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First agreement for UK carbon dioxide storage

17 July 2012

Ocean waves

Today we can announce the UK's first agreement for lease (AfL) for the permanent geological storage of carbon dioxide.

The AfL has been signed with the Peterhead CCS Project (Shell UK Limited and SSE CCS Limited) at the offshore depleted Goldeneye gas field, located in the North Sea 65 miles from St Fergus, north east Scotland in petroleum licence blocks 14/29a, 20/4b and 20/3b.

The Goldeneye storage project is linked to plans to capture carbon dioxide from the Peterhead power plant, which is seeking funding under the UK Government's commercialisation programme for carbon capture and storage (CCS).

As an integral part of this commercialisation programme, in early 2012 we introduced a process for project developers to apply for AfL over potential storage sites. We are the owner of the storage rights on the UK continental shelf and AfLs provide exclusive time-limited options that enable developers to progress their CCS projects through to FID. To date we have received several requests for options over sites and seven of these have been the subject of public notices.

We see CCS as an important technology in helping manage climate change and security of energy supply issues as part of the various ways of continuing to deliver power and industrial processes to the UK with low or zero emissions. The conclusion of this first AfL with Shell, as operator of the Peterhead CCS Project, is an exciting first step for the fledgling industry and we hope to announce more such agreements from summer 2012 onwards. Much work still has to be done to progress CCS and in particular transport and storage infrastructure. We look forward to working with those developers who are successful in the UK Government's commercialisation funding competition to begin the delivery of this infrastructure.