CO2 from a land-based power station will help extract more oil

British and Norwegian oil companies have announced plans to bury carbon dioxide under the bed of the North Sea.

Statoil and Shell plan to take CO2 from a power station in Norway and pipe it to an oil field, where it will be used to force oil to the surface.

The $1.2bn-1.5bn scheme will require major investment from governments.

The process of carbon sequestration is viewed by some as a partial solution to climate change, but can also help companies exploit oil reserves further.

Statoil already extracts carbon dioxide from a natural gas well in its Sleipner field and stores it under the sea bed, while schemes using compressed CO2 to enhance oil recovery are already running in North America.

The companies say their North Sea venture would be the world's largest enhanced oil recovery project.

Sums for storage

Statoil would extract CO2 produced by a new natural gas-fired power station on the Norwegian coast.

It would then be pumped to Shell's Draugen oilfield and injected into oil-bearing strata, forcing more oil to the surface.

Electricity from the power station would run a nearby gas terminal established largely to export gas to the UK.

Elements of the project could be phased in from 2010, with CO2 also being piped later to Statoil's Heidrun field.

"This CO2 project responds to vital future challenges facing society, the environment and industry," said Statoil CEO Helge Lund.

Environmental observers are divided on the merits of carbon capture and storage.

Enthusiasts say it will reduce the greenhouse impact of coal, oil and gas burning.

The counter-arguments are that it distracts from investment in renewable energy technologies, that it can only capture a fraction of global emissions, and that storage under the sea floor may not be secure.

When the CO2 is used to enhance oil recovery, it also brings more oil into the world market.

Cost is a major barrier.

The British government recently set up a �35m ($61m) fund to encourage carbon abatement technologies, but it has not yet disbursed any money.