NORTH SEA
Norwegian Sea trunkline to offer new
outlet for ‘stranded’ gas accumulations
Nick Terdre
Contributing Editor
Norway’s parliament (Storting) has approved a major new subsea pipeline to export gas from felds in the Norwegian Sea. The Polarled system calls for investments of NOK 25 billion ($4.2 billion). Although Norway has an extensive subsea pipeline network
of nearly 8,000 km ( 4,971 mi) for delivering gas to northern Europe
and the UK, only two lines currently connect Norwegian Sea felds off
mid-Nor way to the transportation network in the North Sea. One is the
Åsgard Transport System (ÅTS), serving the cluster of felds around
the Åsgard and Kristin complexes in the Halten Bank region as well as
Heidrun and Norne further north, and running to the Kårstø terminal
in west Norway. The other is the dedicated pipeline from the giant Ormen Lange gas feld to the Nyhamna terminal on the mid-Norwegian
west coast. From there, the Langeled subsea pipeline system takes the
gas southwest, connecting to the North Sea network.
However, as more gas discoveries have emerged in the Norwegian
Sea, the need has grown for a new export trunkline to address capacity
constraints. During the previous decade when BP and Statoil were planning the joint development of the Skarv and Idun felds in the north area
of the Halten Bank, the gas export route was a key issue. Due to insuf-fcient spare capacity in the ÅTS, they were obliged to build a dedicated
pipeline to serve these felds, which came onstream at the end of 2012.
Stepping stone to new era
While Skarv and Idun have suffcient gas to warrant a dedicated
pipeline, many of the undeveloped discoveries in the Nor wegian Sea
do not – they are only likely to go forward for development if they
can connect to transport infrastructure. So Polarled will open a lot of
new opportunities, according to Brian Bjordal, CEO of Gassco, the
independent operator of Norway’s gas transportation system. “It’s
very important for us; it’s a stepping stone to a new era, the most
important one since Ormen Lange and Nyhamna.”
And it requires an undertaking of some magnitude to open up this
new era – the joint price tag of some NOK 57 billion ($9.7 billion) for Po-
larled and Statoil’s associated Aasta Hansteen feld development, also
approved in June, makes these among the biggest industrial projects
currently under way anywhere in Europe.
The 36-in. Polarled pipeline will run 482 km (300 mi) from Aasta
Hansteen in block 6707/10, just inside the Arctic Circle, down to Nyhamna. The route takes it across the Halten Bank close to a number
of discoveries that could potentially be tied in. So far Aasta Hansteen
is the only feld committed to using Polarled. In the early stages of
planning, Norske Shell’s Linnorm feld was also seen as a contender,
but Shell has since expressed concern about Linnorm’s economics,
and development may hinge on an appraisal well to be drilled this
summer on the nearby Onyx South feld.
However, RWE Dea has declared its intention to use Polarled
for gas from its Zidane discovery in block 6507/7, which it plans
to tieback to Heidrun. Other candidates are Centrica’s Fogelberg
in 6506/9; and Total’s Victoria in 6506/6; and Statoil’s Asterix fnd
Polarled, running from the Aasta Hansteen field within the Arctic Circle
to the Nyhamna terminal on Norway’s west coast, will offer a new export
route for gas in the Norwegian Sea. (Image courtesy Statoil)
in 6705/10.
The waters have been muddied somewhat by the Norwegian government’s recent decision to reduce the uplift available in the tax system,
which would increase the tax burden on new projects. However, projects
for which development plans had been fled prior to the tax announcement, including Aasta Hansteen and Polarled, will not be affected.
Ownership issues
Establishing a commercial basis for Polarled, previously known as
the Norwegian Sea Gas Infrastructure project, was not straightforward,
Bjordal explained. “This was not a total greenfeld project. There was a lot
of interfacing involved. The project assumes the participation of several
felds, not just one, and bringing together all the various stakeholders is
always a challenge. From that perspective it has been very complicated.”
Some of those originally involved – Centrica, E.ON Ruhrgas, and ExxonMobil – dropped out, while RWE Dea joined in at a relatively late stage.
Currently there are 10 owners, with Statoil holding by far the largest
stake ( 50.33%), while Petoro, which manages the state’s direct fnancial
interest in petroleum assets, has 11.95%. The other participants are ConocoPhillips, Edison, GDF Suez, Maersk, ÖMV, R WE Dea, Shell, and Total.
Gassco, which is purely an operating company, does not have a stake.
It has not yet been decided if Polarled will be part of Gassled, the
joint venture which owns most of Norway’s gas transportation system,
Bjordal said. A decision may follow closer to the project completion date.
