March 20, 2012 / 8:03 AM / 5 years ago

UK's Petrofac, National Grid plan carbon capture plant

* New project to fit CCS on 90 percent of capacity

* Carbon to be sent to St. Fergus for North Sea burial

LONDON, March 20 (Reuters) - British energy network operator National Grid and London-listed oil and gas services firm Petrofac plan to build a carbon capture and storage (CCS) project in Britain with U.S. partner Summit Power, the companies said on Tuesday.

The consortium will apply for funding from the British government, which is due to relaunch a 1 billion pound ($1.6 billion) tender for CCS projects after a first round of funding failed on cost overruns.

The new coal-fired power plant, named Caledonia Clean Energy Project, will be based at the Scottish port of Grangemouth, west of Edinburgh, and will capture carbon emissions on more than 90 percent of its production capacity.

"The carbon dioxide captured will be transported via pipeline to St. Fergus by National Grid Carbon and then transferred offshore for geological sequestration deep under the North Sea by Petrofac subsidiary, CO2DeepStore," Seattle-based Summit Power said in a statement.

The British government considers CCS a vital technology to reduce carbon emissions from power plants, but developing these plants is expensive as the technology has not been proven to work on a commercial scale.

In October last year, the government's plan to fund Scottish Power's Longannet CCS project failed after the parties could not agree on the funding.

The government said in a pre-tender document published in the European Union's official journal in February that it wanted new CCS projects to start demonstrating carbon dioxide capture by 2016-2020.

Summit Power is a U.S. developer of clean energy projects and has over 7,000 megawatts (MW) of power plants in operation.

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