Shell carbon-capture project gets Alberta nod

CALGARY, Alberta Wed Jul 11, 2012 6:48pm BST

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CALGARY, Alberta (Reuters) - A Canadian carbon-capture and storage project backed by Royal Dutch Shell Plc (RDSa.L) was approved by regulators in Alberta on Wednesday, though the company must agree to a number of conditions before the project can proceed.

Alberta's Energy Resources Conservation Board said Shell's Quest project, which will capture carbon dioxide from its oil sands upgrader near Edmonton, Alberta, and inject the gas into the ground, is in the public interest.

The project would be the first of its kind for the oil sands, the world's third-largest crude reserve behind Venezuela and Saudi Arabia. Oil sands projects, particularly upgraders that convert bitumen stripped from the sands into synthetic crude oil, emit millions of tonnes of carbon dioxide and such projects are seen as a way to improve their environmental performance.

The board attached 23 conditions to the approval, with most of those related to data collection, analysis and reporting.

Shell said it welcomed the approval, however the company and its partners in the Athabasca Oil Sands Project are still completing studies on the feasibility of the project and do not expect to make a decision on whether to proceed until later this year.

"This is a really important and exciting milestone for the project and takes us one step closer to implementing the first CCS project for an oil sands operation," John Abbott, Shell's executive vice-president, heavy oil, said in a statement.

The project could capture as much as one million tonnes of carbon dioxide annually, which Shell says is the equivalent of taking 175,000 cars off the road.

Shell has a 60 percent stake in the Athabasca Oil Sands Project, which includes a mine and a 255,000 barrel per day upgrader. Marathon Oil Corp (MRO.N) and Chevron Corp (CVX.N) each have a 20 percent share.

(Reporting by Scott Haggett; editing by Sofina Mirza-Reid)

(This story changes number of conditions in fourth paragraph and bullet point to 23 from 32)

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