Anglo-Dutch oil titan Shell and Norwegian oil and gas firm Statoil have announced that, after carrying out a joint feasibility study on power production and carbon dioxide management in mid-Norway, they have decided that, although the value chain would be technically feasible, it is not commercially viable.
The joint feasibility study, which was announced on March 8, 2006, looked at gas power production at the Tjeldbergodden plant, with carbon dioxide (CO2) management, commercial use of CO2 for enhanced oil recovery (EOR) at the Draugen oil field and later the Heidrun oil field, and providing the Draugen and Heidrun platforms with electricity from Tjeldbergodden.
When the value chain was launched, the companies emphasized that this would be highly demanding both industrially and commercially, and that it would require involvement of the government and other industrial players. Around NOK400 million has been spent on the project, including external studies.
The evaluation shows that, although the value chain is technically feasible, it is not commercially viable. The companies said that the use of CO2 for enhanced oil recovery on Draugen is not commercially defendable and thus will not make a positive contribution to the value chain.
In addition, modifications of the platform would also be extensive and require shutdown for approximately one year. Shell and Statoil said that the project will complete the work on the Draugen CO2 for EOR study this autumn, and document results and the considerable knowledge acquired.
The companies also said that gas-fired power production in Norway is in itself highly challenging, and with carbon capture it is currently not profitable. The companies will complete the technical studies on carbon capture during autumn 2007, and will continue to explore if there is a possibility to establish the gas power plant at Tjeldbergodden with CO2 capture and storage.
One of the prerequisites for this will be to prepare a robust commercial model, which is considered to be highly demanding. This will involve co-operation with relevant power and industrial companies, and in addition, clarification of framework conditions.