Norway's Ormen Lange Could Flow Gas Before October

LONDON Mar 27, 2007 (Dow Jones Newswires)

Norway's new Ormen Lange gas field is in good shape to deliver its first gas before October, project director Tom Rotyer of Norsk Hydro ASA (NHY), said Tuesday.

"It's a tough game, but things are coming together," Rotyer said, adding Hydro "has sound control of the status of the plant."

Rotyer said gas from the Sleipner offshore field will be pumped to Norway's Nyhamna onshore gas processing plant by the end of June. The gas will be used to commission the plant and the new section of pipeline connecting Nyhamna to the existing Langeled pipeline.

The Nyhamna plant will be fully closed for maintenance around once every three years, Rotyer said. "Full shutdowns will happen as seldom as possible," Norsk Hydro spokesman Ddag Ryen Ofstad said.

He added the plant has two separate production and processing trains, meaning output can continue at 50% even if part of the system is closed for maintenance.

A U.K. gas trader based in London said a likely fall in gas imports into the U.K. through Norway's Langeled pipeline during this testing period is already showing in forward pricing.

"For June, the Sleipner shortages are already factored into the price...hence it's 2 pence above within-day," he said.

Another gas trader at a large bank said: "June is already feeling bullish...there's a general fear of (Norwegian gas field) maintenance there."

Norsk Hydro, which is developing the project for Royal Dutch Shell PLC (RDSB.LN), said earlier this month that flows from the field will begin at 30 million cubic meters a day by October 1, rising to 50mcm/day by April 2008. Full production of 70mcm/day will be reached some time after that.

Rotyer said Hydro will hand over operatorship of the Ormen Lange to Shell after it comes on line.

"The tentative date for November 30 to December 1," Rotyer said. "But that's not confirmed yet." Hydro and the other project partners recently decided to go ahead with a pilot program for the installation of pioneering sub-sea compressors which will help increase gas recovery from around 2015.

Onshore testing of pilot compressors will take place at Nyhamna over the next few years to ascertain whether sub-sea compression is feasible, Rotyer said. The partners will make a final decision on whether to go ahead with that approach, or the more traditional platform mounted compressors around 2011.

Ormen Lange will also produce 50,000 barrels a day of condensate which will be shipped to market by the project's equity holders.

The majority of the cargoes are expected to be sold on the spot market, although some sellers may chose to take the cargoes to their own refineries.

Ormen Lange gas will flow either to the U.K. through the Langeled pipeline, or to continental Europe. Commercial deliveries of Ormen Lange gas are scheduled to begin October 1.

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