A power station to be built on the banks of the River Tees will cost nearly £900m.

The coal-fired power station, being developed by Progressive Energy, is expected to create more than 100 jobs, with hundreds more created indirectly over the next five years.

Plans for the station, which will use the latest technology to collect carbon dioxide to be used in the oil industry, are expected to be submitted in the summer.

Renew Tees Valley chief executive Dr Dermot Roddy said the plant would generate 800MW of electrical power from two million tonnes of coal.

At the same time, it will capture five million tonnes of carbon dioxide a year, which can be used in the North Sea oil industry.

Dr Roddy said: "The plant will produce hydrogen and carbon dioxide. The hydrogen can be fed into the area's existing large-scale hydrogen storage and distribution system and used in gas turbines to generate electricity.

"The carbon dioxide will be sold to the big players to recover oil from under the sea. This type of oil recovery from under the sea is a completely new concept. It is already used on land, in Texas, but not under the sea."

If approved by planning officers, the plant, which will also remove sulphur and nitrogen, is expected to be operational by 2010.

A report from the House of Commons Science and Technology Committee yesterday strongly supported the development of environmentally-friendly coal-fired power stations.