BP buys stake in UK carbon capture project

Harbour Energy scheme aims to meet up to a third of Britain’s annual target

The Viking project will repurpose depleted gasfields off the Humber coast © AP

David Sheppard in London APRIL 11 2023

BP has acquired a 40 per cent stake in the UK’s Viking CCS project from Harbour Energy as the government looks to accelerate plans to develop carbon capture and storage.

The Viking project aims to meet up to a third of the UK’s annual target of capturing 30mn tonnes of carbon dioxide by 2030, by repurposing old depleted gasfields off the Humber region coast. BP’s own CO₂ emissions in its upstream oil and gas production totalled 307mn tonnes in 2022.

There are also plans to ship in additional CO₂ emissions from other parts of the UK and abroad through the port of Immingham on England’s north-east coast.

BP’s investment provides significant backing for a project that is among the leading contenders for the government’s next phase of approvals under its Track 2 carbon capture development process.

The oil major will absorb 40 per cent of the total costs, according to a person familiar with the matter, although terms of the overall deal were not disclosed.

BP is already leading the East Coast Cluster as operator of the Northern Endurance Partnership on Teesside and the Humber, which is targeting cutting 23mn tonnes of CO₂ emissions a year by 2035.

Harbour, the largest oil and gas producer in the UK North Sea, will operate the Viking project and retain a 60 per cent stake. But investing in Viking would give BP an additional back-up in its UK CCS operations, as well as opening up options such as shipping in CO₂ from overseas — a potentially higher margin proposition.

Anja Dotzenrath, head of gas and low carbon energy at BP, said the company was “excited” about the project’s potential for “helping to decarbonise the UK” and as “a future CO₂ shipping destination”.

BP is looking to expand its investments in green technologies and renewable energy, although CEO Bernard Looney has come under pressure from investors to show technologies such as offshore wind and CCS can provide competitive profit margins when compared with oil and gas.

Having reduced the company’s focus on the North Sea in previous decades BP has started to invest more in the UK again, focusing on offshore wind and carbon capture as part of its energy transition strategy.

The UK government said in March that the Viking project and the Acorn project in Scotland were seen as “best placed” to be appointed in its Track 2 process, joining the East Coast Cluster and the Hynet North West projects that were selected in 2021 in the first round.

The government’s deadline for other projects beyond Viking and Acorn to submit proposals is April 28, otherwise, the two will be automatically selected.

“Our entry into Viking CCS demonstrates BP’s commitment to Backing Britain through substantial investment and helping the country achieve its net zero goals,” said Louise Kingham, BP’s head of country for the UK.

Harbour Energy’s chief executive Linda Cook, who has been a fierce critic of the UK government’s windfall tax on oil and gas producers, said the Viking project could “unlock billions of pounds of investment across the full CCS value chain”.

Source :

https://www.ft.com/content/c71bfe7a-c7c8-4c6f-90c7-15ccdf2e2da8