Blow to CCS hopes as Norway cancels Mongstad project

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The Norwegian government has decided to terminate the full-scale carbon capture project under development at Mongstad in what it describes as “a change in direction” in its efforts to promote carbon capture and storage. Instead, some of the funding that was to be spent on the project will be directed into a much vaguer-sounding “CCS programme”. The government says it still aims to have a full-scale CCS project up and running in Norway by 2020.

The decision came hard on the heels of a highly critical report published last month by the Office of the Auditor General. It concluded that “the complexity of implementing CCS was underestimated in 2006” when – with much fanfare – the Norwegian government and Statoil embarked on the Mongstad project.

Auditor General Jorgen Kosmo said “substantial cost increases” had occurred, entailing “a risk that the benefits will not be in proportion to the financial investment”. Kosmo noted that independent quality assurance of the technology centre at Mongstad had not been carried out and added that Statoil had been given “too few incentives for ensuring efficient implementation of the full-scale project”.

The news will come as a disappointment to people in the natural gas industry who were hoping that the Mongstad full-scale project would contribute to demonstrating the viability of CCS in gas-fired power generation. The project would have involved constructing carbon capture facilities at a gas-fired combined heat and power (CHP) power station on the site of the Mongstadt refinery.

Disappointing but not surprising: That said, the decision does not come as a complete surprise. The project has turned out to be a lot more expensive than was envisaged, while carbon prices in Europe have collapsed to the point of irrelevance. Moreover, the refining industry in north-west Europe is having a hard time and the development of the capture facility was about to enter a phase that would have entailed a high spending commitment.

Speaking just a few days before the United Nations’ Intergovernmental Panel on Climate Change (IPCC) released the first part of a major climate change assessment report – which states that it is almost certain that human activities are leading to changes in climate – Norway’s energy minister Ola Borten Moe said:

Too risky: “CCS is essential to combat climate change. We have made considerable progress in developing the necessary technology. The government now reinforces its commitment. A full-scale carbon dioxide capture facility is still the objective. The government has, however, concluded, after careful consideration, that the risk connected to the Mongstad facility is too high and has for that reason decided that the work on the full-scale facility will be discontinued.”

Environment minister Bård Vegar Solhjell added: “We are at a crossroads . . . The government has concluded to consider other possible projects that can be realised within 2020, as agreed in the bi-partisan climate agreement in the Norwegian Parliament. We have gained valuable experience at Mongstad, which can be of use in other projects.”

Statoil and the Norwegian government announced in 2006 that they had agreed to establish “the world’s largest full-scale CCS project in conjunction with the projected CHP plant at Mongstad”. To reduce technical and financial risk, the project was to proceed in two stages. The first was due to be in place by 2010 when the CHP plant was due to start up, and would capture 100,000 tonnes/year of carbon dioxide. The second, full-scale carbon capture stage, was due to be in place by the end of 2014.

Mongstad refinery

The CHP power station at the Mongstad refinery has a heat capacity of 350 MW and an electricity capacity of 280 MW. The full-scale carbon capture project would have removed at least 85% of its carbon dioxide emissions.

“Moon landing”: The following year, the country’s prime mister, Jens Stoltenberg, described the project as Norway’s equivalent of a “moon landing”.

In the same year, the Ministry of Petroleum signed a co-operation agreement with DONG Energy, Hydro, Shell, Statoil and Vattenfall for investment in a technology centre that was the form the first phase of the project.

However, the Technology Centre Mongstad (TCM) was not launched until May 2012. By then, the partners in the project were Statoil, Gassnova, Shell and Sasol. Meanwhile the costs of the TCM had escalated to NOK 5.8 billion (around US$1 billion) and it was starting to become apparent that the future of the second phase looked doubtful – largely because of the weakness of carbon prices.

The TCM, says the government, “will be continued and strengthened” because it is “one of the world’s largest and most advanced”. It will provide a further NOK 400 million of funding for the centre over the coming four years. A further NOK 100 million over two years will go to Norway’s Climit research programme.

"The work carried out on carbon capture and storage (CCS) at Mongstad has been extensive and demanding,” says Eldar Sætre, Statoil’s executive vice president for marketing, processing & renewable energy. “But it has also provided us with some important lessons and given us new knowledge of capture technology. We have also had the opportunity to develop a toolbox for measuring and analysing emissions. Even though the full-scale project will now be concluded, it is important for Statoil that all we have learnt will be of benefit to the industry in its continuing work on CCS."

CCS leader: Statoil is one of the leading companies in CCS technology. The carbon storage at Sleipner was the first large-scale storage in the world. In addition, the company has been involved in full-scale capture and storage at In Salah in Algeria, as well as on the Snøhvit field in Norway.

Besides its Mongstad activities, the company is also involved in research projects devoted to the development of carbon capture technology, which include storage.

“The experience gained at Mongstad indicates that it is necessary to intensify the work being done to develop the technology and reduce the cost involved in so doing. said Sætre. “In Statoil we will press on with our technology development efforts in this area."

By Alex Forbes

(Photo courtesy of Statoil. The small photo was taken by Helge Hansen while the large one was shot by Øyvind Hagen.)

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