Shell, governments agree funding for Canadian CO2 storage project

Shell today announced it had signed agreements with the Governments of Alberta and Canada to secure $865 million in funding for its Quest Carbon Capture and Storage (CCS) Project in Canada.

The Quest Project will capture and permanently store deep underground more than one million tonnes of CO2 per year from Shell’s Scotford Upgrader near Edmonton, Alberta, which processes heavy oil from the Athabasca oil sands.

“Quest would be the first application of CCS technology for an oil sands upgrading operation,” says John Abbott, Shell’s Executive Vice President of Heavy Oil. “Not only would it allow us to significantly reduce the carbon footprint of our oil sands operation here in Alberta, but it will contribute to the global knowledge that will help to get other CCS projects up and running more quickly.”

Shell aims to be a leader in continuously improving its oil sands environmental performance, through CO2 reduction, improved water management and minimizing the impacts of tailings ponds. A number of innovative technological solutions, including CCS, will be required to achieve that goal.

“CCS is recognized as one of the most promising technologies to reduce greenhouse gas emissions from fossil fuels. To realize that potential, government support in this important demonstration phase is essential. We would like to thank both levels of government for their commitment to progress CCS technology by investing in Quest,” Abbott concluded.

“By continuing to move CCS technology forward, Alberta is demonstrating its ongoing leadership in realizing the commercial-scale deployment of this technology and greening our energy production,” said Alberta Premier Ed Stelmach.

“Canada is a world leader in carbon capture and storage and we are in an excellent position to use this technology on a wide scale,” said the Honourable Joe Oliver, Minister of Natural Resources. “The Government of Canada is committed to supporting innovative clean energy technologies such as the Shell Quest Project which will help to bring high-quality jobs to Alberta while contributing to the responsible development of Canada’s energy resources.”

The signing of the funding agreement was announced today as part of an event marking the earlier start-up of Shell’s 100,000-barrel-per-day expansion of its Athabasca Oil Sands Project (AOSP), bringing total capacity to 255,000 barrels per day. The AOSP includes the Muskeg River Mine, Jackpine Mine and Scotford Upgrader.

Regulatory applications for the Quest Project were submitted in November 2010. The signing of the funding agreements represents another important milestone prior to Shell taking a financial investment decision in 2012, subject to the outcome of the regulatory process and economic feasibility.

With CO2 injection planned for 2015, the Quest Project would join a handful of CCS projects around the world that are injecting CO2 at a commercial scale. Shell is working with governments and other experts globally on both political and technical levels to facilitate the development and wide-scale deployment of CCS and is involved in progressing a number of projects around the world, across a wide range of sectors.

The Quest Project is being advanced on behalf of the AOSP, a joint venture among Shell Canada (60 per cent) Chevron Canada Limited (20 per cent) and Marathon Oil Canada Corporation (20 per cent).

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