There was music played on traditional instruments. There was a recital in the form of a Norse saga. The king of Norway gave a speech. A huge figure of a troll split asunder to reveal a model of a production platform within.
The occasion was the inauguration of Norway's massive Troll gas project and transfer of operatorship from development operator Norske Shell AS to production operator Den norske stats oljeselskap AS.
Troll field holds estimated reserves of 1.3 trillion cu m of gas, said to be 40% of Norway's total gas reserves. Beginning Oct. 1, Troll will provide 10% of Europe's gas for the next 50 years (see related story, p. 40).
Shell and Statoil celebrated completion of the project with a stunning show at Kollsnes terminal north of Bergen.
While the Troll project is a magnificent monument to Shell's engineering skills, however, the company will not get a comparatively magnificent reward for its efforts as development operator.
Small stake
Norske Shell drilled the Troll discovery well on Block 31/2 in 1979, which found Troll's western oil province. Following the discovery, there was great competition for shares in adjacent Blocks 31/3 and 31/6.
Although Shell applied for a stake in the new blocks, it got nothing. Most of Troll's huge gas reserves were later discovered in those two blocks.
After unitization, Shell was made development operator of the eastern gas province but found itself with only 8.29% of Troll field interests. Statoil was given 74.58% and made production operator.
Mike Steere is Troll project manager for Shell. He is scheduled to retire Sept. 30, the day before commercial gas production begins in Troll field.
Steere said, "Statoil would not have been capable of a development like Troll gas when the project took shape in the early 1980s, although Statoil would be capable now."
Frustration with state takeover of Troll gas from Shell, as well as the earlier Heidrun oil field takeover from Norske Conoco AS, was one factor behind recent changes in Norway's licensing system.
Norway has recognized that operators are happy to look elsewhere for projects, where a more favorable regime could mean bigger revenues.
Changed rules
Steere said, "In the 1990s, Norway's oil authorities and companies are keen to reduce the numbers of interest holders in any one license. This way, companies can bring their expertise to bear better."
Chris Fay, now chairman and chief executive of Shell U.K. Ltd., was involved in the Troll project during 1981-86, first as production director and then as exploration and production director of Norske Shell.
Fay is forthright about Troll: "We were disappointed we didn't get an equity share in the blocks next to 31/2. There was no operator's fee, so if you asked if 8% equity is a fair share, most people would say no.
"Shell is proud of being at the technical fore, though. The ministry admitted in 1984 that Shell was the only company that could put together the Troll gas project.
"Although no one should underestimate Statoil's contribution, our small equity still rankles deep down. Now the regulations have changed, and there is no sliding scale of state involvement and no takeover of operatorship."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
