Peterhead carbon capture plant moves ahead with Shell agreement

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UKCS – Maximising Economic Recovery for the UK – Final - .PDF file.

The first industrial-scale application of Carbon Capture and Storage (CCS) technology moved forward today after Shell signed an agreement to begin Front-End Engineering and Design (FEED) of the Peterhead carbon capture project in Scotland.

The project, led by Shell with support from SSE, owners of the Peterhead gas power station in Aberdeenshire, aims to capture 10 million tonnes of CO2 over 10 years.

If successful, the project will represent the first application of CCS technology at a gas power station anywhere in the world.

In a statement, Ed Daniels, chairman of Shell UK said: ‘The project has the potential to make gas, already the cleanest burning fossil fuel, even cleaner.

‘CCS could be critical to reducing carbon emissions at a time of growing global demand for energy. The successful demonstration of the technology at Peterhead would be a step towards proving its commercial viability as a tool for mitigating climate change. It could also help diversify the North Sea oil and gas industry and so contribute to the sector’s long-term commercial health.’

The proposed initiative at Peterhead is part of a portfolio of major CCS projects supported by Shell. Others include the Quest oil sands project in Alberta, Canada, and the Gorgon project in Australia.

The FEED phase of the Peterhead project, signed today in an agreement between Shell and the UK government, is expected to continue until 2015.

Subject to positive final investment decisions by Shell and the UK government and the receipt of all relevant consents and permits, the project is expected to be up and running by the end of the decade.

Welcoming today’s news, David Clarke, CEO of the Energy Technologies Institute said: ‘Our research has found that without CCS, the cost of reaching UK Climate Change targets will double from a minimum of around £30bn per year in 2050. That shows the potential economic importance of the technology as part of the UK’s energy mix.

‘Today’s announcement, building on the White Rose announcement late last year is another boost to CCS as an industry in the UK and we hope the Competition assists in providing further confidence in CCS as an important contribution to a future low carbon UK energy system.’

Oil boost

Today’s statement of intent forms part of a wider announcement in which the government revealed the conclusions of Sir Ian Wood’s review on maximising recovery from the UK Continental Shelf.

The report builds on an interim report published in November 2013 outlining how an additional £200bn could be added to the economy by delivering at least 3‐4 billion boe more than would otherwise be recovered over the next 20 years.

In his interim report Sir Ian said the Treasury, the industry regulator within DECC, and the industry itself must, ‘adopt a cohesive tripartite approach to develop and commit to a new, shared strategy of Maximising Economic Recovery for the UK (MER UK) to maximise the huge economic and energy security opportunity that still lies off the UK’s shores. This will involve more collaboration and more proactive and involved stewardship.’

Responding to today’s report, the government said it offers the strongest basis to unlock the investment needed to achieve Sir Ian’s objectives.

According to the department of energy and climate change, this will involve improving the efficiency with which the industry operates, increasing production of oil and gas by one third, and boosting jobs in an industry that already employs 450,000.

Ed Davey, energy and climate change secretary said: ‘Britain will still need large amounts of oil and gas, even as we cut our carbon emissions over the coming decades. So with recent large falls in North Sea production, I commissioned this report from Sir Ian Wood to see how we can reduce the oil and gas we would otherwise import by boosting UK offshore production.

‘Our large tax and consumer base will ensure that the potential £200bn benefit Sir Ian Wood has identified can be realised.’