Shell to build world's first oil sands carbon capture project in Canada

European oil and gas giant Royal Dutch Shell Plc said yesterday that the company would proceed with the world's first oil sands carbon capture and storage (CCS) project in Alberta, Canada.

The flagship project named Quest will be built on behalf of the joint developers of the Athabasca oil sands project, Shell, US oil giant Chevron Corp and Canada's Marathon Oil Corp with the supports of the federal and provincial governments, Shell said in a statement.

Shell's chief executive officer Peter Voser said, ''CCS is critical to meeting the huge projected increase in global energy demand while reducing carbon dioxide (CO2) emissions.''

''If you want to achieve climate change goals, CCS has to be part of the solution. We are helping to advance CCS technology on a number of fronts around the world, but Quest will be our flagship project,'' he further stated.

Quest, which is expected to cost around C$1.35 billion, will get a substantial chunk of the investment through government funding. Alberta government will contribute C$745million while the federal government will add another C$120 million, leaving the balance C$485million for the industry.

According to some estimates, the actual investment by the industry for the project could be substantially lower, as Alberta's legislation provides a carbon credit of C$15 per tonne of CO2, and Quest is eligible for a two-for-one credit. Moreover, it is widely expected that the government could substantially increase the cost of carbon in the coming years.