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THE WALL STREET JOURNAL: Statoil, Shell Offer Plan to Boost Oil Recovery in Norwegian Sea

March 9, 2006
OSLO — Statoil ASA and Royal Dutch Shell PLC announced plans for a multibillion-dollar project to increase oil recovery through carbon-dioxide injection at two oil fields in the Norwegian Sea.
The project, said by the companies to be the biggest of its kind in the world, envisions capturing the greenhouse gas from a new, 850-megawatt gas-fired power plant at Statoil's Tjeldbergodden methanol refinery in Norway. The carbon dioxide would then be pumped to Shell's Draugen field to increase crude output and later to Statoil's Heidrun field.
The companies have yet to make a final investment decision on the project. Statoil's Chief Executive Helge Lund yesterday said “substantial” government funding would be required to make it profitable and that the government has yet to approve the project or say how much it would be willing to contribute.
Norwegian Oil and Energy Minister Odd Roger Enoksen said he was “very excited and positive about the project.”
Shell and Statoil aim to start the power plant in 2010 or 2011, and supply carbon dioxide to Draugen in 2011 or 2012. The companies plan to seek government approval and funding commitments as soon as possible.
Statoil's senior vice president for the environment, Tor Fjaeran, said the power plant, capture technology and pipeline infrastructure would likely cost between $1.2 billion and $1.5 billion. In addition, substantial investments would be required to reengineer the fields for carbon-dioxide injection and lay power cables to the platforms. He couldn't yet put a figure on those costs.
Carbon dioxide injected into a field can increase the internal pressure necessary for crude extraction. Shell hopes to increase Draugen's oil recovery to a near-record 85%. That could extend the lifetime of the 140,000 barrels-a-day field by five years to 2020. Carbon dioxide would be recycled from the Draugen field, shipped and injected into Statoil's 140,000 barrels-a-day Heidrun field for a higher recovery rate.
Thomas Palm, a carbon-dioxide expert from the Norwegian environmental organization Zero, as in zero carbon-dioxide emissions, said the project could conservatively increase recovery of the two fields by 155 million barrels of oil over the project's lifetime.
Shell Executive Vice President Graeme Sweeney said the companies are lobbying Norway and the European Union to include Norwegian power stations and carbon storage in the carbon-dioxide emission credit system so that the project could go ahead.
Write to Ian Talley at [email protected]

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