Royal Dutch Shell PLC's Canadian unit said Wednesday it will proceed with the proposed Quest carbon capture and storage project, the first such commercial-scale project to tackle carbon emissions in the Alberta oil sands.

Shell said the project will be built on behalf of the Athabasca Oil Sands Project joint-venture owners, which also include Chevron Canada Ltd. and Marathon Oil Canada Corp. Shell Canada owns 60% of the joint venture, with the two partners each holding 20%.

The Athabasca joint venture produces bitumen, which is piped to Shell's Scotford Upgrader near Edmonton, Alberta. Starting in late 2015, Quest will capture and store deep underground more than 1 million metric tons a year of carbon dioxide produced during the bitumen processing, Shell said, reducing direct emissions from the upgrader by up to 35%.

In a statement, Shell didn't disclose the estimated total cost of the Quest project, though it said the Alberta and Canadian governments will invest 745 million Canadian dollars ($756 million) and C$120 million, respectively, to support the project as part of initiatives to reduce greenhouse gas emissions. The Canadian government has previously put the cost of the Quest project at C$1.35 billion.