Gas transport agreement paves way for Ormen Lange-UK pipeline

Oct. 7, 2003
British and Norwegian authorities have reached agreement on the main facets of a treaty that will pave the way for laying the two-part, 1,200 km "Britpipe" subsea pipeline from deepwater Ormen Lange field in the Norwegian Sea to the UK.

By OGJ editors

HOUSTON, Oct. 7 -- British and Norwegian authorities have reached agreement on the main facets of a treaty that will pave the way for laying the two-part, 1,200 km "Britpipe" subsea pipeline from deepwater Ormen Lange field in the Norwegian Sea to the UK.

Plans calls for natural gas from the field to be transported via a 140 km pipeline to Nyhamna on the Norwegian coast for processing then piped south to a tie-in to Statoil ASA's Sleipner fields hub in the North Sea and from there to Easington in northeastern England (OGJ, Aug. 25, 2003, p. 100). [insert map]

Statoil said Ormen Lange gas field licensees, along with ConocoPhillips as another investor, plan to invest almost 20 billion kroner in the trunkline and have been waiting for the agreements, which will be incorporated into a treaty within the coming year by Norway's Ministry of Petroleum and Energy and the UK Department of Trade and Industry.

Statoil, which holds 10.774% interest in Ormen Lange, has the responsibility for planning and constructing the pipeline in cooperation with field development operator and transport system developer Norsk Hydro AS 17.956%. Statoil had put off submitting pipeline plans until talks between the UK and Norway on how to treat field development and pipelines in the North Sea could be resolved.

"We need the assurance of this agreement before we can begin to invest in a new pipeline," explained Øyvind Kirkhus, head of new infrastructure at Statoil ASA's natural gas business area.

AS Norske Shell 17.2% will be production phase operator when the field comes on stream in 2007. Other shareholders are Petoro AS 36%, Esso Norge AS 7.182%, and BP PLC 10.888%.

Construction
Statoil said Britpipe's pipeline installation and operation plan is due in November, and the facility could be ready in autumn 2006.

The investment will demand much of the world's pipeline-laying capacity in 2005-06 according to Norsk Hydro's head of mid-Norway exploration and development Bengt Lie Hansen. Ormen Lange will increase Norwegian gas exports by 25%, he said, "making Norway the world's next largest gas exporter after Russia" (OGJ Online, Mar. 19, 2003).

Britpipe will enable Norway to supply 20 billion cu m/year to the UK over a 20 year period. The UK consumes 110 billion cu m/year—Europe's biggest gas market.

This capacity is in addition to the 12 billion cu m/year of gas delivered through the Vesterled pipeline from Heimdal via the Frigg transport system to St. Fergus, Scotland.

Statoil and the state's direct financial interest (SDFI) will own almost half of the total capacity on Britpipe, which will be operated by Norway's state-owned company Gassco AS.