The multinational energy giant will help Queensland Government-owned power generator Stanwell and its subsidiary ZeroGen to demonstrate the viability of generating low emissions base-load electricity through integrating coal gasification with the capture and safe storage of carbon dioxide.
ZeroGen says while conventional coal-fired power stations burn pulverised coal with air to raise steam that is then used to generate electricity, gasification combines coal with a mixture of oxygen and steam under pressure to produce a clean synthesis gas (syngas).
It says the application of gasification on a large scale, when combined with CO2 capture and storage (CCS), can reduce CO2 emissions from coal-fired power plants to near zero levels.
ZeroGen director Gary Humphrys says Shell will assist the ZeroGen project during the phased test drilling program, which is currently being undertaken in the northern Denison Trough in central Queensland.
"The signing of this agreement will provide ZeroGen with access to the full range of Shell's intellectual property in the area of carbon capture and storage and the support services necessary to undertake our test drilling program," Humphrys said.
The test drilling is being undertaken to ascertain if the general reservoir properties in the area are capable of accepting CO2 and are regionally consistent.
Brisbane-based Sunshine Gas began initial drilling for the ZeroGen CO2 storage project in June.
Sunshine managing director Tony Gilby said at the time his company was pleased to be associated with Stanwell in the pioneering C02 storage and coal gasification trial project, especially within the context of Australia's current nuclear energy debate.
"The debate over nuclear power has effectively refocused attention on this country's need to develop other environmentally friendly, low-emission technologies for power generation using our abundant supply of fossil fuels," he said.
"Through this project, Stanwell is taking a global leadership position on the practical investigation of viable means for the safe and long-term sequestration of this environmentally damaging greenhouse gas."
Queensland Premier Peter Beattie says the drilling program will determine the geological suitability of rock formations in the Springsure-Emerald area for CO2 sequestration – the safe and secure storage of CO2 from the power plant in deep salt water aquifers.
"ZeroGen would be the first power generation project in the world to combine this sequestration with coal-based gasification, making it an initiative of national and international importance," Beattie said.
"Coal gasification is the cleanest method for converting coal's energy potential into electricity."
Stanwell has a range of power generation assets including coal-fired thermal, wind and hydro-electricity facilities in Queensland and other states. Its largest asset is based at Stanwell Energy Park, near Rockhampton, where it has proposed to build the power plant.
"If the drilling results are as expected, construction is due to start in the second quarter of 2008, with completion due in 2010," Beattie said. "The proposed demonstration facility will produce up to 100MW of electricity and has the capacity to capture and store up to 420,000 tonnes of carbon dioxide a year.
"The carbon dioxide would then be taken by pipe 220km to the saline aquifers deep underground near Emerald for safe storage."
Beattie says as part of the agreement, Shell will be offered up to a 10% equity position in the project.
He says the Queensland Government has earmarked $300 million from the Queensland Future Growth Fund to develop clean coal technology.
But in a low-key parliamentary inquiry in September, energy organisations delivered a body blow to the Australian Government's policies on carbon capture.
In submissions and evidence to the House of Representatives Standing Committee on Science and Innovation, companies and peak industry bodies warned that investment in geosequestration would not occur without an emissions trading system.
The Government has been advocating geosequestration as a way of fighting climate change without disadvantaging the Australian coal industry. But it refuses to plan for a greenhouse emissions trading system.
CSIRO told the inquiry that installing geosequestration at existing power stations would double the cost of electricity. Even with future improvements in the technology and installation from scratch in new power stations, geosequestration would still significantly increase the cost of power.
Industry agrees with the thrust of CSIRO's figures and is telling government it will not bear the extra cost unless compelled to do so.
Major Australian oil and gas explorer Santos told the inquiry it would not act on geosequestration without an emissions trading system.
"A viable carbon emission abatement trading system with a carbon dioxide price signal does not currently exist in Australia," the company said. "There is no economic incentive to consider geosequestration as a long-term business proposition."
Australia's Mining Monthly
