StatoilHydro Confirms Smoke Incident on Rig at Troll Field

StatoilHydro ASA (STO) said Tuesday there has been an incident involving smoke on a production drilling rig at its Troll field, but there are no indications oil and gas output from the area will be affected.

All 100 personnel on board the Songa Dee drilling rig which was operating in the Troll West area are "reported to be in good shape," said StatoilHydro spokesman Gisle Johansen, with no evacuations necessary.

"There is no information that this will impact production," he said.

Johansen said: "We can't confirm the reason behind the smoke," but "most important for us now is to make sure that the personnel on board are safe."

The news caused a brief rally in gas prices in the U.K., which is a big importer of Norwegian gas. The market was initially "spooked", with the average price for the remainder of January rising almost 2 pence a therm at one point, said a U.K.-based gas trader working at a European utility.

"Sense has prevailed, it's coming off now," he said.

"It seemed a bit of an over reaction," said a U.K.-based trader at a large bank.

Gas for delivery in January traded at 50.50 pence a therm prior to the incident, to 51.50 pence a therm shortly after, before abating to 50.65 pence a therm at 1450 GMT.

Troll is located in the northern part of the North Sea, about 65 kilometers west of Kollsnes gas processing plant. Troll has two main structures, East and West and its annual estimated output in 2007 is 30 billion cubic meters of gas, 0.64 million metric tons of natural gas liquids, while daily oil production will average 162,000 barrels a day, according to figures from Norway's petroleum directorate.

StatoilHydro is operator of Troll, with an around 30% stake, Royal Dutch Shell (RDSA) has an 8.10% stake, ConocoPhillips (COP) 1.62%, Petoro 56% and Total (TOT 3.69%.

The Songa Dee rig is owned by Songa Offshore and managed by Stena Drilling.

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