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Shell Gets $876 Million for Canadian Carbon Capture Project

By Ehren Goossens and Jeremy van Loon – Jun 24, 2011 9:46 PM GMT+0100

Royal Dutch Shell Plc (RDSA) will receive C$865 million ($876 million) from the governments of Alberta and Canada to fund a carbon capture and storage project.

Shell and its partners will receive the money over 15 years, based on meeting certain performance targets, according to a statement today on the Government of Alberta’s website. The province of Alberta will contribute C$745 million and Canada will provide the remainder.

Shell’s Quest project would be the first oil-sands operation to capture the greenhouse gas for an upgrading plant, Shell said. Development of Canada’s bitumen reserves has contributed most of the nation’s increase in carbon emissions since 1990 when output was supposed to begin to decline under the Kyoto Protocol.

“This is the second of four grants finalized by the Alberta government for CCS, so the committed funds are starting to flow to developers,”said Cheryl Wilson, carbon capture and storage analyst at Bloomberg New Energy Finance in Washington.

“Quest is Shell’s main carbon capture project after its Barendrecht project near Rotterdam was canceled in November,” Wilson said. The Canadian authorities pledged their support for the project in October 2009.

Alberta has committed C$2 billion to fund four carbon capture and storage projects including Quest, which it says will reduce greenhouse gas emissions by 5 million tons a year starting in 2015.

Slowing Carbon Emissions

Alberta, home to Canada’s oil and gas industry, is counting on carbon capture and storage technology to help slow its output of the gas amid criticism from environmental groups and politicians in the U.S. and the European Union. Greenpeace has said the technology is too expensive to rely on for reducing carbon output on the scale needed to tackle climate change.

Shell and its competitors in the oil and gas industry are not only counting on the technology to allow them to continue exploiting fossil fuel reserves, they also expect governments to help pay for development of carbon capture and storage.

“CCS is recognized as one of the most promising technologies to reduce greenhouse gas emissions from fossil fuels,” said John Abbott, Shell’s executive vice president of Heavy Oil in today’s statement. “Government support in this important demonstration phase is essential.”

To contact the reporters on this story: Jeremy van Loon in Calgary at [email protected] Ehren Goossens in New York at [email protected]

To contact the editor responsible for this story: Will Wade at [email protected]

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