Tullow Oil may spend up to €250m on innovative carbon capture technology, as part of a venture that could eventually be floated off as a separate company.
Carbon capture and sequestration, known as CCS, involves piping CO2 from coal-burning power stations into empty oil and gas fields under the sea bed.
Tullow is the second major Irish firm to explore what is a groundbreaking potential money-spinner for oil and gas companies, after Providence Resources began a study last month into storing carbon dioxide (CO2) off the coast of Dublin.
"We've looked at this from a corporate social responsibility view, but it's a £200m investment for us. It has to be viable in the long term and we'll probably end up making a reasonable return from it," Aidan Heavey, Tullow's chief executive said.
"We've got one of the best reservoirs for this in the North Sea's southern gas basin, which is almost empty. We're spending millions on studies and getting it to the stage where it's proven and viable. This will be a commercial opportunity for us and the venture could be floated off as a separate company in the future," Tullow's UK manager, Mike Simpson, added.
Oil companies are exploring new revenue streams after the ongoing financial crisis sent the oil price plummeting in recent weeks, from $147 a barrel down to $90.
Tullow is competing to win backing for the North Sea project from the British government, and there could be a further money-making opportunity for the company in selling or licensing the technology to firms in China and India.
- John Reynolds
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