Carbon Capture and Sequestration (CCS)

Implications: The Miller Field has been in production since 1992 and is almost depleted. EOR was added to the field in 1996, using alternating water sweep and gas re-injection. A dedicated pipeline system exists between the Miller platform and Peterhead Power Station with no third party use, and gas re-injection exists on the production platform. If CCS is not viable without subsidy for this project, what chance has CCS of being commercially viable at other sites where infrastructure has to be built and where there will be no revenue stream from EOR? Is it wrong to provide government assistance for CCS on a natural gas project, and would any public funds be better spent assisting CCS on a more carbon intensive coal-fuelled project? Does existing infrastructure assist CCS or does it hinder the project economics?

Analysis:  BP have been working on this project for more than 2 years, and have always said it needed government assistance to be successful. BP's Partners in the Miller Field Shell and ConocoPhillips dropped out of the project many months ago, and Scottish and Southern Energy (SSE) who operate Peterhead Power Station are in Partnership with BP and Rio Tinto joined the consortium earlier in May.

SSE have 2300MW of installed generation plant at Peterhead, but can only despatch 1524MW due to transmission constraints. Why would SSE want to invest in adding 475MW of new generation to the already 775MW of stranded assets.

BP have failed to attract any third party business to the Miller infrastructure, despite other pipeline systems in that region of the North Sea attracting significant additional fields to existing infrastructure. BP now find the Miller infrastructure is empty and will be faced with decommissioning costs if no extra business can be found.

If this CCS project is not viable having considered an extra 57 million barrels of EOR, use of redundant infrastructure and gas re-injection equipment, and delaying decommissioning costs for up to 20 years. Then what are the chances for CCS project where there are far less commercial opportunities?