Two out of four CO2 storage licenses awarded offshore Norway going to Equinor

Two out of four CO2 storage licenses awarded offshore Norway going to Equinor

The Norwegian Ministry of Energy has awarded four new exploration licenses related to CO2 storage on the Norwegian Continental Shelf (NCS) to six companies as part of the sixth call for CO2 storage on the NCS.

The exploration licenses are located in the North Sea, with two offered to Equinor, one to a group consisting of Vår Energi, OMV (Norge) and Lime Petroleum, and one license offered to a group consisting of Aker BP and PGNiG Upstream Norway.

The authorities reviewed applications from eight companies following the announcement of two suitable acreages in March.

The licenses are offered with a binding work program which includes mileposts that ensure fast and efficient progress or return of the areas if the licenses do not carry out the storage project.

“The awards are given to companies that have matured good, industrial plans. The interest for new storage space by several players in the industry, makes me optimistic for the future work of making CO2 storage one part of the solution to the worlds’ climate challenges,” said Norway’s Minister of Energy Terje Aasland

According to Hilde Braut, Assistant Director for New Industries, this is the highest number of offers that have been sent out simultaneously.

Equinor’s two licenses are referred to as Albondigas and Kinno, and are each expected to have the capacity to store around 5 million tons of CO2 per year when in operation, with the estimate further determined in the exploration phase.

Source: Equinor

The Norwegian company said it was expecting 4-8% real base project returns for its early phase CO2 storage business, and further value uplift potential when commercial markets are developed.

In terms of other efforts, Equinor is maturing a ship-based solution as well as a large pipeline to connect industrial emissions in Europe with storage opportunities on the NCS. The planned pipeline named CO2 Highway Europe will have the capacity to transport 25-35 million tons of CO2 per year from Belgium and France.

The Smeaheia storage license, awarded in 2022, is the anchor storage for this pipeline development and Albondigas and Kinno will be additional storage opportunities that can be connected.

Equinor is also about to complete the first phase of the Northern Lights CO2 transport and storage facility together with Shell and Total Energies, which will be ready to receive CO2 by the second half of this year.

“We see that demand for CO2 storage is increasing in several countries, and it is crucial to bring forward new CO2 storages quickly, so that we can offer industrial solutions that can support large scale decarbonisation of hard-to-abate industries in Europe,” said Grete Tveit, Senior Vice President for Low Carbon Solutions at Equinor.

“Scale-up of CO2 transport and storage is essential to meet the interest and demand for this type of services. Gaining access to more CO2 storage capacity aligns well with our ambition of having 30 to 50 million tons of CO2 transport and storage capacity per year by 2035.”

In the second awarded license, named Iroko, Vår Energi holds 40%, and OMV Norge and Lime Petroleum each hold a 30% share. The Iroko area has the potential to store up to 7,5 million tonnes of CO2 annually for at least 30 years, a total of approximately 215 million tonnes. 

The license is located northeast of the Vår Energi-operated Balder field and about 130 kilometers west of the coast from Haugesund. 

Before this, seven licenses were awarded for CO2 storage offshore Norway, six in the North Sea and one in the Barents Sea. Sval Energi, Storegga Norway and Neptune Energy Norway secured an exploration permit located east of the Sleipner Øst field in what was the fifth time acreage was awarded.

The Norwegian Ministry of Energy announced on June 6 that three new areas for CO2 storage are up for grabs, representing the seventh time acreage is being announced for CO2 storage on the NCS. Applications can be submitted until August 29.

Related Article