The provincial government of Alberta, the federal government of Canada and Shell announced the signing of agreements aimed at securing $865 million for Shell's Quest carbon capture and storage project near Edmonton.
John Abbot, executive vice president of heavy oil products at Shell, said the Quest project would be a first for oil sands operations.
"Not only would it allow us to significantly reduce the carbon footprint of our oil sands operation here in Alberta, but it will contribute to the global knowledge that will help to get other CCS projects up and running more quickly," he said in a statement.
The project, once completed in 2015, is designed to capture and store more than 1 million tons of CO2 per year from Shell's operations in the Athabasca oil sands play.
Ed Stelmach, the premier in Alberta province, said the project is part of an effort to make energy production more environmentally friendly.