As part of its cluster sequencing process, the UK government has selected two carbon capture and storage
(CCS) projects to establish two new clusters through the Track 2 process, which are expected to further enrich
the development of Britain's carbon capture, usage, and storage (CCUS) industry. These two clusters, which are
part of Track 2 are expected to be up and running by 2030.

The UK government believes that CCUS will be essential to meeting its net-zero ambitions. Therefore, Britain
aims to deploy CCUS in a minimum of two industrial clusters by the mid-2020s, and four by 2030 at the latest to
capture and store 20-30 MtCO2 per year by 2030. In line with these plans, the government launched a process
in 2021 to determine the sequence in which it would support the decarbonisation of regional industry clusters
across the UK, placing the clusters in two tracks.

The government's cluster sequencing process, which has, through the CCS Infrastructure Fund, £1 billion to
provide the industry with the certainty required to deploy CCUS at pace and at scale, completed the first phase of
the evaluation of the five cluster submissions received in October 2021. As a result, the UK set its cap on
establishing two industrial clusters by the middle of this decade – the HyNet and East Coast clusters in the North
West, and North East of England – to form what it is calling Track 1.

These Track 1 clusters are expected to be expanded to include Humber later in the year, while Britain also plans
to develop a further two clusters as part of Track 2 by 2030. The UK's up to £20 billion funding for early
deployment of CCUS is expected to help the nation meet climate commitments.

At the end of March 2023, the UK's Department for Energy Security and Net Zero launched a four-week
expression of interest (EoI) process for transport and storage (T&S) systems that met the eligibility criteria set out
in the CCUS Track 2 guidance document. Following a review of EoI applications against the Track 2 eligibility
criteria, the government has concluded that Acorn and Viking CCS projects, due to their maturity, remain best
placed to deliver the UK's objectives for Track 2.

“We will therefore commence engagement, assessment of delivery plans, and due diligence with Acorn and
Viking T&S systems. The government will set out the process by which capture projects for Track 2 will be
selected to meet the stated ambitions in due course. We also reserve the right to re-engage with T&S systems
that submitted an EoI should any significant delivery challenges arise with Acorn and Viking T&S systems,”
outlined the UK government.

According to the UK government, this decision is in line with the Review of Net Zero chaired by Chris Skidmore
MP, which included a recommendation that government should take a pragmatic approach to cluster selection by
allowing the most advanced clusters to progress more quickly. Acorn also retains its status as a Track 1 reserve
cluster while the government reserves the right to enter into accelerated negotiations with Acorn in the event that
one of the named Track 1 clusters encounters significant delivery challenges.

Acorn is a joint venture with four partner companies – Storegga, Shell UK, Harbour Energy, and North Sea
Midstream Partners – developing decarbonisation projects in Scotland. This CCS project is described as a
catalyst for industrial decarbonisation in Scotland, providing the critical infrastructure for the decarbonisation of
the Scottish Cluster, which is a collection of industrial, power, and hydrogen businesses in the Central Belt and
North East Scotland that will capture their CO2 emissions and then move them permanently into the Acorn CCS
geological stores, deep under the North Sea.

“We recognise the importance of providing further certainty for industry and we will work with other T&S systems
on future opportunities through the government's CCUS programme. Later this year, we will publish a vision for
the UK CCUS sector, setting out how CCUS will support our net-zero ambitions, to raise confidence and improve
visibility for investors,” added the UK government.

Harbour Energy, which acts as the operator of the Humber-based Viking CO2 transportation and storage network
and partner in the Acorn CCS project in northeast Scotland, has welcomed the news that both projects have
been awarded Track 2 status. The company believes that this marks “an important milestone” for these two
projects, allowing them to move into front-end engineering and design (FEED) and discussions with the
government over the terms of the economic licences, ahead of final investment decisions (FIDs).

Linda Z Cook, CEO of Harbour Energy, commented: “Today's announcement is an important step forward for
Harbour's Viking and Acorn CCS projects and the development of the carbon capture and storage industry in the
UK. It is also a further demonstration of the key role that the oil and gas sector is playing by using our existing
infrastructure, skills, and experience to build this new industry and help deliver the energy transition.

“Viking has the potential to be transformational for the Humber, the UK's most carbon-intensive industrial region,
creating thousands of jobs in the area and playing a vital role in supporting the UK to meet its target to capture
30 million tonnes of CO2 annually by 2030.”

Harbour has a 60 per cent stake in the Viking CO2 transportation and storage network while BP holds the
remaining a 40 per cent non-operated share. The two players already share an interest in the Lincolnshire
Offshore Gas Gathering System (LOGGS) pipeline, which is intended to be repurposed as part of the project to
connect customers to the depleted Viking gas fields, which recently had their 300 million tonnes of CO2 storage
capacity independently verified.

Harbour Energy secured the CO2 appraisal and storage license for the Viking project in October 2021. Recently,
the firm entered into an exclusive commercial relationship with the Associated British Ports for the development
of a CO2 import terminal at the Port of Immingham, the UK's largest port by tonnage.

The firm already put the wheels into motion to showcase the potential of the Viking CCS project by establishing a
partnership with RWE to investigate options to capture, transport and store CO2 from RWE's gas-fired power
stations via the Viking CCS project. Due to this, RWE joins Phillips 66, VPI and West Burton Energy as Viking
CCS' capture project partners.

The Viking CCS project – previously known as V Net Zero – which is located close to the heavily industrialised
Humber region, has the potential to transport and store up to 10 million tonnes of CO2 annually by 2030 and 15
million tonnes of CO2 annually by 2035.

The project could be transformational for the Humber region, potentially unlocking up to £7 billion of investment
across the full CO2 capture, transport, and storage value chain between 2025 and 2035, creating over 10,000
jobs during construction and providing an estimated £4 billion of gross value add (GVA) to the Humber and its
surrounding areas.

Additionally, the Viking CCS project can enable, through work with Associated British Ports at the Port of
Immingham, the potential for shipped CO2 from dispersed emitters elsewhere in the UK and internationally to be
transported for permanent storage within the Viking fields, creating a new industry for the UK.

A final investment decision for the Viking CCS project is expected in 2024 and the project could be operational as
early as 2027.