PETERHEAD has been identified as one of two preferred bidders for the UK’s £1bn carbon capture and storage project.
Shell’s proposal for the town’s facility progressed to the next stage of the UK Government’s CCS Commercialisation Competition.
Its rival is the White Rose Project in Yorkshire.
The project could be the world’s first commercial scale full-chain demonstration of CCS from a gas-fired power station.
The Government will now undertake discussions with the two preferred bidders to agree terms by the summer for Front End Engineering Design studies, which will last approximately 18 months. A final investment decision will be taken by the Government in early 2015 on the construction of up to two projects.
Shell and SSE said they welcomed the opportunity to work with the Government to progress plans for the world’s first full-chain gas CCS facility to the next stage and the opportunity to become a global leader in gas CCS.
The project is expected to capture ten million tonnes of CO2 over ten years from SSE’s Peterhead gas-fired power station.
Shell will store the CO2 in the depleted Goldeneye gas reservoir, 102km off the coast of Scotland, under the North Sea.
The White Rose Project involves capturing 90% of the carbon dioxide from a new super-efficient coal-fired power station at the Drax site in North Yorkshire, before transporting and storing it in a saline aquifer beneath the southern North Sea. The project involves Alstom, Drax Power, BOC and National Grid.
Shell UK chairman Ed Daniels said: “The Government’s decision sends a strong signal of support for the role of gas in meeting the rise in global energy demand.
“At Peterhead, we expect to demonstrate capturing around 90% of the emissions from natural gas, making the cleanest burning fossil fuel even cleaner.
“What we learn from the project will help the industry to be able to scale-up the technology to make a material impact on tackling climate change, and to create a world-leading industry here in the UK, with excellent potential for job creation and long-term growth.”
Secretary of State for Energy and Climate Change, Edward Davey said: “Today’s announcement moves us a significant step closer to a Carbon Capture and Storage industry – an industry which will help reduce carbon emissions and create thousands of jobs.
“These two are major infrastructure projects potentially worth several billion pounds and could support thousands of construction jobs over the next few years.
“We had four excellent bids and I’d like to thank each one of them for their hard work. We will now be working swiftly to progress our preferred two, while making sure we continue to provide the best possible value to tax payers.”
Energy Minister John Hayes said: “We are working quickly to our goal of a cost competitive CCS industry - and these projects are just the start. In the past year we have demonstrated there is significant appetite from industry to invest in UK CCS, providing jobs and investment opportunities.
“It is my intention to work with industry, beyond these two projects, to ensure we have further CCS projects by the end of the decade – supported by the innovative changes we are making to the energy market to encourage investment in low carbon electricity.
“I am also very pleased that these two projects offer us the opportunity to ensure that both gas and coal generation have a hugely reduced impact on our carbon emissions.”
Commenting on the news, North-east MSP Alison McInnes said: “I am delighted that the Peterhead Project has been announced as a preferred bidder in the UK’s £1bn CCS programme. Locally we knew they had a strong case.
“The team at Peterhead, and the local community will be delighted to have reached this milestone and will now be focussed on securing a massive investment into the local economy.”