Statoil Scraps CO2 Plan

On March 8, 2006, Statoil and Shell announced that they would conduct a joint feasibility study on power production and carbon dioxide (CO2) management in Mid-Norway.

The scope of the study was:

--Gas power production at Tjeldbergodden with CO2 management

--Commercial use of CO2 for enhanced oil recovery (EOR) at the Draugen oil field and later the Heidrun oil field

--Providing 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.

Some 80 and 90 people have been working on this value chain, and around NOK 400 million have been spent on the project including external studies. The evaluation shows that though the value chain is technically feasible, it is not commercially viable. 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. The extra oil volumes that the Draugen license operator believes to be recoverable are too low to justify the necessary investments in the field. Modifications of the platform would also be extensive and require shutdown for approximately one year. The project will complete the work on the Draugen CO2 for EOR study this autumn, and document results and the considerable knowledge acquired.

Gas fired power production in Norway is in itself highly challenging, and with carbon capture it is currently not profitable. The companies will during this autumn complete the technical studies on carbon capture, and 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 cooperation with relevant power and industrial companies, and in addition, clarification of framework conditions.