A project that will use carbon-capture technology to reduce greenhouse gas emissions at a Shell upgrader has received $865 million in federal and provincial funding, officials announced in Edmonton Thursday.

Money for the Shell Quest project — which is owned by Shell Canada, Chevron Canada and Marathon Oil Sands L.P. — will be used to develop the technology to eventually capture and store 1.2 million tonnes of carbon dioxide each year from Shell's Scotford upgrader and new expansion east of Edmonton.

Under the proposal, carbon dioxide would be captured from the steam methane units that produce hydrogen, and then injected 2,300 metres undergound.

The province is providing $745 million over 15 years for the project. The remaining $120 million is coming from the federal government's Clean Energy Fund.

The entire cost of the  project is estimated at $1.35 billion.

The Shell project was one of three carbon-capture and storage projects selected in June to receive a portion of the $2 billion the Alberta government has set aside to develop the new technology.

The three proponents of the Shell Quest project were the first to sign a letter of intent with the province.  Alberta is still working on letters of intent for other projects.


With files from The Canadian Press