SNC-Lavalin-built carbon capture facility has 'serious design issues': SaskPower

An internal SaskPower briefing note obtained by the NDP suggests the much-celebrated Boundary Dam carbon capture project near Estevan, Sask., has "serious design issues".

The note goes on to say the company contracted to engineer, procure, and build the capture facility, SNC-Lavalin "has neither the will or the ability to fix some of these fundamental flaws."

The note, dated Sept. 30, 2014, said SaskPower has already paid 97 per cent of the value of the three subcontracts SaskPower had with SNC — $533 million of $549 million.

It says at the time SaskPower was withholding $6.5 million in payments from SNC because the Crown corporation was having to pay to correct problems with SNC's work.

"SNC has been very slow to address basic design problems," the note claims. "SNC is more concerned about getting paid for the $6.5 million than fixing the deficiencies in our plant."

Speaking at the legislature, following question period, the minister responsible for SaskPower, Bill Boyd, acknowledged there have been problems.

"We are certainly going to work as hard as we possibly can to recover any dollars that SaskPower feels is appropriate from SNC-Lavalin or any other contractor that we feel didn't meet their contractual obligations," Boyd said.

Problems persist at high profile project

The president and CEO of SaskPower, Mike Marsh, admits there have been many technical problems during the project's first year, which have resulted in the facility running at just 40 per cent of its capacity.

"We've identified a lot of deficiencies that we believe should have been caught in the very beginning and that's why legal process has begun already with some of the contractors involved," Marsh said.

He said SaskPower is in the midst of overhauling the project, which was officially opened just last fall.

"We have full confidence in our technical assessment that we're going to be running at a much improved performance post overhaul."

Marsh said the issues between SaskPower and SNC have not been resolved and the facility is still not commercially operational.

The briefing note says the stakes are high between the two sides and it suggests the relationship is troubled.

"SaskPower expects to have over $50 million in claims against SNC-Lavalin alone. The last three months have seen very poor to no support from SNC-Lavalin."

The note does go on to acknowledge that things seemed to be improving. In the legislature, Marsh also indicated SNC was cooperating with SaskPower to some degree.

He said the two sides are in the midst of a dispute resolution process.

SaskPower awards SNC-Lavalin another contract

Despite the ongoing conflict, SaskPower recently awarded yet another contract to SNC.

On Sept. 29, SNC announced that "it has been awarded the owners engineer contract by SaskPower for the Island Falls Powerhouse Concrete Rehabilitation project in Saskatchewan. The total capital cost of the project is $45 million."

This move baffles NDP critic Cathy Sproule.

"I don't know if I was working on my house if I would hire a contractor I had problems with to do more work," Sproule said. "I don't know. It doesn't make sense on first blush."

Later in the day, the Saskatchewan government sent out an email clarifying SNC's role in this new project.

"The total capital cost of the project is $45 million but SNC's contract is for $4 million of that work."

CBC reached out to SNC-Lavalin but they were unable to immediately respond.