Hydro says "pure speculation" to reports of giant find

Oct 20, 1997 02:00 AM

August 29, 1997 Norway's Norsk Hydro has dismissed a report that its recent gas discovery in the remote waters of the Norwegian Sea could rival the biggest gas field in western Europe.
The Financial Times said the discovery in the Ormen Lange structure, announced by the Norwegian Petroleum Directorate (NPD), could prove as large as the massive Norwegian Troll field. "We know there are large structures with possible high potential in this area and this is one of them but we have not in our plans estimated anything like the size of a Troll field," a Norsk Hydro spokesman said. "We have no estimate of the size yet as we have only drilled into the top few metres of the reservoir," he said. "This is pure speculation," he said.
The NPD said Norsk Hydro had found indications of gas deposits at an exploration well drilled in almost 1,000 metres of water some 120 km west of Kristiansund.
Norsk Hydro said it would continue drilling at the well on the Ormen Lange structure and would release additional information. But early development of the reservoir would depend on whether further exploration drilling turns up oil as well as natural gas.
"If it's simply a dry gas structure then it would probably not be developed for another decade -- there's no infrastructure and no market yet for the gas," said a senior consultant at Wood Mackenzie Consultants in Edinburgh. "But if there are substantial liquids, these would be developed first and the gas reinjected into the reservoir," he said.
Industry experts said the discovery would cost billions of dollars to develop and present huge technical challenges given the water depth, the location and the absence of a pipeline network to get the gas to market. The prospects for the field could depend on whether other recent discoveries in the frontier areas of the Norwegian Sea were developed, he said.
British Petroleum recently discovered gas in the Nyk High area, while Norway's Saga Petroleum is currently considering ways of developing its Kristin gas and condensate find. Saga's Kristin and Laverans discoveries are just to the north of this well in the Aasgard area. They may require an additional pipeline which could pass pretty close to the Norsk Hydro well.
Saga said earlier this year it planned to develop Kristin ahead of Lavrans because of the high level of liquids in the former.
Oil companies usually insist on tying up long-term supply contracts before committing themselves to the substantial investment required to develop remote gas discoveries.
Norsk Hydro's partners in the Ormen Lange project are Statoil (50 %), Esso Norge (10 %) and Norske Shell (15 %).

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