Partners Agree on Snohvit Development

The partnership in the Statoil-operated Snohvit unit in the Norwegian Barents Sea decided September 25th, to submit a plan for development and operation (PDO) to the authorities. A plan for installation and operation of an associated gas liquefaction plant on land in northern Norway was also approved for submission.

Snohvit will be the first development in the Barents Sea, and also ranks as the first large-scale project in Europe producing liquefied natural gas (LNG). The project will be developed stepwise at an estimated cost of NOK 46 billion in current money. "Snohvit will be the largest industrial project ever in northern Norway," says Henrik Carlsen, executive vice president for Statoil's Exploration & Production Norway business area. Expected to provide extensive spin-offs for the region, the development embraces field installations, pipelines, receiving facilities and a gas liquefaction plant at Melkoya near Hammerfest. Four large specialized LNG carriers will be built to transport the LNG between Melkoya and terminals in the USA and southern Europe.

Work is due to begin in the spring of 2002, with the installations coming on stream in 2006. Operation will continue until roughly 2030. During the peak construction period, the equivalent of 1,200 full-time workers will be needed at Melkoya. Operating the facility will create some 180 permanent jobs in the Hammerfest area.

The Snohvit partners have negotiated contracts on an individual basis to deliver a total of 5.6 billion cubic meters of LNG annually to US and south European markets. These sales agreements and contracts for the LNG vessels are due to be signed in October. The names of the gas buyers, shipowners and shipyards will be announced at the same time. The plans now being submitted embrace the development of gas and condensate (light oil) deposits in the Snohvit area, about 130 kilometers from the western coast of Finnmark county. The Snohvit, Askeladd and Albatross deposits will be produced by subsea installations operated from Melkoya, and none of the offshore installations will be visible on the surface. Snohvit is the first subsea development in which all field functions will be remotely operated from a facility onshore. A total of 21 production wells and one carbon dioxide injection well are due to be drilled. The wellstream will be piped to shore through a 160-kilometer line – the longest multiphase transport in any Norwegian offshore development. Condensate and liquefied petroleum gas (LPG) are removed from the wellstream on Melkoya and exported as separate products.

The natural gas is further cooled down to –163°C, when it liquefies. This LNG will be transported to market in vessels specially constructed for the low temperature. Technological choices are based on best available technology. Carbon dioxide produced with the gas will be separated, piped offshore in a separate line and injected into a sub-surface reservoir. The Barents Sea is an important area for Norwegian fish stocks, and optimal consideration will be paid to the fishing industry in the development. All seabed installations can be overtrawled.

Statoil has a 22.29 percent interest in Snohvit, while the state's direct interest is 30 percent. The other licensees are TotalFinaElf with 18.4 percent, Gaz de France with 12 percent, Norsk Hydro with 10 percent, Amerada Hess with 3.26 percent, RWE-DEA with 2.81 percent and Svenska Petroleum with 1.24 percent.

The project requires approval by the Norwegian Storting (parliament).