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Lloyds List: Statoil expects projects to flourish in Norwegian Sea

New gas extraction projects in the Norwegian Sea are set to come onstream over the next five years providing huge opportunities for suppliers of production systems and offshore contractors, writes Martyn Wingrove, Lloyds List

Published: Apr 13, 2007

STATOIL believes there could be at least four more floating production systems deployed in the Norwegian Sea over the next seven years but a new gas pipeline to Europe will be needed.

There has been an increase in exploration drilling activity in the Norwegian Sea lately with a reasonable level of success that is leading the industry into developing more fields.

Previous gas discoveries are being examined and new discoveries are being evaluated for their development, while the remote location and medium water depths mean floating production units are more economic than fixed platforms.

State energy group Statoil is behind much of the exploration work in the Norwegian Sea, although it is often a non-operating partner in some of the latest evaluation projects.

Recent developments in the Halten Bank and Nordland areas have involved subsea wells tied back to the existing infrastructure that currently has enough capacity for these satellites.

It was a different story at the beginning of developing hydrocarbons in the Norwegian Sea. The first generation of projects in the early 1990s were based around the large oil fields, with gas being almost a side product that needed to be reinjected or sold to local markets.

The Draugen fixed concrete platform and the Heidrun tension-leg platform were installed, then the Njord production semi-submersible and the Norne floating production storage and offloading vessel were deployed in 1997.

Only the Heidrun field was exporting its associated gas, but this all changed in 1999 when Statoil developed the Asgard fields with an FPSO and production semi-submersible and built the main export pipeline.

Now all of the fixed and floating production platforms are linked to this Asgard Transport pipeline and the terminal at Kasto, near Stavanger, but this is near to full capacity.

Norsk Hydro and Shell are developing the Ormen Lange gas field with a dedicated pipeline to the UK and BP has only just been able to secure gas export capacity on Asgard for its Skarv project, which is set to involve an FPSO. This leaves no usage in these pipelines until at least 2015.

‘The Norwegian Sea has significant gas potential in the mature areas near infrastructure and in the deepwater areas,’ says Tim Dodson, senior vice-president for exploration in Statoil’s Norway business area.

‘We need new export infrastructure for this area but to do this we need more large gas volumes. The volume of gas resources discovered will determine how large the pipeline will be.’

It is a chicken and egg scenario where the promise of a new pipeline would attract greater exploration in the Norwegian Sea for gas resources and more discovered volumes would make the new pipeline more economically viable.

There is also a view that another Norwegian Sea gas export pipeline could be linked with a new export pipeline required for the second phase of developing the gas resources within the giant Troll field in the North Sea.

Gassco and the state run oil companies Statoil and Petoro are discussing the options for building a new pipeline network for the next phase of Troll and Norwegian Sea developments. It seems a new gas terminal at Kollsnes will be used as a connection and compression point for any of the options.

One question in Norwegian minds is the destination of a new pipeline. It could either go to mainland Europe or the UK. Both markets may need fresh gas supplies in the next five years, the time it would take to install a new trunk pipeline.

The UK market could be swamped with gas delivery capacity because of new liquefied natural gas terminals opening up and the latest set of new pipelines, including Langeled from Norway and BBL from the Netherlands, starting their supplies.

This may mean gas prices in Europe could be more profitable for the Norwegians to build their pipeline to Belgium or Germany. But there will be competition from the Russians who have their own Baltic trunk pipeline under construction. With the volume of shipping required to build these large trunk pipelines survey ships, pipelay barges, support vessels, dredgers and subsea construction units there is much to look forward to if Norway decides to build another 1,000 km plus gas transport network.

In the Norwegian Sea there remains the question of which fields will be linked to a new pipeline. Statoil has indicated that it wants the deepwater Luva gas field in the Voring area and Shell’s Onyx SW discovery, south of Asgard, to be linked to the new pipeline.

French oil major Total also has plans to develop the large Victoria gas field in the Norwegian Sea north of Asgard with a floating production system linked to a new gas pipeline.

Oslo-listed Statoil has future exploration plans to find new gas resources in the region. ‘We will be drilling three deepwater wells before the end of 2008, two close to Luva and one west of Luva,’ says Mr Dodson.

This year, Statoil’s main wildcat drilling focus in the Norwegian Sea is exploring for crude oil reserves north of Ormen Lange and south of the Elida discovery, which has large oil resources but too poor reservoir quality.

‘With our Mid Night Sun well, that we will drill in the second quarter, we will be hoping to find better reservoir quality,’ says Mr Dodson. ‘We are convinced we will find oil between Elida and Ormen Lange.’

Statoil’s exploration programme this year is a similar size to last year’s but many of the wells are focused on finding small fields close to existing infrastructure.

‘There are less high impact wells this year where there could be more value from a discovery, but in 2008 we will be drilling more in the deepwaters of the Norwegian and Barents Seas,’ says Mr Dodson.

One of this year’s planned wells is in the Barents Sea to appraise the potential of the oil resources in the Snohvit field. If this well is successful, then Statoil may be forced to develop the oil as soon as possible with an FPSO before it recovers the large volumes of gas in the area.

Overall Mr Dodson is upbeat over the drilling success Statoil has had in recent years, but he wants to find more large fields and appraise the existing larger discoveries in the Norwegian Sea to secure enough resources for his bosses to agree on building the new gas export pipeline.

If this goes ahead there will be plenty of business opportunities for offshore vessel owners and oil field contractors, while mid-Norwegian ports will also benefit from the logistic requirements. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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