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Shell to Build Canada Capture Project for Oil-Sands Carbon

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, will build the first carbon capture and storage, or CCS, project that locks away emissions from mining Canada’s oil sands.

The company, together with partners Chevron Corp. (CVX) and Marathon Oil Corp. (MRO), received government backing to start work on the Quest venture north of Edmonton, Shell said today in a statement. Starting in 2015, Quest is designed to store more than 1 million metric tons of carbon dioxide a year from Shell’s Scotford upgrader, cutting emissions 30 percent from the plant processing heavy oil mined from the area’s tar sands.

Mining oil-sands reserves in the Alberta province has increased Canadian crude production about 30 percent in the last decade, while opening oil producers to criticism because of the amount of energy used to extract the fuel. Increasing emissions prompted Canada to repudiate the Kyoto Protocol on climate change, the only nation among 191 signatories to do so.

“If you want to achieve climate change goals, CCS has to be part of the solution,” Shell Chief Executive Officer Peter Voser said in a statement. “We are helping to advance CCS technology on a number of fronts around the world, but Quest will be our flagship project.”  

Government Backing

Alberta’s goverment will back Shell’s Quest project with C$745 million ($745 million) from a C$2 billion fund to support carbon-capture technology. Canada’s government will invest $120 millio from its clean-energy fund, the statement said.

The project wil include an 80-kilometer (50-mile) project from the Scotfor Upgrader to a storage site where the gas will be injected more that 2,000 meters (6,561 feet) underground into porous rock. Monitoring equipment will ensure the gas is permanently stored, the statement said.

Quest “will demonstrate existing capture, transportation, injection and storage technologies working together for the safe and permanent storage of carbon dioxide,” said John Abbott, Shell excutive vice president for heavy oil.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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