Barendrechters Stand Up to Shell Plan to Bury CO2 Under Town

By Fred Pals

April 20 (Bloomberg) — The Dutch town of Barendrecht has a message for Royal Dutch Shell Plc: Not under my backyard.

The oil company and the Netherlands government intend to build the first of a new generation of carbon-dioxide storage facilities in two depleted natural-gas fields in Barendrecht. The plan is to capture the emissions from a gasification hydrogen plant at Shell’s nearby Pernis refinery and then store the CO2 more than a mile below area homes, preventing the greenhouse gas from reaching the air and harming the environment.

“I don’t think this is the solution to the CO2 problem,” said 53-year-old resident Gerard van Gils. “Why do a project in a residential area and not offshore? The atomic bomb wasn’t tested under Manhattan. To me this means: Not under my backyard.”

Barendrechters like Van Gils say they’re concerned about safety and a possible drop in property values. Governments around the world want energy companies to store CO2 instead of releasing it, to combat global warming. The Netherlands aims to bury 30 million tons of CO2 by 2030 and is spending about 750 million euros ($980 million) in three years on CO2 reduction.

Carbon capture and storage, or CCS, involves extracting CO2 from power generation and industrial projects, compressing it and injecting it into depleted oil and gas fields or saline aquifers. The technology would allow prolonged use of coal for electricity generation while reducing greenhouse pollution.

“We are very confident about the safety of the project,” said Margriet Kuijper, CCS project manager at Shell. “Barendrecht is strategically important for Shell and for the Netherlands, as it is paving the way for the bigger projects.”

Environmental Assessment

An independent environmental assessment this month will determine whether the project at Barendrecht, on the outskirts of Rotterdam, addresses all concerns. The city council, which so far has opposed the plan, will deliver a final decision by June 29. That can still be overruled by the Dutch government, which commissioned the project.

In its preliminary finding, the council said public support was “lacking” and asked Environment Minister Jacqueline Cramer to halt the venture.

“This project is an experiment, and we don’t think that it is a good idea to have that in a densely populated area,” Simon Zuurbier, alderman of the city council, said in an interview. “It would be better to do it somewhere else.”

Negligible Risks

The Dutch Economic Affairs and Environment Ministries sought proposals for the project. Shell’s plan is to inject as much as 10 million tons of CO2 into the fields, the same amount of the gas created by heating one million modern houses over five years.

The fields are about 1,700 meters (5,577 feet) and 2,700 meters underground. Shell, Europe’s largest oil company, says the risks are negligible and within government standards.

The proximity of the refinery to the ageing gas fields and the existing pipelines make Barendrecht the ideal site for a trial project, The Hague-based Shell said.

Other countries are competing for European Union funding to support similar projects. BP Plc in 2007 scrapped a $1 billion carbon capture and storage power project in Scotland because possible U.K. government money would come too late.

The Barendrecht project is one of two Dutch prototypes for a pair of larger facilities that must be up and running by 2015 for the country to cut emissions by 30 percent in 2020.

Test Projects

The second prototype is being developed in the southern province of Limburg, where a unit of French utility GDF Suez SA and Dutch chemical company Royal DSM NV plan to store at least 2 millions tons of CO2 in the next decade.

Civic opposition to the Barendrecht facility may make the project a test case for similar projects elsewhere in Europe. The European Union plans to make 9 billion euros available for CCS pilot projects near power plants in the 27-nation bloc to prove the commercial viability of the technology.

The Paris-based International Energy Agency, an energy policy adviser to 28 industrialized nations, says these types of projects are crucial to reducing by half the world output of global-warming gases by 2050 and curbing climate change. Greenhouse gases must peak in 2015 and drop by half by 2050 to avert the worst effects of climate change, the United Nations said in a 2007 report.

Shell estimates that CCS could cut global carbon dioxide emissions by more than a third by 2050. Chief Executive Officer Jeroen van der Veer has said companies need reliable prices for CO2 from cap and trade programs to justify investments in the technology.

Europe’s Biggest Refinery

Pernis, Europe’s biggest refinery, can process 416,000 barrels of oil a day and produces about 1 million tons of CO2 a year. The plant already delivers about 400,000 tons of CO2 as a feedstock to local industries and another 150,000 tons to carbonated-beverage makers in the region.

Shell plans to store 400,000 tons of CO2 a year at Barendrecht, the equivalent to 5.4 million euros worth of European Union carbon dioxide permits, based on the April 17 spot price of 13.40 euros a ton on the BlueNext exchange.

Shell Netherlands CEO Peter de Wit said the Barendrecht project is the quickest way to gain experience for large-scale CO2 storage in the Netherlands.

“We really hope we can execute this project,” De Wit told an audience at a car fair in Amsterdam in March. A 30 percent reduction by 2020 is impossible without CCS, he said.

International Efforts

The Netherlands, with CO2 storage capacity of about 2,650 million tons at 176 potential offshore and onshore sites, is taking the lead, along with Saudi Arabia, Norway and the U.K., to cooperate internationally and establish a clear legal framework, according to the IEA.

“Given its geologic resources and its position as a gas supplier, it is commendable that the Netherlands take a leadership role in trying to build global consensus on a liability and regulatory solution for CCS,” the IEA said in a February review of the Dutch energy policy.

In Barendrecht, Van Gils isn’t so sure. He said he’s concerned that his apartment, which is next to an elementary school and above the perimeter of the proposed storage site, may be prone to gas leaks or shifting earth. More than a 1,000 people showed up to question the government and Shell on the project at town hall meetings in February, according to the city council’s Web site.

“The vast majority doesn’t want this,” Van Gils said. “It has to take something to get people in Barendrecht out of their homes and attend such a meeting.”

To contact the reporter on this story: Fred Pals in Amsterdam at[email protected]

Last Updated: April 19, 2009 19:00 EDT