Aker Wins Breakthrough Ormen Lange Contract

Hydro has awarded Aker Kvaerner a total contract that could be worth up to NOK 850 million (US$135.5 million) for the Subsea Compression Pilot for the Ormen Lange natural gas field development offshore Norway.

The project is a world first for subsea compression. If it provides the expected results, the Ormen Lange partners will have a cost-effective alternative to the originally planned offshore platform.

Full execution of the contract is subject to the Ormen Lange partners' approval of both work program and budget for the subsea compression pilot program. A limited scope of work and cost exposure has been agreed. The aim of the project is to evaluate whether a subsea compression station, at approximately 900 meters water depth, is a viable alternative to an offshore platform. Later in the production phase, the challenge at Ormen Lange will be to boost the well stream in order to maintain production of gas and condensate from the reservoir

The pilot is identical to one of four trains on the proposed full-scale subsea compression station. The contract includes an option for the partners to choose Aker Kvaerner to deliver the complete subsea compression station--a decision expected late in 2011.

"We are extremely happy to announce this breakthrough contract,” said Aker Kvaerner executive vice president Raymond Carlsen. “For 20 years Aker Kvaerner has worked continuously to develop a robust subsea gas compression system in close cooperation with the industry. What's more, this technology is applicable to other field developments both in Norway and Russia--and all over the world.”

Currently, Aker Kvaerner is constructing the onshore process facility for Ormen Lange at Nyhamna on Norway’s west coast. Nearly 5,000 people are working in rotation. "By combining our subsea gas compression know-how with the extensive knowledge of the process facility at Nyhamna and our proven track record for executing projects, we are confident in the success of the pilot," said Carlsen.

Subject to the partners' final approval, Aker Kvaerner's scope of work comprises concept development, engineering, procurement, construction, and qualification of the subsea compression station pilot. The objective of the pilot project for Ormen Lange subsea compression is to perform a controlled endurance test from 2009 to 2011 at the Nyhamna onshore terminal.

The engineering phase starts immediately. Approximately 90,000 engineering hours will be carried out at Aker Kvaerner's office in Oslo. The compact and modularized pilot will be constructed and assembled in Norway at Aker Kvaerner's Egersund yard and will be ready for installation in January 2009. A purpose-built test pit for the compression pilot is being prepared at Nyhamna.

The pilot will be carried out as an integrated project, using Aker Kvaerner's project execution model, with resources from several Aker Kvaerner companies, including Subsea and Engineering & Technology. The contract partners are Aker Kvaerner Subsea AS and Hydro acting as operator on behalf of the Ormen Lange Group.

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