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Energy Minister says plans afoot to revive “corpse” of Peterhead CCS project

Peterhead Power Station
Peterhead Power Station

Attempts are being made to revive the “corpse” of the carbon capture and storage (CCS) project which had been destined for Peterhead, Scotland’s energy minister said yesterday.

But Fergus Ewing said none of the other options being mulled would be easy to put into practice.

Plans to build the CCS plant were derailed in November following the UK Government’s decision to cut £1billion worth of funding for the technology.

The move was announced on the same day Chancellor George Osborne delivered his spending review.

Speaking at an event hosted by Robert Gordon University (RGU) and the Royal Institution of Chartered Surveyors, Mr Ewing branded the UK Government’s decision to ditch the project tremendously disappointing and politically motivated.

Mr Ewing said joint venture partners Shell and SSE had put a huge amount of time and money into the project and that any serious kinks had been ironed out.

He said it was difficult to see how climate change could be dealt with without CCS technology and accused the UK Government of forfeiting the opportunity to become a pioneer in the field.

Despite the earlier snub, Mr Ewing said the people behind the project are still hopeful that the nuts and bolts can repackaged − in a kind of “Frankenstein” scenario − to get the ball rolling once more.

Mr Ewing said: “Those who were closely involved in the project are seeing if there is another option to revive the corpse. … We’re looking at other options but none of them are particularly easy.”

A spokesman for Norwegian oil major Statoil, which is behind a floating wind farm development off the north-east coast, said the firm was interested in CCS technology, but would not be drawn on whether it would get involved in a revitalized Peterhead project.

Mr Ewing also called for Mr Osborne to deliver additional tax boosts for the struggling oil and gas sector, which he said was unfairly judged in terms of the amount of tax revenue it generates.

He said “It’s sensible to judge the sector’s success not by tax but by the economic contribution it makes. No other sector is judged solely by the amount of tax it generates. You also need to look at things like the number of people employed and the number of businesses working.”

On taxation levels, he said: “Someone has said to me the days of ‘supernormal’ profits have gone. If that’s correct, then so should be the days of super taxation. Operators are asking me why they are not treated the same as any other sector. It’s time for George Osborne to listen to the industry.”

But Mr Ewing said there were still plenty of success stories in the North Sea, citing major developments being worked on by Maersk, BP and Statoil, and that he believes the sector can turn the corner.

He added: “The challenge now is for the industry to survive so that it can thrive. I believe it will survive and that it will start to strive within a relatively small number of years. Our efforts are geared towards that objective.”

The event at RGU, which looked at commercial practice and value creation in the energy sector, was one of two functions Mr Ewing spoke at in Aberdeen yesterday.

Later in the day he presented his views on the state of the energy sector to the Society for Underwater Technology at Aberdeen University’s Sir Duncan Rice Library.

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