Abby L. Harvey
GHG Monitor
7/11/2014
U.K-based 2Co Energy has entered into negations to sell its Don Valley Carbon Capture and Storage project to Norwegian company Sargas for “an undisclosed sum,” according to a company release. The project is a new-build 650 MW integrated gasification combined cycle plant planned to be built in South Yorkshire that would capture roughly 5 million tonnes of CO2 annually for storage. 2Co Energy previously estimated that the onshore portion of the project would cost roughly £3 billion ($4.8 billion), and the offshore infrastructure, including a 250-mile pipeline, would cost another £2 billion ($3.2 billion). The project had been one of the most promising in Europe until the U.K.’s Department of Energy and Climate Change (DECC) denied the project funding under its CCS demonstration contest in 2012. Because of this, the project, which had been the top seed in the first round of the European Commission’s New Entrants Reserve 300 program, was ineligible for that funding as well, leaving the project with an uncertain financial future.
While the project has had troubles securing funding through other programs, it is the only CCS project in the U.K which received a grant from the European Union’s European Economic Program for Recovery (EEPR). That grant totaled €180 million and has been “essential in funding the project to the point where the final investment decision will be made,” according to the release. This funding made the project an attractive acquisition for Sargas, said Chief Executive Trevor Nash in the release. “Sargas has CCS technology ready to be deployed at an industrial scale that is more energy efficient and, as a result, lower cost than all currently available alternatives. We have looked at potential CCS projects globally and have been attracted to the U.K. by the advanced stage of thinking on the policy support for renewable and low-carbon energy. [Don Valley Power Project] is unique in having both EEPR funding to help the project through the development phase and the prospect of a Contract for Difference from the UK government to support the operation of the plant. It’s an exciting project we will press forward with urgently.”
Project Has Reached Several Milestones
Regardless of the difficultly the project has had securing financial backing, it is at an advanced state of development, according to a 2Co Energy release that states that £60 million has already been invested in the plant and that several milestones have already been met, including the approval of the plant’s planning permission and an agreement for the plant to connect to the national grid. According to the release, the plant will feasibly be ready to come into operation “immediately after the projects in the government’s CCS Commercialization program.” This would put it on-line after Drax’s White Rose project, which was awarded €300 million funding from the second round of the NER 300 program this week. The Don Valley project would be well situated to use the same CO2 transport and storage infrastructure as White Rose, providing significant cost saving.
The sale is expected to be finalized by the end of the summer, the release said. Following the sale, 2Co Energy will be pursuing enhanced oil recovery prospects elsewhere, Lewis Gillies, Chief Executive at 2Co Energy said. “2Co’s core business is Enhanced Oil Recovery (EOR), we have a program of investment in the U.S. that is at an advanced stage of development and we continue to develop EOR options in the North Sea using our unique expertise. If a number of CCS projects some to fruition EOR will become a reality for the U.K.,” Gillies said.
