Shell and its partners on the Ormen Lange license have postponed plans for a ground-breaking compression project on the giant field, halting ongoing concept select work, citing costs and reservoir data.
Ormen Lange, Norway’s second largest field and producing since October 2007, in the Norwegian Sea, about 140km west of Kristiansund, had been a candidate for subsea compression—a new technology for the industry to help unlock gas reserves.
Norway’s Aker Solutions had carried out a pilot qualification and delivery 2004-2011, and system testing 2011-2013, based on one 12.5MW compression station at a 120km step out distance.
According to Shell, the partners had been working towards a concept select decision for offshore compression, with either subsea compression or a tension leg platform, for Ormen Lange since 2008.
This morning chairman of the Ormen Lange management committee, Odin Estensen, said: "The decision [to stop concept select] is based on an updated economic assessment Incorporating new cost information for the current concepts and updated analysis of the reservoir. The current concepts do not provide an economic return, based on the required capital investment and expected production volumes. The updated reservoir analysis also shows that offshore compression timing is not critical to the ultimate recovery of the field.”
The decision to halt concept select was supported by all the Ormen Lange partners, except state oil firm Petoro, said Shell.
The move will put the Åsgard subsea compression project, operated by Statoil, firmly in the lead in the race to the first commercial project offshore. Installation work on the Åsgard subsea compression project started last year, with the compression and manifold frames being installed offshore. Read more: Åsgard comes a step closer - http://www.oedigital.com/component/k2/item/3286-asgard-first-comes-a-step-closer
Watch video: Åsgard sets sail - http://www.oedigital.com/oe-media/oe-videos/item/3307-asgard-subsea-template-sets-sail
Statoil is also moving forward with its Gullfaks subsea compression project, with installation expected to be carried out next year. Announcing plans to use subsea compression on Gullfaks in 2012, Statoil said: “This technology adds 22MM boe to the production from the Gullfaks South Brent reservoir. The partners will invest some NOK three billion in the technology project scheduled to be completed in the autumn of 2015.”
However, escalating costs have seen projects delayed or cancelled, in the Norwegian and UK sectors of the North Sea. Read more: Production falls, costs rise - http://www.oedigital.com/component/k2/item/5118-production-falls-costs-rise
"The oil and gas industry has a cost challenge,” Estensen said today. “This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible.”
Water depth in the Ormen Lange area, in blocks 6305/4, 5, 7 and 8, is 800-1100m, according to partner DONG. The field is the second largest gas field on the Norwegian Continental Shelf (NCS), after Troll, and was developed with four subsea templates with a total 24 wells, combined with an onshore facility in Nyhamna. The field has an estimated life span of 30-40 years, with gas produced mostly sold to the UK.
“The Ormen Lange license remains committed to the ambition of maximizing the ultimate recovery from the Ormen Lange in a sustainable manner. Significant new information both on reservoir behavior and technology development will become available in the next few years, and provide basic two re-evaluate new options,” Estensen says.
"The Ormen Lange License believes in the subsea compression technology, and still regards the qualification of this technology to be an important stepping stone for the future Ormen Lange development alternatives. Subsea compression technology is a key contributor for ongoing and future developments field on the Norwegian Continental Shelf," Estensen added.
The Ormen Lange Partnership comprises: Shell (operator 17.81%), Petoro (36.49%), Statoil (25.35%), DONG Energy (14.2%), ExxonMobil (6.34%).
Ormen Lange Facts (from Shell and Statoil)
The Ormen Lange field was discovered in 1997, and is about 40km-long and 8-10km-wide.
The plan for development and operation (PDO) of the Ormen Lange field was submitted to the Norwegian authorities on 4 December 2003. Norske Shell took over as operator on 1 December 2007.
The Ormen Lange wells, drilled in an area with extreme weather conditions and sub-zero temperatures on the sea bed, are the world’s largest in diameter.
The concept solution for Ormen Lange includes 24 wells divided between four subsea templates. The fourth template was installed in the northern part of the field in 2011/2012.
The well stream is processed at the land facility in Nyhamna, where the gas spends just about 10 minutes before it is exported 1200km through one of the world’s longest subsea pipelines, Langeled, to Easington, in England.
Ormen Lange also produces a significant amount of condensate.
The gas field is named after King Olav Tryggvason’s longship, the Ormen Lange. This viking ship is particularly known from the story of the Battle at Svolder.
Subscribe
