability of the project as a whole.
Another consideration is the effect of the coal-fired steam plant on the Marsaxlokk bay and fishing village, as well as other polluting side-effects.
The ministry said that as a result of KPMG's viability analysis report, it had informed Sargas that for it to consider its proposal further it requires Sargas SA to provide a full feasibility study which analyses and addresses the major issues.
The ministry said that the major issues highlighted by the KMPG report - which Prime Minister Lawrence Gonzi admitted the existence of only weeks ago - which are opportunity cost issues; the fuel used (coal and biopaste); the carbon capture and storage technology; maritime issues, environmental considerations and certain uncertainties including the sale of green certificates, and the sale of CO2 and the sale of bed ash and fly ash.
KPMG's pre-feasibility study comprised a qualitative analysis on Sargas's profile and track record, and on the extent of world-wide commercial implementation of the technology.
In the second phase, KPMG were required to develop a financial model in order to test the projections of the proposal. In particular, KPMG were asked to examine claims concerning the pricing of electricity in such a plant's initial year of operation.
