Norway 'Turns Screws' on Ormen Lange
Thursday 1 December 2016
Shell is reportedly facing renewed pressure from the authorities to move forward on an increased recovery project at its Ormen Lange gas field off Norway – though the Anglo-Dutch supermajor is apparently considering asset sales off the country.
The operator and its licence partners decided in 2014 to postpone a concept decision on a subsea gas compression project to exploit more of the field’s residual resources midway through a four-year pilot scheme, citing economic pressures.
Shell, which is already expanding its onshore Nyhamna gas processing plant with two new compressors to lift recovery at Ormen Lange, has previously stated it would possibly make a concept selection in 2017 for the offshore project, with work ongoing internally.
However, the Norwegian Petroleum Directorate’s (NPD) director general Bente Nyland told news agency Bloomberg it wants to see Shell start making progress on offshore compression from next year, adding it will start to be “urgent” to proceed with the project in 2017 and 2018.
“A clear message to Shell is that we expect that it seizes the opportunities that exist at Ormen Lange and comes to a decision to take this forward. There are a lot of resources at Ormen and we have to get them out.” Nyland was quoted as saying.
Production at the Norwegian Sea field, which supplies about 20% of the UK’s gas demand, has been falling due to a natural decline in reservoir pressure, which could be offset by subsea compression facilities.
Shell said earlier this year that the project could add as much as 30 billion cubic metres of gas output from the field, which has remaining reserves of about 140 Bcm, down from an initial estimate of 300 Bcm.
Operators off Norway are under increasing pressure to realise time-critical resources using existing infrastructure in line with a regulatory requirement and the NPD has warned this should not be sacrificed due to cost-cutting amid low oil and gas prices.
Nyland has previously said oil companies should not “skim the cream” by tapping only resources that can be profitably exploited at current price levels but should have a longer-term perspective on resource recovery.
A spokeswoman for the company stated: “It is still too early to conclude if a major project to increase recovery beyond onshore compression will materialise.
“The concepts being evaluated range from debottlenecking from existing infrastructure, to subsea separation and compressor solutions subsea as well as on floating structures.”
Shell is though reported to be looking at possible asset disposals from its $3 billion Norwegian portfolio, having enlisted investment bank Rothschild to carry out a review of its country unit, as part of a wider $30 billion divestment programme.