September 5, 2012 / 1:52 PM / 5 years ago

Shell to proceed with oil sands carbon capture project

(Reuters) - Royal Dutch Shell Plc (RDSa.L) said on Wednesday it will go ahead with its planned Quest carbon capture and storage project in order to cut carbon-dioxide emissions at its 255,000 barrel per day Scotford oil sands upgrader near Edmonton, Alberta, by more than a third.

The company said in a statement the facility will capture more than 1 million metric tons of carbon dioxide annually and inject it two kilometers (1.2 miles) underground.

The project would be the first of its kind for the oil sands, the world’s third-largest crude reserve behind Venezuela and Saudi Arabia.

Oil sands projects, particularly upgraders that convert bitumen stripped from the sands into synthetic crude oil, emit millions of metric tons of carbon dioxide annually and carbon-capture projects are seen as a way to improve their environmental performance.

Shell said the Quest project will the first that it designs, builds and operates and will be at the center of the company’s carbon-capture and storage research for its global operations.

“We are helping to advance CCS technology on a number of fronts around the world, but Quest will be our flagship project,” Peter Voser, Shell’s chief executive, said in a statement.

Shell has not said how much it expects the project, which will be operating late in 2015, will cost. The governments of Alberta and Canada are contributing C$865 million ($877 million) to the project.

The Scotford upgrader is part of the Athabasca Oil Sands Project. Shell has a 60 percent stake in the Athabasca Oil Sands Project, which includes mining operations and the upgrader. Marathon Oil Corp (MRO.N) and Chevron Corp (CVX.N) each have a 20 percent share.

($1 = $0.99)

Reporting by Scott Haggett; Editing by Gerald E. McCormick and Sofina Mirza-Reid

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