By KJETIL MALKENES HOVLAND
OSLO -- Norway is shutting down the Statoil-operated
Mongstad full-scale CO2 capture project, Oil Minister Ola
Borten Moe said Friday, ending the prestigious environmental project that outgoing
Prime Minister Jens Stoltenberg branded Norway's "moon landing"
The International Energy Agency -- the energy watchdog of
the Organization of Economic Cooperation and Development -- has
said that CO2 capture and storage from power plants fired by
oil, gas and coal will play a vital role in worldwide efforts
to limit global warming, contributing to about 20% of required
emissions reductions in 2050.
The Mongstad full-scale project was meant to capture CO2
from the nearby gas-fired power plant and refinery, and the government had
estimated the planning to cost NOK3 billion. The project is led
by Statoil, but the government pays all the costs.
The project has been both challenging and costly, and the
risks are now seen as too big to go through with it, the
"We must have a project we can stand for, so we can show
that this [technology] is good," Mr. Moe told the Wall Street
Journal in an interview. "When our assessment is that Mongstad
isn't such a project, it's the right thing to do
what we are now doing, taking the consequences."
The uncertainty about the CO2 capture project also increased
because the Western European refinery business is
struggling, the government said. This has hurt the margins at
Statoil's Mongstad refinery, one of the project's CO2
Statoil said it has no plans to shut down the refinery,
which ran a surplus in 2012 for the first time in years, and
was going through a cost savings program.
"The margins in the refinery market are challenging,"
Statoil spokesman Oystein Johannessen told the Wall Street
Earlier this week, the Norwegian Office of the Auditor
General slammed the lack of government control over the costs
of the Mongstad capture project, which includes a full-scale
CO2 capture project and a test center where companies Aker
Clean Carbon and Alstom are testing
different CO2 capture technologies.
The government said it has spent a total of NOK7.2 billion
on the project, but will continue to fund the test center in
coming years. The full-scale capture project ends in 2014.
"The government has spent NOK1.2 billion on full-scale
capture on Mongstad alone," Mr. Moe told an Oslo press
conference, adding that he still has the ambition to establish
a full-scale CO2 capture project by the end of 2020, giving no
"This is some of the worst political incompetence and [lack
of] will to control an oil company I've seen," said Frederic
Hauge of the Bellona foundation, an environmental organization that has
been a key advocate for CO2 capture technology. "I'm angry."
The reason the government allowed Danish company Dong Energy
to build the Mongstad gas power plant, in operation since 2010,
was that it had plans to capture the CO2 emissions and store them
underground. Nature and Youth, another environmental
organization, claimed that Statoil was never really interested
in the CO2 capture project.
"This should be the big moon landing and was the big environmental issue in 2005, but now
it will just be a pollution bomb that will spew out CO2 for
decades," said Silje Lundberg, leader of Nature and Youth.
Statoil said it hasn't been able to solve the technical
challenges with installing a huge, complex capture plant at a
refinery and gas heat and power
plant in full operation.
"We've had a binding deal, which we have taken most
seriously. We've worked dedicated and hard," said Statoil's Mr.
Johannesen, adding that the project "has been big and complex
and has met challenges."
Mr. Stoltenberg, who lost last week's national elections to
a center-right coalition headed by Conservative Erna Solberg,
was on a plane and wasn't immediately available for
Dow Jones Newswires