2Co Energy Ltd., a British carbon emissions reduction company owned by the private equity group TPG Capital, acquired Powerfuel Power Ltd. and its Hatfield carbon capture and storage project in northern England.
The South Yorkshire complex will be renamed the Don Valley Power Project and generate 900 megawatts of low-carbon electricity from 2015 with CCS technology fitted to it, London- based 2Co Energy said today in an e-mailed statement.
Powerfuel Power's parent company Powerfuel Plc went into administration in December and 2Co was appointed preferred bidder for the company in March. KPMG Europe LLP acted as advisers to the sale. Terms weren't disclosed.
Don Valley will capture as much as 5 million tons of carbon dioxide a year for storage beneath the North Sea, according to the statement. The U.K. government has said it will fund four of the projects that demonstrate CCS technology, which siphons smokestack emissions for storage underground, as it seeks to cut fossil-fuel emissions linked to climate change.
The project, in partnership with National Grid Plc, won a 180 million-euro ($260 million) grant in December 2009 under the European Union's European Energy Program for Recovery. 2Co Energy will provide the financial guarantees that the European Commission requires for a 45 million-euro pre-financing payment to be made, according to the statement. That will enable the grant money to be used to progress the project, 2Co said.
Among Most Advanced
The project is among the most advanced CCS projects in the world, according to 2Co. "The political will to make this project happen is considerable," Lewis Gillies, chief executive of 2Co and former BP Plc executive, said in the statement. The project also applied for funds under a further program run by the EC to support CCS and renewable technologies, the New Entrants' Reserve 300.
Today is the deadline for when member states must submit eligible projects to the European Investment Bank, which is helping implement the initiative, for further assessment.
The National Grid and 2Co Energy will examine two options for storing the CO2 in the next year or so, according to the statement. 2Co Energy will evaluate the potential for enhanced oil recovery in the central North Sea. That technology boosts the amount of oil that can be extracted from fields by injecting CO2 into mature reserves to thin out deposits, making removal easier and prolonging the lifespan of fields.
"The potential for using CO2 for Enhanced Oil Recovery could help meet U.K. fiscal needs as it would bring access to taxation revenue from extra North Sea oil production and significantly reduce the overall cost of CCS to the U.K.," Gillies said.
CCS Cluster
The National Grid, owner of the electricity transmission network in England and Wales, will focus on saline formations in the southern North Sea that could be used for 2Co's project or future projects, according to the statement.
Don Valley has a vital role in developing a CCS "cluster" in the region, Chris Train, National Grid's network operations director, said. The Humberside area in northern England has a number of power stations and heavy industry that could share potential storage sites, according to a separate statement from the National Grid.
The National Grid already began work on designing a carbon dioxide pipeline linking the sites, which emit about 60 million tons of CO2 per year. 2Co enlisted Talisman Energy Inc. to study the potential for enhanced oil recovery in the North Sea and CO2 storage, it said.
