Global energy company
Royal Dutch Shell plc
(
RDS.A
) announced that it will progress with the construction of the
carbon capture and storage (CCS) project in the Canadian oil sands
play - the first of its kind in the region.
The project - named Quest - is expected to come online in 2015 and
is part of the larger Athabasca Oil Sands Project -- a joint
venture between Shell Canada (60%),
Chevron Corporation
(
CVX
) (20%) and
Marathon Oil Corporation
(
MRO
) (20%). The venture will also receive support from the Governments
of Canada and Alberta.
The Quest CCS project - worth C$1.35 billion - will see funding of
C$745 million coming form the Alberta government from a $2-billion
fund set up to support CCS. The Canadian authority will put in
almost C$120 million through its Clean Energy Fund, while the
remaining C$485 million will be collected from the industry.
Located at the Scotford site, northeast of Edmonton, Alberta, the
Quest venture will capture more than 1 million tons of carbon
dioxide annually from Shell's Scotford upgrading process and
transport the same via a 50-mile long pipeline to a northern site.
Quest - largely owned, designed and operated by Shell - will be the
world's first commercial-level CCS project targeted to minimize the
effects of greenhouse gas in the oil sands. The project will also
contribute immensely in expanding and enhancing the domestic energy
resource base.
The Hague, Netherlands-based Shell is engaged in oil and gas
exploration, production, refining and marketing with operations and
assets, worldwide. Shell currently retains a Zacks #3 Rank that
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on the stock.
The company displays a strong and diversified portfolio of
development projects offering attractive long-term
opportunities. The group - renowned for its success in
bringing some of the largest and technically challenging
capital-intensive projects to fruition - is expected to continue
improving both the top and bottom lines in the forthcoming days.
However, the company's high exposure to the downstream business,
its major natural gas focus, as well as lofty capital spending, may
result in reduced returns going forward.
CHEVRON CORP (CVX): Free Stock Analysis Report
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