Statoil, Shell shelve Draugen field CO2 injection

OSLO Fri Jun 29, 2007 4:07am EDT

A man fills his car at a Shell garage in Glasgow, February 3, 2005. Energy groups Statoil and Shell have dropped plans to bury carbon dioxide (CO2) in the seabed beneath Shell's Draugen field in the Norwegian Sea to enhance oil recovery because it is uneconomical, the companies said on Friday. REUTERS/Jeff J Mitchell

A man fills his car at a Shell garage in Glasgow, February 3, 2005. Energy groups Statoil and Shell have dropped plans to bury carbon dioxide (CO2) in the seabed beneath Shell's Draugen field in the Norwegian Sea to enhance oil recovery because it is uneconomical, the companies said on Friday.

Credit: Reuters/Jeff J Mitchell

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OSLO (Reuters) - Energy groups Statoil and Shell have dropped plans to bury carbon dioxide (CO2) in the seabed beneath Shell's Draugen field in the Norwegian Sea to enhance oil recovery because it is uneconomical, the companies said on Friday.

The companies reached that conclusion in a joint feasibility study that they had begun in March 2006 and which has cost them around 400 million Norwegian crowns ($67.72 million).

The preliminary plans had envisaged capturing CO2 from a big gas-fired power plant to be built at Statoil's Tjeldbergodden methanol complex, piping it offshore to the Draugen field and injecting it into the reservoir to boost oil recovery.

"The evaluation shows that though the value chain is technically feasible, it is not commercially viable," Statoil and Shell said in a joint statement.

"The extra oil volumes that the Draugen license operator (Shell) believes to be recoverable are too low to justify the necessary investments in the field," they said.

Modifications of the platform would have been extensive and required a production shutdown for about one year, they said.

Statoil and Shell had said from the beginning that the concept was highly challenging and that financial support from the government would be needed to make it viable.

Carbon capture and storage is still in a pioneering phase.

Industry and governments have had high hopes that burying CO2 underground or below the seabed could help reduce emissions that are widely blamed for causing global warming.

Statoil has been burying CO2 separated from the natural gas stream at its Sleipner field in the North Sea for a decade.

But capturing and burying CO2 emissions from power plants would be a new step in Norway which is rich in hydropower and is only now planning to build gas-fired plants.

"Gas-fired power production in Norway is in itself highly challenging, and with carbon capture it is currently not profitable," Statoil and Shell said.

"The companies will during this autumn complete the technical studies on carbon capture, and continue to explore if there is a possibility to establish the gas power plant at Tjeldbergodden with CO2 capture and storage," they said.

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