ConocoPhillips, Shell and Scottish and Southern Energy (SSE) will begin engineering the design of the world's first industrial scale project to generate 'carbon-free' electricity from hydrogen. The planned project - producing 'decarbonised' fuel and using it for power generation - would convert natural gas to hydrogen and carbon dioxide gases, then use the hydrogen gas as fuel for a 350 MW power station, and export the carbon dioxide to a North Sea oil reservoir for increased oil recovery and eventual storage. The project would reduce the amount of carbon dioxide emitted to the atmosphere by the power generation by over 90 percent. While each of the component technologies making up the project is already proven, their proposed combination in this project is a world first.

The project would be located close to Peterhead in north-east Scotland. A newly built reformer plant would convert up to 70 million cubic feet of natural gas a day into carbon dioxide and hydrogen and the hydrogen would be used as fuel for a new 350MW combined cycle gas turbine power station.

The carbon dioxide generated by the reformer would be exported through existing pipelines to the mature BP-operated Miller oilfield, 240 kilometers offshore, where the platform would be adapted to allow for injection of the gas into the reservoir four kilometers below the seabed to increase oil recovery from the reservoir and for storage.

The Miller field is currently due to cease production in 2006/7 but the injection of carbon dioxide into the reservoir could increase the amount of oil extracted from the field, potentially allowing the production of up to 40 million additional barrels of oil and extending the life of the field by 15 to 20 years.

Initial engineering feasibility studies into the project have already been completed. The partners will now carry out further detailed front-end engineering design work with the aim of confirming the economic feasibility of the scheme. This work would be expected to be complete in the second half of 2006. This will allow a final investment decision to be taken next year, subject to which the project would then be expected to commence operation in 2009.

The full project would require total capital investment of some USD$600 million. It would also require an appropriate policy and regulatory framework which encourages the capture of carbon from fossil fuel-based electricity generation and its long-term storage.

When fully operational, the project would be expected to capture and store around 1.3 million tons of carbon dioxide each year and provide 'carbon-free' electricity to the equivalent of a quarter of a million UK homes.

"This is an important and unique project configured at a scale that can offer significant progress in the provision of cleaner energy and the reduction of carbon dioxide emissions," said Lord Browne, BP Group Chief Executive.

Browne added that if the process was applied to just five per cent of the new electricity generating capacity that the world is projected to require by 2050, such projects would have the potential to reduce global carbon dioxide emissions by around one billion tons a year.