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Former Norwegian Prime Minister in Mongstad Hearing

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The CCS project at Mongstad was cancelled in September 2013, shortly after the Auditor General released a report that questioned the lack of financial control in the project. Former Prime Minister Jens Stoltenberg will have to meet in a hearing on January 20 to shed a light on what went wrong.

The former Prime Minister will, in addition to previous ministers of oil and petroleum, environmental organisations, research institutions and private companies, try to answer questions from the Norwegian Parliament. What went wrong? Why was the prestigious project never finished? Were the goals realistic? And lastly: What happens to CCS in Norway now?

What went wrong? Why was the prestigious project never finished? Were the goals realistic?

ZERO thinks that building a full-scale CCS plant at Mongstad in 8 years was realistic. The development of other CCS projects proves this point:

  • Boundary Dam is a full-scale CCS coal plant in Canada, which will open in April 2014. The planning and building took 5 years, of which 3 years were actual building. Approximate cost: CAD 600 million.
  • Port Arthur refinery in Texas. CCS plant with a capacity to capture 1 million tonnes per year. The capture commenced in 2013, and the build took 1,5 years. Approximate cost: USD 384 million.
  • Quest is a CCS project in a Canadian refinery. Building started in 2012 and the project is expected to be finished in 2015. Approximate cost: USD 1,38 billion.

- None of these projects are exactly like Mongstad, but they show that building full-scale plants in connection with refineries and power plants is possible. Nothing about Mongstad implies that it was not possible to finish in 8 years. What is unique about Mongstad is not that the technology did not work, but the lack of project management and the right incentives, says Gøril Andreassen, Head of Oil, Gas and Industry Department in ZERO.

What is unique about Mongstad is not that the technology did not work, but the lack of project management and the right incentives

- Only full-scale projects can give us the much needed technological development; the remaining test center at Mongstad is not enough. We need new technology to bring the cost down, says Marius Holm, CEO of ZERO.

- We need a full-scale plant more than ever, and the Norwegian climate agreement states that full-scale CCS has to be realized within 2020, also by learning from the mistakes made at Mongstad, Holm continues.
The main issue is the contract between the Norwegian Government and Statoil from 2006. Statoil took all the risk and were responsible for any cost increases during the implementation of the project. The contract gave Statoil’s project managers three clear messages:
  • Any cost increase should be avoided, because Statoil will pay any increase. This resulted in a substantial risk premium.
  • The prize on technological solutions does not matter, because the government will pay, and because Statoil will have to pay if it does not work.
  • The planning process has to be thorough.

The result was a project that could not be finished in a timely and cost-effective manner. However, ZERO wants to commend the previous government for trying, and wants to encourage the new government to be ambitious and continue the efforts to create full-scale CCS projects in Norway and internationally, but also learn to from the mistakes made at Mongstad.

Watch the hearings live here: http://stortinget.no/nett-tv

 

(Article updated January 24, 2014)



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