BP moves towards carbon storage in North Sea oil and gas field

Oil giant BP is moving ahead with plans to capture CO2 from an onshore power plant and inject it into a North Sea oil field. In the next few weeks, the Government is expected to issue a new strategy on carbon sequestration and to put forward financial support for demonstration projects.

Carbon capture and sequestration is attracting growing interest as a way of delivering deep cuts in the power sector’s CO2 emissions. A particularly attractive option is "enhanced oil recovery" (EOR) in which the gas is injected into a mature oil well. This boosts the yield of oil, so offsetting some of the costs of carbon capture.

In its energy White Paper, issued in early 2003, the Government promised an "urgent detailed implementation plan" for an EOR demonstration project in the North Sea.

The DTI later back-pedalled in light of an apparent lack of interest from oil companies (ENDS Report 355, pp 44-45 ). Another problem is that the window of opportunity is set to close rapidly as North Sea oil production tails off.

However, carbon sequestration has moved back up the agenda. In his March Budget, Chancellor Gordon Brown revealed that the Government is examining how it might support development of the technology (ENDS Report 363, pp 3-4 ). ENDS understands that the Department of Trade and Industry’s long-overdue strategy on carbon abatement, due out this summer, is likely to include funding for more than one demonstration project.

BP has now confirmed that it is "exploring the possibility" of an EOR project in the North Sea, and is in discussions with potential partners. The project has moved beyond the concept stage, but BP says it is "premature" to release any details.

However, ENDS understands that the company is planning to use its Miller oil and gas field to store the CO2. One attraction is that the offshore infrastructure is designed to handle sour gas, so is already able to cope with corrosive materials such as liquid CO2.

The plan is to reform natural gas into separate streams of hydrogen and CO2, probably at BP’s St Fergus gas terminal in north-east Scotland. The hydrogen would be used as a fuel in a gas turbine - and BP is in talks with Scottish and Southern Electricity over the scope for using the gas-fired station at Peterhead.

The project would capture roughly one million tonnes of CO2 each year, and BP hopes that it could be up and running by the end of the decade.

The company appears to be relying on some form of Government support to make the project viable. One key issue which will need to be resolved is whether carbon storage will be eligible for credits under the EU emissions trading scheme.

Until now, most of the interest in carbon storage has come from the coal industry, which sees it as a way of shoring up demand for coal in a carbon-constrained world while avoiding over-dependence on imported gas.

BP’s move follows on from a speech in February by its chief executive Lord Browne. "We estimate that the reservoirs in the North Sea could store all the CO2 produced over 60 years of power generation in Europe," he said. He pointed to the potential to produce hydrogen for use in electricity generation - and noted that "one mid-sized power station…would effectively produce twice the amount of carbon-free electricity currently produced by all the windfarms in the UK."

BP has already obtained experience of carbon capture and sequestration in Algeria. The In Salah gas field produces gas with high levels of CO2 which needs to be removed for reasons of fuel quality.

Last summer, BP and its partners, Norway’s Statoil and the Algerian state oil company Sonatrach, began injecting this CO2 back into the gas field at a depth of 1,800 metres. The project has cost some $100 million, and will dispose of some 1 million tonnes of the gas each year.

Carbon capture and storage is also moving forward on the international stage. The Intergovernmental Panel on Climate Change is due to publish a report on the subject in September - and is expected to conclude that geological storage is a viable option with abatement costs of €20-30/tCO2e within 20 years.

The European Commission is also pushing forward with plans for a "technology platform" tasked with delivering a strategic research agenda by the start of next year. Energy Commissioner Andris Piebalgs has set a €20/tCO2 cost objective.

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