Norsk Hydro Tests First Ormen Lange Gas Production Well

OSLO, Jul 23, 2007 (Dow Jones Commodities News)

Norsk Hydro (NHY) has successfully tested the first gas production well at its giant Ormen Lange field in Norway using the drillship West Navigator, the company said Monday.

The well - called A2 - began flowing on July 19 at a maximum rate of 3 million standard cubic meters a day, which is the drillship's capacity, Norsk Hydro said. It will have a production capacity of 10 million cubic meters a day when the field comes online in October.

Norsk Hydro spokesman Lars Bjelvin said the gas from the tests on well A2 is currently being flared onboard the drillship vessel, and added that production testing will continue until it is ready to start production.

He reiterated earlier comments that Hydro expects to begin Ormen Lange production in October, for delivery to market.

Ormen Lange project director Tom Rotjer said: "This is an important milestone in the Ormen Lange project and the Well Delivery and Subsurface Teams have made a great achievement in getting us to where we are today."

Well A2 is the first of many production wells that will be drilled at the field. Three wells are planned to be cleaned up and tested by early August and handed over to operations ready for full production start-up later this year, Hydro said.

After that project, the West Navigator will move on to completing the next batch of wells prior to moving onto next winter's drilling campaign, Hydro said. A total of 24 deep-water wells are set to be drilled on Ormen Lange.

Hydro relinquishes operatorship of Ormen Lange field to Royal Dutch Shell (RDSA) on Nov. 30 this year, on completion of the development phase. Gas from Ormen Lange will be shipped to the Sleipner processing hub via Langeled North pipeline and then on to either the U.K. through Langeled South, or the European continent. While Langeled's south portion is already operational, the north-leg is currently undergoing start-up procedures. It will be tested using gas from the Sleipner field. Sleipner gas will also be used to commission the Ormen Lange gas processing plant at Nyhamna.

First commercial deliveries from Ormen Lange will flow at around 30 million cubic meters a day, ramping up to 50 mcm/day in April 2008 before reaching plateau production of 70mcm/day.

Statoil ASA (STO), Denmark's DONG Energy, ExxonMobil Corp. (XOM) and Petoro ASA have minority stakes in Ormen Lange.

Copyright (c) 2007 Dow Jones & Company, Inc.

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