StatoilHydro cancels Troll upgrade project

StatoilHydro, Norway's biggest oil and gas producer, scrapped a NOK 3.8 bn (EUR 415 mm) project to upgrade pipes at Troll, the country's largest gas field, citing weaker oil prices and higher costs.
The replacement of flowlines in the gas wells of the Troll A platform was one of three investment projects for the North Sea field submitted to the authorities in June and awaiting approval, the company said. The new pipes would have maintained gas exports of about 120 mm cmpd from Troll A, StatoilHydro said June 27. The initial investment framework for the projects was NOK 10 bn.

"This will have no impact on our gas clients; it just means that the maximum production level will be somewhat lowered," StatoilHydro spokesman Geir Gjervan said from Stavanger, where the company is based. "This project will be postponed for several years, while the remaining two will still go ahead."
Oil companies are lowering spending as crude has slumped more than $ 100 a barrel from a record in July, paring revenue for producers. StatoilHydro in December withdrew an application to build an upgrader plant at its Canadian oil-sands project, citing the "uncertain" outlook for oil prices. The company reported a 67 % drop in fourth-quarter profit.

Troll contains about 60 % of Norway's reserves, according to StatoilHydro. The remaining two projects involve the instalment of a gas-injection plant at Troll B, which will be in place as scheduled by the beginning of 2011, and a 35-inch (90-centimeter) pipeline from Troll A to the Kollsnes gas-processing plant, the company said.
Gas injection, which aids recovery of oil reserves, will result in a 17 mm-barrel increase in production from Troll West, where the Troll B platform is located, StatoilHydro said. The company's partners at Troll include units of Total, ConocoPhillips and Royal Dutch Shell, as well as Petoro.