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Statoil Shuts Snohvit Gas Field, Melkoya LNG Plant Due To Leak

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OSLO (Dow Jones Newswires), Jan. 13, 2012

Norwegian energy company Statoil has shut production at its Snohvit gas field in the Barents Sea and the production of liquefied natural gas at its Melkoya plant outside Hammerfest, Norway due to a ruptured fire water line.

The rupture at the Melkoya plant happened Wednesday, the company said in a statement late Thursday.

"We are working to clarify the cause of the water leakage and preparing the repair work, so that we can resume production quickly," Oivind Nilsen, production director for Hammerfest LNG, said in the statement.

The Melkoya plant has seen a number of shutdowns and technical problems. This has also affected production from the Snohvit gas field, which fluctuated heavily in 2011.

The latest published production numbers from October 2011 showed that net production from the Snohvit field was down 7.6 million barrels or 23% on the year.

Gas from the Snohvit field is pipelined to Melkoya for liquefaction and exports.

Statoil added it is "too early to say anything about the duration" of the current production halt.

The shutdown would have to last for a while to have an impact on the market, an Oslo-based analyst said.

"We can't say anything more now" about the reasons for the incident, said Statoil spokesman Jannik Lindbaek Jr. on Friday.

Asked how long it will take before production is resumed, Lindbaek said: "we'll have to come back on that."

Statoil's share of production from the Snohvit field totals 48,000 barrels of oil equivalent a day, the company said.

Numbers published by the Norwegian Petroleum Directorate show that production from the Snohvit field fluctuated heavily in 2011.

In March it produced 4.4 million barrels of oil equivalent but maintenance stopped production in May and June. The August production was back up at 4.3 million barrels, but it dropped to 1.5 million barrels in October.

From January to October of 2011, the Snohvit field produced a total of 25.7 million barrels of oil equivalent, which is 7.6 million barrels less than in the same period of 2010, according to numbers from the Petroleum Directorate.

Snohvit's November and December production numbers for 2011 have not yet been published.

Statoil Petroleum AS owns 33.53% of the Snohvit license, Petoro AS owns 30%, Total E&P Norge AS owns 18.4%, GDF Suez E&P Norge AS owns 12%, Hess Norge AS owns 3.26% and RWE Dea Norge AS owns 2.81%, according to the directorate.

Copyright (c) 2012 Dow Jones & Company, Inc.

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