Norway earmarks $309 mln for carbon storage in '09

OSLO, Oct 7 (Reuters) - Oil-rich Norway will spend 1.9 billion crowns ($308.7 million) on carbon capture and storage (CCS) next year as it seeks to develop technology expected to play a leading role in combating climate change.

CCS involves capturing carbon dioxide (CO2) emissions from power plants or other industrial facilities and burying them underground or below the seabed to avoid releasing the man-made heat-trapping gas into the atmosphere.

The Norwegian government said in its draft budget on Tuesday that it aims to allocate 920 million crowns to a CCS test centre at the Mongstad power plant on Norway's North Sea coast.

"The goal is that the (Mongstad) project will make a significant contribution to the development of CCS in Norway as well as internationally," Petroleum and Energy Minister Terje Riis-Johansen said in a statement.

A number of European countries are working on technology to capture heat-trapping carbon dioxide emissions from power plants which are run on coal or, as in Norway's case, on natural gas.

Norway will also spend 190 million crowns to plan another carbon capture project at the Kaarstoe gas-processing unit before an investment decision is taken in the end of 2009, the ministry said.

Furthermore, a budget of 570 million crowns has been proposed for the "planning and preparations of the transportation and storage of captured carbon dioxide."

Norway is studying whether it can inject CO2 into reservoirs deep under the North Sea, near existing oil and gas fields.

Much of the remaining funds will be spent on research and promotion of CCS internationally, the ministry said.

Norwegian energy group StatoilHydro (STL.OL) has been stripping CO2 from the natural gas well stream at its Sleipner field and buring it below the sea floor since 1996. (Reporting by Wojciech Moskwa)