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Tue 28 Oct 2008 11:35 PM

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Abu Dhabi $3bn carbon capture project set for 2013

Masdar CCS project being developed by BP and Rio Tinto joint-venture first of its kind.

Abu Dhabi's ambitious $3 billion Carbon Capture & Storage (CCS) project will be operational by early 2013, allowing for enhanced oil recovery and providing alternative energy for power and transport, the project's developer said on Monday.

Abu Dhabi government-owned Masdar's CCS project, being developed by Hydrogen Energy, a joint-venture between BP and Rio Tinto, is the first commercial scale and countrywide scheme globally.

"When the project is commercially operational in the first quarter of 2013, the initial carbon capture will be around 2 million tonnes per year for use in Abu Dhabi's oilfields to enhance recovery," David Binnie, General Manager, Hydrogen Energy said during a conference.

"Every tonne of carbon dioxide injected can lead to an extra 2.5 to 3 barrels of oil," he said.

The project valued at up to $3 billion is currently in the FEED (Front end engineering & design) stage, which is being undertaken by the US company Foster Wheeler , he said.

Under the project, carbon dioxide will be captured from industries with major carbon dioxide emissions across the United Arab Emirates, and then transported via pipelines to storage sites near oilfields.

It is then injected into ageing oilfields for enhanced oil recovery.

"In the next stage, through a separation process, the hydrogen will be used for different things... power plants, hydrogen powered cars," Binnie said, adding that about 50 million tones of carbon dioxide will be captured during the project's life of about 25 years.

The project will be financed jointly by Masdar and Hydrogen Energy but the investment pattern will be finalized by next year, he said.

A joint venture company between the two will be set up locally shortly.

The potential demand for CCS is considerable worldwide and a "winning formula" for Masdar, said Binnie without elaborating about the expected revenues.

"There are ongoing negotiations and could well go on through next year," he said.

The prospects are plenty for oil and gas companies and contractors but profitability could be only marginal in CCS projects, said Gulshan Dua, Vice President, Chemicals and Petroleum Unit of Canada's SNC Lavalin which did the conceptual study for Abu Dhabi.

"There's no huge room for profits in CCS. Energy conservation and efficiency are the main drivers here. But the carbon credit market is just emerging," he said. (Reuters)

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