Joint development agreement on carbon capture and storage

SSE Plc has entered into a joint development agreement with Shell UK Limited in relation to the proposed Carbon Capture and Storage (CCS) project at Peterhead Power Station.

The agreement will enable the project to accelerate a programme of pre-FEED (Front-End Engineering Design) studies, with the intention that the project will be in a position to begin an full FEED study in the second half of 21012, subject to the process with funding proposals submitted under the EU’s NER300 process and developments in the UK’s CCS demonstration programme.

The project aims to design and develop a full chain, post-combustion CCS facility which will be capable of capturing CO2 from one 385 MW combined cycle gas turbine unit at Peterhead Power Station.

It is planned that the CO2 will then be transported to the Shell-operated Goldeneye gas field in the North Sea using, as far as possible, existing infrastructure.

SSE will lead on all aspects of the capture plant at Peterhead, including initial compression and dehydration; with Shell examining all other aspects, including onshore and offshore transportation and storage.

In May 2011, the UK government announced that the Peterhead project was one of seven UK CCS applications to the European Investment Bank for consideration in the EU’s NER (New Entrant Reserve) scheme to support CCS renewable energy projects across the EU.

Up to three such projects may be supported per Member State. A decision has recently been taken not to proceed with the CCS project proposed for coal-fired power station at Longannet in Fife, which had been one of the seven UK CCS applications.

Ian Merchant, chief executive of SSE, said: “If long-term targets for reducing emissions are to be met, CCS technology must be applied as widely as possible. We therefore welcomed the Government’s decision to include gas-fired generation plant in its CCS demonstration programme.

“However, the development of a commercial-scale CCS demonstration project presents significant challenges and will require appropriate levels of support from both the EU and UK government.”

Paul Smith, managing director, General, of SSE, said: “For more than six years we’ve thought that Peterhead represents the best site in the UK for a gas CCS project.

“Our co-operation with Shell strengthens this proposition even further. Given the work already undertaken the project can proceed at a pace at least equal to other CCS projects in Europe.”

Meanwhile, Glen Cayley, vice-president, technical of Shell UK Limited, added: “Shell believes CCS is an essential technology in the fight against global climate change and we remain committed to development CCS in the UK.

“Valuable work has already been carried out during the Longannet Project - work that will be relevant to the proposed CCS project at Peterhead.

“Shell’s Goldeneye reservoir offers excellent geological storage conditions in terms of pressure, capacity and availability and we are set on finding a way to use it as a CO2 link.”

The announcement was welcomed by First Minsiter Alex Salmond who called it ‘an important step forward’ for the development of CCS in Scotland and underlying the strong commitment of the two energy giants to the technology.

“Following the recent disappointment over Longannet and the previous UK Government’s abandonment of the earlier Peterhead CCS project, it is essential that Westminster clearly demonstrates its commitment to supporting the commercial development of CCS, not least when the continued commitment from industry is so clear,” he said.

“CCS technology could transform carbon-reduction efforts across the world, particularly in fast-growing economies. As such, it has the potential to become a significant export industry for these islands, and for Scotland in particular – that’s why we are working with the UK CCS Liaison Group to ensure that lessons are learned from the Longannet FEED study.

“The case for CCS deployment at Peterhead and in Scotland is extremely strong. We have world-leading expertise and R&D capacity, a strong industry capability and some of the best carbon storage sites in Europe. That is why Scotland remains in the vanguard of what could become game-changing technology,” he added.Banff & Buchan MP Eilidh Whiteford also hailed the announcement stating: “This is great news for Peterhead and excellent news for Scotland’s renewable sector given we have some of Europe’s largest carbon storage reserves in our North Sea oil and gas fields combined with the expertise on how to access them.

“SSE are to be commended for their continuing commitment to carbon capture at Peterhead, and this project has huge environmental potential of international significance, and must be embraced by the UK Government.

“This has been a key campaign for the SNP, and Alex Salmond, as First Minister and as the former local MP, battled to bring the development of carbon capture to the area.

“This project would put Peterhead at the cutting-edge of carbon capture technology. The UK Government must now recognise the very strong case which exists for this project going ahead and the investment it will bring to Peterhead.

“People have not forgotten that Peterhead could already have been three years ahead of where it is now had the last Labour Government not decided to pull back from its support for the previous carbon capture project.”