Shell secures Peterhead CCS contract

Shell will work with site owners SSE to install carbon capture technology onto the site

The government has awarded Shell a multi-million pound contract to progress the Peterhead Carbon Capture and Storage project to the next phase of design.

Shell will be working with Scottish and Southern Energy (SSE), owners of the Peterhead gas power station in Aberdeenshire, to install carbon capture technology onto the site. It will transport the CO₂ 100km offshore for permanent storage 2km under the North Sea in the old Goldeneye gas field. If built, the project could save 1 million tonnes CO₂ each year and provide clean electricity to more than 500,000 homes.

Ed Daniels, chairman of Shell UK, said: "The signing of this agreement is a hugely important step towards the UK delivering the world’s first CCS demonstration facility on a gas-fired power station. The project has the potential to make gas, already the cleanest burning fossil fuel, even cleaner.

“CCS could be critical to reducing carbon emissions at a time of growing global demand for energy. The successful demonstration of the technology at Peterhead would be a step towards proving its commercial viability as a tool for mitigating climate change. It could also help diversify the North Sea oil and gas industry ­ and so contribute to the sector’s long-term commercial health.”

The proposed initiative at Peterhead is part of a portfolio of major CCS projects supported by Shell. Others include the Quest oil sands project in Alberta, Canada, and the Gorgon project in Australia. 

The announcement follows the award in December of a Front-End Engineering and Design (FEED) contract for the White Rose project in Yorkshire. The government is investing about £100 million from its £1 billion budget to take the Peterhead and White Rose CCS projects to the next stage of development – which together could support more than 2,000 jobs during construction.

Meanwhile, the government today accepted all the main recommendations of Sir Ian Wood’s review into maximising North Sea revenue. The measures include: a joint commitment between government and the industry to ensure production licences are awarded on the basis of recovering the maximum amount of petroleum from UK waters as a whole rather than just each individual licence block; greater collaboration between industry and government, for example by better sharing infrastructure, geophysical information and cutting red tape; and a new independent regulator to supervise licensing and ensure maximum collaboration between companies to explore, develop and produce oil and gas.

Prime Minister David Cameron said: “For many years the UK has supported the North Sea oil and gas industry and we have worked together to make this an economic success the whole country can be proud of.

“I promise we will continue to use the UK’s broad shoulders to invest in this vital industry so we can attract businesses, create jobs, develop new skills in our young people and ensure we can compete in the global race,” he added.