Shell and StatoilHydro have scrapped plans to build a green power plant that would capture and store carbon dioxide because the project was found to be uneconomic.

The decision to shelve the gas-fired power project, which was to be built at Tjeldbergodden in Norway, casts further doubt on the financial viability of power schemes that capture and safely store greenhouse gases.

In the UK, BP was forced to scrap plans to build a carbon-capture and storage scheme at Peterhead in Aberdeenshire, citing inadequate assurances of financial support from the British Government.

Shell and Statoil first announced their plans in March 2006, when Shell hailed the Tjeldbergodden scheme as “an important milestone towards our vision for greener fossil fuels”.

The Tjeldbergodden project would have captured carbon dioxide emitted from an 860 megawatt gas-fired power station, which would then have been injected into two offshore oil wells: Shell’s Draugen field and later Statoil’s Heidrun field.

The scheme is based on proven technology by which recovery of oil from wells is enhanced by the injection of gases. Oil companies routinely reinject natural gas into wells to boost oil output and the injection of carbon dioxide has been shown to have similar effect.

In July, however, the partners revealed that the potential extra oil recovered by injecting CO2 would be inadequate to justify the huge investment. However, the two companies agreed to conduct a further study to determine whether an investment was justified.

Yesterday, Shell and StatoilHydro threw in the towel, admitting that while the technology worked, it was uneconomic without significant subsidy.
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3080952.ece