The project will be based on an 860 MW gas-fired power plant and methanol production facility at Tjeldbergodden in Mid-Norway, fuelled by gas from offshore fields. Carbon dioxide emissions from the plant will be captured and delivered for re-injection into the Draugen and Heidrun offshore oil and gas fields to the tune of 2 – 2.5 million tonnes annually. The project will contribute to the long-term power balance in Mid-Norway, but power from the plant will also be utilised in the offshore fields, enabling near zero CO2 and nitrogen oxide (NOx) emissions from these installations, and from a nearby gas terminal.

The project, estimated to cost between 1.2 and 1.5 billion dollars, will be phased in during 2010–2012, the two companies said. But establishing the CO2 value chain is, according to the partners, technologically and commercially challenging. The project will therefore depend on substantial government funding as well as the involvement of industrial stakeholders and electricity users in the region.

“This is an important milestone for Shell towards our vision for greener fossil fuels with part of the carbon dioxide captured and sequestrated underground,” said Shell CEO Jeroen van der Veer.

“Our aim is to establish a broad partnership in order to realise this ground breaking project. This CO2 project responds to vital future challenges facing society, the environment and the industry,” said Statoil CEO Helge Lund.