Shell to construct world's first oil sands carbon capture and storage (CCS) project
Sep 5, 2012
Shell today announced that it will go ahead with the first carbon capture and storage (CCS) project for an oil sands operation in Canada. The Quest project will be built on behalf of the Athabasca Oil Sands Project joint venture owners (Shell, Chevron and Marathon Oil*) and with support from the Governments of Canada and Alberta.
CCS is critical to meeting the huge projected increase in global energy demand while reducing carbon dioxide (CO2) emissions, explained Peter Voser, Chief Executive Officer of Royal Dutch Shell plc. “If you want to achieve climate change goals, CCS has to be part of the solution. We are helping to advance CCS technology on a number of fronts around the world, but Quest will be our flagship project.”
Alberta’s oil sands are a secure, reliable source of energy and an economic engine which drives employment, training and business development across Canada and beyond. “We will need all sources of energy to meet world demand in the coming decades,” Voser noted. “Lower CO2 energy sources will grow, but even by 2050 at least 65 per cent of our energy will still come from fossil fuels. So CCS will be important to manage climate impacts.”
The Athabasca Oil Sands project produces bitumen, which is piped to Shell’s Scotford Upgrader near Edmonton, Alberta. From late 2015, Quest will capture and store deep underground more than one million tonnes a year of CO2 produced in bitumen processing. Quest will reduce direct emissions from the Scotford Upgrader by up to 35 per cent – the equivalent of taking 175,000 North American cars off the road annually.
“Quest is another example of how we are using technology and innovation to improve the environmental performance of our oil sands operations,” said Shell Executive Vice President of Heavy Oil, John Abbott. “The opportunity Quest provides to reduce emissions from our upgrading activities is an important achievement in itself, but the project’s technical and strategic value reaches beyond the emissions it will capture.”
“Quest is important because it is a fully integrated project that will demonstrate existing capture, transportation, injection and storage technologies working together for the safe and permanent storage of CO2. The knowledge it provides will help to enable much wider and more cost-effective application of CCS through the energy industry and other sectors in years to come.”
Both the Canadian federal and Albertan provincial governments have identified CCS as an important technology in their strategies to reduce CO2 emissions. The Alberta government will invest $745 million in Quest from a $2-billion fund to support CCS, while the Government of Canada will invest $120 million through its Clean Energy Fund.
“We will continue to invest in innovative clean energy technologies such as the Shell Quest project to help support high-quality jobs and responsible development of Canada’s energy resources,” said the Honourable Joe Oliver, Minister of Natural Resources. “Carbon capture and storage has the potential to help us balance our need for energy with our need to protect the environment.”
“Today’s announcement reaffirms Alberta’s position as a global leader in carbon capture and storage,” said Energy Minister Ken Hughes. “Technologies like CCS will play an instrumental role in helping to lower greenhouse gas intensity from the oil sands and demonstrate to the world Alberta’s commitment to responsible energy development.”
The International Energy Agency (IEA) calls CCS “a crucial part of worldwide efforts to limit global warming” and estimates that it could deliver about one-fifth of necessary worldwide reductions in greenhouse gases by 2050. Shell is also working with governments and experts to help the development of CCS in other countries, including projects in Norway and Australia.
Quest is the world’s first commercial-scale CCS project to tackle carbon emissions in the oil sands, and the first CCS project in which Shell will hold majority ownership and act as designer, builder and operator. It will also form the core of Shell’s CCS research programme and help develop Shell’s CO2 capture technology.
Shell has received the necessary federal and provincial regulatory approvals for Quest. Construction has begun and will employ an average of about 400 skilled trades workers over roughly 30 months, peaking at about 700.
* The Athabasca Oil Sands Project, with 255,000 barrels per day of mining and upgrading capacity, is a joint venture among Shell Canada Energy (60 per cent), Chevron Canada Limited (20 per cent) and Marathon Oil Canada Corporation (20 per cent).
More about Quest
The Quest CCS project will capture more than one million tonnes per year of CO2 from the Scotford Upgrader located near Edmonton, Alberta and transport it up by an 80 km underground pipeline to a storage site north of the Scotford site. Here, it will inject it more than two kilometres underground into a porous rock formation called the Basal Cambrian Sands (BCS), which is located beneath layers of impermeable rock. Sophisticated monitoring technologies will ensure the CO2 is permanently stored. In 2011, Quest received the world’s first certificate of fitness for its storage development plan from Det Norske Veritas (DNV), an international risk management firm. DNV assembled a panel of seven CCS experts from academia and research institutions to perform the review over a two-week period.
To improve efficiency, up to 50 per cent of project work will be done offsite at a construction yard yet to be selected. Shell will use third-party construction facilities in Edmonton, helping the continuing development of key construction capacity in the province. Large pre-assembled modules will then be delivered to the Shell site for installation.
Shell Canada Media Relations: firstname.lastname@example.org or +1 877 850 5023. Please provide both your e-mail and phone number as some queries will only be answered via e-mail.
Shell Investor Relations Europe: +31 (0)70 377 3996
Shell Investor Relations United States: +1 713 241 2069
Shell International Media Relations: +44 (0) 207 934 5550
Visit the Shell in Canada website to find out more about the Quest Carbon Capture and Storage (CCS) Project
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this release “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this release, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “objectives”, “outlook”, “probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should” and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended 31 December, 2011 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, September 5, 2012. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this release.
We use certain terms in this release, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.