Royal Dutch Shell Plc and BP Plc stand to make “serious profit” by pumping carbon dioxide from European power plants into North Sea oil fields, according to Petroleum and Renewable Energy Company Ltd.

Putting carbon dioxide into old oil wells may yield profits of as much as $40 a metric ton in the next decade, Stewart Whiteley, managing director at the consultant known as Petrenel, said today at a seminar at London’s Geological Society.

“You can start making serious profits out of this,” Whiteley said. ”It’s a matter of whoever gets there first.”

Enhanced oil recovery involves pumping carbon dioxide into underground reservoirs to extract more crude than would otherwise be obtained through natural pressure. The process has the advantage of extending the lifespan of an oil field, while permanently burying the pollutant. Carbon capture and storage has been touted as a way of slashing emissions of CO2, a greenhouse gas blamed for climate change.

Kinder Morgan Energy Partners Ltd. and Denbury Resources Inc., two pipeline operators in the U.S., are profiting on transporting and storing CO2, Whiteley said.

BP, Europe’s second-largest oil company after Shell, shelved a plan to use its Miller field in the North Sea for CO2 storage in 2007 after the U.K. didn’t provide the company with tax incentives for the project.

Petrenel estimates it costs $7 to $20 to dispose of a metric ton of carbon dioxide underground for storage in an aquifer or depleted gas field. The CO2 could turn into an asset in extracting more oil, he said.

The figures don’t account for costs of capturing the CO2 from the source, such as power stations, just transporting and storing the gas, he said.

Editors: Mike Anderson, Stephen Cunningham.

To contact the reporter on this story: Catherine Airlie in London at cairlie@bloomberg.net

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Royal Dutch Shell Plc, Europe’s largest oil company, started production at the 100,000 barrel-a- day expansion of its oil sands development in Canada.

The company completed the Jackpine Mine at the project in northern Alberta, adding capacity to the existing Muskeg River Mine’s 155,000 barrels of oil equivalent a day, Shell said today in a statement. Output will rise toward capacity in 2011 once the Scotford upgrader is ready, Shell said.

Canada’s oil sands, a mixture of sand, clay, water and a heavy oil called bitumen, contain the world’s second-largest proven concentration of crude at about 170 billion barrels. Higher oil prices and advances in technology have prompted companies including Shell and BP Plc to invest in tapping Canada’s oil sands.

Shell is targeting an 11 percent increase in production by 2012 to 3.5 million barrels of oil equivalent a day from 2009. The Anglo-Dutch company is also targeting hard-to-reach rock formations for potential fuel in Australia, China and the U.S, as well as projects in Qatar, to boost production growth.

Shell operates the Athabasca Oil Sands Project in which it has a 60 percent stake. Chevron Corp. and Marathon Oil Corp. share the remaining 40 percent.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

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The conclusions, sent to BP executives in a letter in October last year, found “training of some new personnel to basic safety standards was ineffective”.

The letter, obtained by The Daily Telegraph under Freedom of Information laws, added there was “evidence of a culture among your contractors, Seawell (up to senior levels of management), of working outside of procedures, permit or permit conditions”.

Investigators also criticised BP for its response to the inquiry, saying “did not appear to identify the significance of issues raised by the complainant once they were put to you by HSE”.

According to the letter, there are four examples of incidents on North Sea rigs in 2008 and 2009 where BP failed to learn lessons after investigations.

It comes as Tony Hayward, the chief executive of BP, prepares to be questioned on Wednesday by a panel of MPs on UK deepwater drilling.

Tim Yeo, chairman of the Energy and Climate Change Committee, said training of North Sea staff was of key interest to the inquiry.

“There are some extremely important aspects of training that do need improving,” he said.

Another committee member, Tom Greatrex, said he is “concerned about the difference between rhetoric and reality” over North Sea safety.

Steve Walker, head of the offshore division at the HSE, said work permits and training were a “pretty central part of major hazard control”.

A response to the investigation from BP central office told the HSE that its processes had been reviewed and improved by November.

A reply to the HSE from the head of operations at Clair said: “Your letter provoked consternation amongst the Clair offshore team, who strongly refute the allegations set out in your letter.”

A BP spokesman said: “Clair has an excellent safety track record and has recently achieved six years of operation without any injury that has resulted in a day away from work.”

Records show that four out of five of BP’s North Sea installations inspected last year were issued with warnings for failure to comply with regulations on oil spills

Better training was a recommendation in BP’s internal report last week into what caused the Deepwater Horizon rig to sink, killing 11 men and triggering a giant oil spill.

Steve Rae, Seawell, VP International drilling, said that Seawell had cooperated fully with the investigations. “These investigations did not result in any improvement notice being raised or issued against Seawell. Seawell, who have been recognised for their best in class safety performance over the last three consecutive years by IADC North Sea Chapter, have the highest regard for all health and safety related matters and take all such investigations as very serious.”

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