UpstreamOnline: Oslo pulls plug on Troll gas project

Oslo has blocked plans by StatoilHydro to accelerate gas production at Troll and build a new gas export pipeline to Europe, the government said today.

StatoilHydro-operated Troll holds about 10% of the total discovered oil and gas on the Norwegian shelf.

The government, taking a long-term view of how to best monetise the value of resources in its biggest field, believes that boosting gas supply now – at the expense of lowering future oil output from Troll – was not in its interest.

“Such accelerated gas production would reduce the possibility to recover large volumes of oil from the field,” the Petroleum & Energy Ministry said in a statement.

The ministry told the Troll partners, which include Shell, ConocoPhillips, Total and Norwegian state-owned Petoro, that it will not increase the field’s gas output permits as StatoilHydro wanted.

“We have to take the ministry`s decision into account, and have therefore recommended that the project is stopped with immediate effect,” StatoilHydro boss Helge Lund said in a statement.

StatoilHydro will consequently withdraw from the related Gas Network Expansion (GNE) project in its current form, the company said.

The GNE project is aimed at realising a new gas export pipeline from the Norwegian continental shelf to Europe.

“StatoilHydro’s commitment to realising the full potential on the Norwegian continental shelf remains the same,” Lund said.

“The work undertaken in Troll Future Development has provided a good basis for a long-term development of the resources on Troll.

“We are working on a number of projects in Norway and internationally that will contribute to strengthening our position as an important and reliable long-term supplier of natural gas to Europe.”

The ministry said that studies done by the state-run Norwegian Petroleum Directorate (NPD) show a large potential for increased oil recovery from Troll.

“The NPD is of the opinion that accelerated gas production…will lead to a direct loss of oil of around 65 million barrels,” the ministry said, adding that the project could also adversely affect oil recovery in the long-term.

“If the oil is not given priority, a loss of up to 600 million barrels of oil for the duration of the Troll field could be the result,” the ministry said.

According to NPD data, at the end of 2006 Troll had recoverable reserves of more than 1 trillion cubic metres of gas, 51 million cubic metres of oil and 24 million tonnes of natural gas liquids.

Lund said StatoilHydro will present its strategy early next year.

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19 October 2007 07:13 GMT  | last updated: 19 October 2007 14:46 GMT

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