x Abu Dhabi, UAESunday 21 January 2018

BP delays $2 billion hydrogen power plant in Abu Dhabi

BP has delayed a US$2 billion hydrogen power project in Abu Dhabi.The project was intended to supply carbon dioxide to the emirate¿s oilfields.

BP has put a planned US$2 billion (Dh7.34bn) hydrogen power plant in Abu Dhabi on the back burner.

The project was intended to supply carbon dioxide to the emirate's oilfields. BP says it is waiting for the Abu Dhabi Government to decide how much the emirate will pay for the carbon dioxide that would have been produced and captured at the gas-fuelled plant.

"The project has been de-manned," said Dominic Emery, the chief of staff at BP Alternative Energy. "It's very much in the [hands] of the Abu Dhabi Government."

Abu Dhabi's ambitious 2008 proposal to produce 420 megawatts of clean electricity as well as boost oilfield production through carbon dioxide injection drew attention from international players. BP and the Anglo-Australian mining group Rio Tinto won a contract to develop the plant through a joint venture, Hydrogen Energy.

But uncertainty over international carbon credit schemes and Abu Dhabi's ultimate financial support has since cooled interest. In 2009, Rio Tinto pulled out of the project, selling its 50 per cent stake to BP. The proposed budget shrank from $2.5bn to $2bn, and the completion date shifted from 2013 to 2014.

Now that date is uncertain. BP, which had completed preliminary engineering and design work for the plant, began redeploying staff this month. The project's general manager left last month. Mr Emery said the delay did not represent a pull-out.

"We never cut any steel in the project," Mr Emery said on the sidelines of the World Future Energy Summit in Abu Dhabi. "It was on paper, ready to go."

The Abu Dhabi Government is continuing to weigh carbon capture and storage, said David Scott, who directs the economic and energy affairs unit of Abu Dhabi's Executive Affairs Authority.

"They're still very much in an evaluation phase," Mr Scott said.

Masdar Carbon, a unit of Masdar, the Abu Dhabi Government's clean energy company that plans to sell carbon dioxide captured at UAE industrial sites to Abu Dhabi National Oil Company (ADNOC), still plans on BP's hydrogen plant to be part of the carbon capture and storage pipeline network it hopes to build throughout the emirate.

"The [Hydrogen Project Abu Dhabi] is still very much part of our portfolio," said Keristofer Seryani, the head of commercial development for Masdar Carbon. "We're ready to take it to the next step. The commercial structure has to be finalised."

Emirates Steel Industries' Musaffah plant, the first of the emirate's commercial-scale carbon dioxide capture projects, is scheduled to come online in 2014.

ADNOC would have been the ultimate buyer of the carbon dioxide, which it can inject into ageing oilfields to boost oil output.

"Maybe the numbers [BP] knows for utilising [carbon dioxide] is not in line with their cost," said Shain Neghabin, the research and development manager of ADNOC's oil subcommittee.

"That was a source of [carbon dioxide] that we're going to lose."

ADNOC, which demonstrated it could successfully inject carbon dioxide into its Rumaitha field last year, is now looking into using the technique in fields containing water and oil mixtures, rather than just oil, Mr Neghaban said on the sidelines of the summit.

"In order to make this happen in the region, we have to have … a green subsidy," he said.

ADNOC is progressing with carbon capture plans, including a second pilot project for up to 32 million cubic feet of carbon dioxide injection in its north-eastern Bab oilfields. It has also completed the initial engineering studies to capture carbon dioxide from the Abu Dhabi Gas Industries' plant in Habshan, starting in 2014.