StatoilHydro targets 2014 carbon capture start

STAVANGER, Norway Aug 27 (Reuters) - A power plant in Mongstad would capture 2.5 million tonnes of carbon dioxide annually from 2014, Norwegian oil and gas producer StatoilHydro (STL.OL) said on Wednesday.

The government has said that final Mongstad investment decisions were due in late 2008.

Carbon Capture and Storage (CCS) technology may cut the contribution of coal and gas-fired power plants to global warming by trapping and burying the greenhouse gas carbon dioxide (CO2), but it is untested on a commercial scale.

The Mongstad project, now a research centre, is seen as one of the first to start full scale operation in 2014.

"The research lab will lead us to a full scale CCS plant," Alexandra Bech Gjorv, the senior vice president of new energy with StatoilHydro.

"Mongstad will capture 2.5 million tonnes of CO2 every year when it start full scale operation in 2014." She did not specify the portion of CCS for the 280 megawatt plant.

Although CCS is seen as a key technology, some projects have been cancelled and none exists anywhere yet to demonstrate the technology fitted to a large-scale power plant, partly because of an added cost of around 1 billion euros ($1.55 billion) per plant.

StatoilHydro's Gjorv said the cost at Mongstad might be higher than International Energy Agency figures, citing the agency's 2006 estimate of $25-110 per tonne of CO2 captured.

"Our concern is the cost will be higher.

According to a 2006 agreement StatoilHydro will take a 20 percent equity stake in the project. (Reporting by Ikuko Kao; editing by Gerard Wynn)