New report reveals potential for one billion extra barrels of oil
Combining the storage of carbon and using it for enhanced oil recovery in some of Scotland’s key oil fields could generate up to an additional £2.7bn GVA for the Scottish economy, according to a new report.
The report also suggests that using CO2 to increase oil recovery rates from some fields could help to create and sustain many hundreds of oil and gas jobs.
The report, Economic impacts of CO2-enhanced oil recovery for Scotland, which has been developed for Scottish Enterprise, found that such positive economic impacts could be significantly increased if opportunities in the supply chain were effectively utilised.
It identifies 19 oil fields on the UK Continental Shelf (UKCS), with the technical potential for this type of project, which could lead to an additional one billion barrels of oil being recovered as well as helping to store significant volumes of CO2.
If fully exploited, it is estimated projects in these key oil fields could contribute 15 per cent of all UKCS oil production by 2030.
The report’s financial modelling also suggests that additional tax receipts generated by the additional extraction could be used to offset initial support for CCS, and help make this more competitive with other low carbon power generation technologies.
The report has been developed for Scottish Enterprise by Element Energy with Dundas Consulting and the Institute of Petroleum Engineering at Heriot Watt University.
It sets out a number of potential actions that could be considered to help support the development of CO2 Enhanced Oil Recovery.
Energy Minister Fergus Ewing said: “With more than half of the value of the North Sea’s oil and gas reserves yet to be extracted, up to 24 billion recoverable barrels with a potential wholesale value of £1.5 trillion, oil and gas will remain an enormous economic resource for decades to come.
“Carbon capture and storage technology implemented on a commercial scale would drive a significant reduction in carbon emissions from fossil fuels, increasing our security of supply, and presenting enormous opportunities for Scotland.
“Maximising oil recovery will lead to huge gains for Scotland – recovering just one per cent more oil could lead to an increase of £22 billion in the total oil recovered. That is why the Scottish Oil and Gas strategy, developed by industry, the Scottish Government and Scottish Enterprise, explores further ways of maximising recovery.
“Oil and Gas are essential feed-stocks for much more than just energy – we know chemicals, plastics, pharmaceuticals and fertilisers are all oil derived products – and this report, which looks at ways of increasing the amount of oil recovered, while at the same time locking away carbon dioxide, shows how innovation in the oil and gas sector can continue to create jobs and growth for years to come.”
David Rennie director of oil & gas, thermal generation and CCS at Scottish Enterprise said: “This report provides strong evidence of the significant economic potential in developing Carbon Capture and Storage on the UK Continental Shelf, particularly when combined with enhanced oil recovery techniques.
“Our world-leading oil and gas sector means we already have the infrastructure and skills in place in Scotland to exploit this potential, which was highlighted in the recently launched industry-led Oil & Gas strategy for Scotland.
“We will be working closely with industry, key stakeholders and other partners to explore this potential and ensure we take full advantage of the significant economic opportunities we know this activity represents.”
Shell and SSE looking for the £1bn promised for CCS by Westminster
Shell and Scottish and Southern Energy have said that they want to develop new CCS (carbon-capture and storage) technology at Peterhead power station – if they can get the funding for it.
The UK government has promised £1bn to develop the technology, which will capture emissions from power stations and bury them under the sea bed. A proposed pilot project at Longannet in Fife was cancelled last month due to the cost, which the operators fol Longannet, Scottish Power, estimated as £1.5bn. The UK government decided £1bn was the limit, and pulled the plug on the project.
CCS involves capturing and liquefying CO2 emissions then pumping them via pipeline into to depleted oil and gas fields under the sea bed.
Longannet faced some disadvantage in being further from suitable storage sites, with the need for expensive pipeline construction. The Peterhead plan involves pumping the CO2 to the Shell-operated Goldeneye gas field using, as far as possible, existing pipeline infrastructure.
First Minister Alex Salmond welcomed the new agreement as an ‘important step forward for the development of CCS in Scotland’ and said that it was important lessons were learned from the failure of the Longannet project.
Dr Richard Dixon, director of WWF Scotland, said: “The Peterhead carbon capture proposal has a lot going for it. The fact that another energy company is now on board must confirm this scheme as the front runner for the government’s £1bn test project.”
Friends of the Earth Scotland’s chief executive Stan Blackley said that CCS should not be an excuse for developing new coal and gas-fired power, and should only be developed in order to be “retrofitted” to existing plants. Mr. Blackley’s comment is timely as today North Ayrshire Council threw out Ayrshire Power’s controversial plan for a new coal fired plant with experimental carbon capture and storage technology at Hunterston.
Plans for other CCS projects in Scotland must be urgently accelerated
The future development of carbon capture and storage (CCS) technology in the UK has been left up in the air today following the announcement that the UK Government and ScottishPower have failed to agree terms for a large-scale trial at the Longannet coal-fired power station, in Fife. Longannet was in line for a £1bn grant as the only finalist left a UK government CCS competition which has been running since 2007.
Dr Richard Dixon, Director of WWF Scotland said:
“This news is massively disappointing and threatens Scotland’s, and the rest of the UK’s, ambition to be at the forefront of developing this new technology. If technical and economic hurdles can be overcome CCS has the potential to help reduce emissions at thousands of coal power stations around the world. However, almost four years after launching its funding competition, plans for CCS in the UK have descended into farce. Four years have effectively been wasted in the battle to tackle climate change.
“The UK Government’s decisions to roll forward the £1bn competition fund to fund other CCS projects is welcome but the process for identifying these must be urgently accelerated. Lots of valuable research and planning has been done around the Longannet proposal, which could put Scotland in pole postion to have a CCS scheme at the existing gas-fired power station at Peterhead or the recently consented gas-fired power station at Cockenzie.
The environmental group said today’s announcement had big ramifications for plans to build new coal-fired power stations. Dr Dixon added:
“Even a £1bn sweetener was not enough to make the economics of running a coal-fired power station in the coming decades stack up. This must surely be the final nail in the coffin for the proposal at Hunterston which has never made economic or environmental sense.”
A report by WWF previously found Longannet power station to the best value option for UK Government trials to capture carbon emissions.  The environmental group warned that some of the other sites being considered would result in vastly higher carbon emissions, actually increasing emissions instead of reducing them.
An exchange at Prime Minister’s Questions today:
Mr. Speaker, given the importance of carbon capture and storage both as a way of helping reduce our carbon emissions and also as an exportable technology to help rebalance the economy will the prime minister now put his words into action and step in to ensure that the Longannet demonstration project goes ahead?
What I can say to the honourable gentleman is that the funding we set aside for carbon capture and storage is still there. That funding will be made available. Clearly the Longannet scheme isn’t working in the way that they intended, but the money from the government – the support from the government – for this vital technology is there.
The Energy Secretary Chris Huhne confirmed later in the afternoon that the Longannet scheme was not going ahead. He said that the length of pipeline needed for Longannet and the distance from reservoirs made the scheme unviable.
‘Clean Coal’ proposal receives a record number of objections.
The proposed new coal fired power station on the Ayrshire coast at Hunterston has attracted more formal objections than any other development in the history of the Scottish planning system, with over 20,000 people having now registered their opposition. A large proportion of the objections come from people living in North Ayrshire.
Carbon capture and storage technology, if applied to all the emissions frm the new station, could theoretically ensure that up to 90% of CO2 emissions are captured instead of being released into the atmosphere. Howver, the plans for the start-up are much more modest with only 15% of the Carbon Dioxide (CO2 ) being removed – and it is not clear yet how even this negligible figure wouold be achieved.
Aedán Smith, Head of Planning and Development at RSPB Scotland, said: “I think these figures demonstrate the strength of public feeling against the building of a new Hunterston power station, and the level of local opposition is clear to see. We hope that the views of local people will be taken into account when North Ayrshire Council considers its position on the proposals over the next few weeks”.
Dr Richard Dixon, Director of WWF Scotland said: “The area has had enough uncertainty about energy development. The huge public opposition shows that this application should be turned down, especially as we don’t believe it will be built should it be given the go ahead. In order to make carbon capture on coal work, even ScottishPower would need over £1bn at Longannet, making it highly improbable Ayrshire Power will be able to build this unpopular station or find a buyer for the site.”
Stan Blackley, chief executive of Friends of the Earth Scotland, said: “Given the huge number of people who have objected, local Councillors and Scottish Ministers would be foolish to ignore them. Scotland does not need another dirty coal-fired power station and the plans for this one should be consigned to the dustbin forthwith.”
More than 30ha of a coastal wildlife site used by tens of thousands of wintering water birds – the largest such site in Ayrshire – could be completely destroyed if the new power station is built.
Tim Cowen co-chair of Communities Opposed to New Coal at Hunterston (CONCH), added: “CONCH will be giving evidence to North Ayrshire Council at a pre-determination hearing on October 24. North Ayrshire Council will be meeting on November 9 to decide on whether or not to support Ayrshire Powers plans. If allowed to proceed, Ayrshire Powers plans will have a devastating impact on our health, environment and economy. It is vital that the Council put the interests of their constituents ahead of big polluting business. We are calling on councillors to give a strong signal to the Scottish Government and “Say no to dirty coal”.
North Ayrshire Council will hear views from objectors and the applicant on Monday 24 October at Cunninghame House, before taking a decision on their position on the application on Wednesday 9 November.