Offshore Europe

Statoil is pressing ahead with Sn hvit, Norway's first LNG project, despite a threatened legal challenge from the Bellona environmental group.

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Jeremy Beckman, London

Barents LNG back on track

Statoil is pressing ahead with Sn hvit, Norway's first LNG project, despite a threatened legal challenge from the Bellona environmental group. Work on the $5-billion development - drawing supplies from three gas fields in the Barents Sea - had stalled due to a dispute over the Norwegian government's proposed tax regime. Subsequent revisions submitted by the Finance Ministry in May proved acceptable to the Sn hvit partners, and these were also ratified by the European Free Trade Association's surveillance authority.

This allowed the Sn hvit partners to waive conditional clauses in LNG sales contracts that had been negotiated with El Paso and Spain's Iberdrola. Bellona, however, which has opposed the project from the outset on environmental grounds, may contest the revisions in the European courts, arguing that the new fiscal plans violate the European Economic Agreement.

Construction of the LNG terminal on the island of Melkoya should by now have resumed. Statoil recently awarded a $165-million contract to Germany's Linde for a large proportion of the LNG plant. This will feature licensed technology that the two companies have developed together.

Farther south in the Norwegian Sea, work on Norsk Hydro's much larger Ormen Lange gas discovery has so far been contention-free. A recent appraisal well drilled by the Scarabeo V semi in 1,000 m of water seemed to confirm the 400 bcm reserve estimate. The gas flow, tested at 1.8 MMcf/d, also suggested good reservoir productivity. Collected data is now being analyzed to determine locations for production wells. Appraisal work also included a study of the top hole layers. The area was hit by a giant seabed slide 8,000 years ago. The team concluded, however, that these layers would not be at risk of further slippage in the event of a subsurface blow-out.

Aside from Ormen Lange and BP's Skarv, exploratory drilling off mid-Norway has yielded little of late. This partly accounts for the meager take-up of acreage on offer under the recent Norwegian Sea (17th) licensing round. Only six new licenses were issued, with two operatorships for Hydro, and one each for Agip, Phillips, Shell, and Statoil.

Perseverance pays for TFE

After two failures caused by collapsed wellbores, TotalFinaElf finally hit the target with its third exploration well on the Forvie North prospect in UK North Sea block 3/15. The 3/15-9A well, drilled by the Transocean John Shaw semi in 120 m of water, flowed 1 MMcf/d of gas and 1,400 b/d of condensate during separate prod-uction tests. The discovery, at a total depth of 3,560 m, is thought to lie within the same fairway as TFE's Dunbar field. The Dunbar platform is only 16 km away, but TFE is concentrating first on completing the subsea Otter and Nuggets developments in this area. The Alwyn North/Dunbar fields currently produce 180,000 boe/d.

Statoil also reported two new finds within reach of platforms in the Tampen area of the Norwegian North Sea. Both wells - on the Dole and Ole prospects - were drilled in close proximity by the semi Borgland Dolphin, yielding gas condensate and light oil from the Mid-Jurassic. Statoil has declared its intention to exploit all small finds in this area, where possible. Two schemes are already being evaluated for the new pair - either a tieback to the Gullfaks C platform via existing seabed templates, or a 16-km direct link to Statfjord B.

Brae's strategic potential

Majors and minors are joining the fray to tackle Britain's looming gas shortfall. Under an asset swap with BG valued at ?98.5 million by analysts Wood Mackenzie, BP has raised its stake in the Brae gas-condensate complex in the UK central North Sea to 27%. Operator Marathon recently announced plans to link Brae to the proposed 620-million Symphony trunkline that would carry gas from production centers off southern Norway to Bacton on the English east coast. BP is thought to view Brae as a potential processing host for its Harding and Devenick gas developments in the UK sector.

Concurrently, Nippon Oil acquired Burlington Resources' 6.3% share in Brae and a 4% interest in the Braemar gas-condensate discovery. After years of deliberation, the latter is finally being lined up for development via a single subsea well tieback to the East Brae platform.

Early in June, Statoil agreed to supply 5 bcm/yr to British Gas Trading for the UK market, starting October 2005. As things stand, the gas could be routed through an existing Norwegian trunkline to Zee-brugge in Belgium, then west to Bacton through the Interconnector. Or it could flow through the new Vesterled line linking the Heimdal complex with the Frigg line to St. Fergus in Scotland. But Statoil may decide to install a new long distance link of its own to the UK mainland from its Sleipner complex.

As for BG, one of the main draws of its exchange package with BP was a strengthened position in the Outer Moray Firth area off eastern Scotland, where it now holds 75% of the Atlantic gas condensate discovery. Atlantic lies between the BG-operated Blake field and PanCanadian's Buzzard, in which it also has a near-20% stake. Before selling out, BP had issued an environmental statement concerning a proposed development of Atlantic. The project will still likely go ahead, but in concert with the nearby Amerada-operated Cromarty field, in which BG is a 10% stakeholder.

Hutton TLP to be released

Britain's sole production tension leg platform (TLP) is on its way out of the Hutton field, following government approval for Kerr-McGee's decommissioning plan. The proposed year-long process includes a period of well abandonment, removal of risers, disconnection of the TLP's tethers, and pipeline isolation. KCA in Aberdeen has been nominated for the well work and Technip-Coflexip for the pipelines, although the future of the TLP has still to be resolved. Kerr-McGee has been marketing the platform to other operators, but if no takers are found, it may have to be scrapped, as happened with Phillips' Maureen gravity-base platform last year.

Another elderly structure, the fixed Thistle platform in UK block 2-11/18, could survive a while longer if DNO agrees to assume ownership from BP. Thistle came onstream in 1978, but production has slid from a peak of 125,000 b/d in 1987 to 6,500 b/d currently from 21 producing wells. DNO is reviewing the area's exploration/development potential before making a commitment, and this would not include liability for removal of the platform.

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Forvie North is a significant new discovery, according to operator TotalFinaElf.
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