Statoil group proposes development of Europe's first LNG project

Statoil and its partners project Tuesday filed a formal development plan (PDO) for Snøhvit field, the first offshore gas field in the Barents Sea and Europe's first LNG project. Production would begin in 2006 from subsea wellheads.

Sept. 25, 2001

3 min read

By the OGL Online Staff

LONDON, Sept. 25 -- Statoil and its partners project Tuesday filed a formal development plan (PDO) for Snøhvit field, the first offshore gas field in the Barents Sea and Europe's first LNG project.

Only 2 months ago the companies decided not to submit a PDO because of pending taxation issues with the Norwegian Finance Ministry and emissions issues with the Environment Ministry (OGJ Online, Sept. 21, 2001).

The Snøhvit project will involve the drilling of 21 production wells and one carbon dioxide injection well. The subsea production facilities will be connected to a 160 km pipeline, the longest multi-phase transport line of any Norwegian offshore development. Snøhvit will be the first subsea development in which all field functions will be remotely controlled from a land-based facility.

Gas will be piped from the subsea installations to a LNG terminal to be built at Melkopya near Hammerfest, with associated export facilities. Carbon dioxide removed during gas processing will be piped back for injection. There is expected to considerable industrial spin-off for the region and the initial construction and development phase will provide 1,200 full time jobs with 180 permanent jobs once production starts in 2006. The expected life of the project is until 2030.

Henrik Carlsen, Statoil executive vice-president for exploration and production Norway, said Snøhvit will be the largest-ever industrial development in northern Norway.

The Norwegian government has a 30% direct financial interest in the project. Statoil, as operator, has 22.29%, TotalFinaElf 18.4%, Gaz de France 12%, Norsk Hydro AS 10%, Amerada Hess Norge AS 3/26%, RWE DEA Norge AS 2.81%, and Svenska Petroleum Exploration AS 1.24%.

The project will involve an investment of 46 billion kroner, including 15 billion for the land-based facilities and 5 billion for a fleet of four large dedicated LNG carriers.

Customers for Snøhvit gas will be disclosed next month, after contract negotiations between producers and customers are completed. The LNG carriers will be designed for existing gas handling ports in southern Europe and the US. Initial contracts will involve deliveries of 5.6 billion cu m/year.

Snøhvit is in Block 7121 off the far northwestern Norwegian coast, which also contains the smaller Albatross and Askeladden fields. It has estimated reserves of 318 billion cu m of gas, with small oil reserves at present considered uneconomic to recover.

Statoil required operatorship of the two smaller fields following an asset-swap with Norsk Hydro, after it had been considered that the demanding nature of the project would be best handled by one operator.