Norway will not approve enhanced gas output at Troll field

Oct 19, 2007 02:00 AM

Norway's Ministry for oil and energy told the stakeholders of giant oil and gas field Troll that it won't approve a plan to accelerate Troll gas production because it would result in a direct loss of 65 mm barrels of oil.
The decision, which follows months of wrangling between stakeholders and Norway's authorities, won't affect the quantity of gas recovered from Troll over the field's lifetime. It will however reduce the speed at which gas will be produced in the short-term, putting paid to plans to build an associated new gas export pipeline between Norway and Europe.

The ministry, taking advice from Norway's Petroleum Directorate, or NPD, said pursuing the Troll Future Development, or TFD, plan, as laid out by the field's operator StatoilHydro and licensees, could result in the loss of up to 600 mm barrels of oil for the duration of the field.
Gas in hydrocarbon reservoirs helps to maintain high pressure, which enables better oil recovery. Many oil producing fields with small associated gas volumes reinject the gas to help maintain reservoir pressure and enhance oil output. Some Norwegian fields are in the process of switching to become predominantly gas producing, from mainly oil producing after the recoverable oil and been extracted.

NPD spokeswoman Eldbjorg Vaage Melberg said the ministry's decision was based on advice from the NPD, a resource management body which is tasked to ensure that all resources on the Norwegian continental shelf are developed in an economic way.
"If you produce the gas too fast, you'll lose the oil," she said, adding that "you'll not lose the gas if output remains at the same pace."
StatoilHydro Vice President Ola Morten Aanestad said the company is "disappointed" with the decision by the ministry. Aanestad said the Troll "partnership was of the opinion that we'd found a balanced resources drainage strategy where we could increase the gas and still improve oil recovery."

The TFD project has been stopped with immediate effect, along with the gas network expansion project in its current form StatoilHydro said.
Chief Executive Helge Lund said: "StatoilHydro's commitment to realizing the full potential on the NCS remains the same." He added that the work undertaken on the TFD project will contribute to the long term development of the Troll resources.
"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," Lund said.

StatoilHydro will now look to other development and export solutions for Norwegian gas, which would likely have been tied into the TFD and export project.
"In the Norwegian Sea there are some gas discoveries that don't have transportation, where we will need new (export) capacity to develop them in a fairly short time. We will look at various opportunities," Aanestad said.

European players with an interest in the export pipeline -- which would have been landed in either the UK,the Netherlands or Belgium -- will be disappointed that there won't be a new source of reliable pipeline gas to bolster supplies. UK's Centrica had long been lobbying Norway for the pipe to arrive in the UK to help offset declining UK production. Other stakeholders in Troll are ConocoPhillips, Royal Dutch Shell and Total.
Troll contains one of the largest oil volumes remaining in Norway, as well as huge gas reserves. The field was the biggest Norwegian producer of both oil and gas between 2000-2004.

Company Web site: http://www.statoilhydro.com, Ministry Web site: http://regjeringen.no, NPD Web site: http://www.npd.no.

Source: Dow Jones & Company
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