Melkøya Expansion Will Have to Wait, Snøhvit Partners Decide (Norway)

The owners in the Snøhvit license have decided to stop the work on a possible capacity increase on Melkøya. The license has concluded that the current gas discoveries do not provide a sufficient basis for further capacity expansion.

The license has not determined whether LNG or a pipeline solution is the best concept for a potential capacity increase at a future date.

Over the last eighteen months, the Snøhvit license partners have carried out studies for the expansion of the gas export capacity from Melkøya. The increased capacity would enable the accelerated gas production of increased reserves in the Snøhvit license, together with existing discoveries in the area.

Thorough studies have been carried out of both an LNG train II and a dew-point facility/pipeline solution, and the Snøhvit license has devoted considerable resources to finding solutions that could make a capacity expansion profitable. The pipeline solution was studied in collaboration with Gassco.

The possibility of producing increased reserves in existing trains has been an alternative throughout the process, in addition to the two concepts for capacity increase. With new gas discoveries increased capacity may again be considered.

The Snøhvit license will in the immediate future focus on optimising and upgrading the existing LNG facility on Melkøya (Train I) and further developing Snøhvit through phases 2 – 4 for Train I.

“There will be major investments associated with phases 2 – 4, which include the development of Askeladd and a future compression solution,” says Øystein Michelsen, executive vice president for Development and production Norway in Statoil.

In total, the installation of five new subsea templates and a total of 12 production wells are planned.

Facts about Snøhvit and Melkøya

* Snøhvit was the first petroleum development in the Barents Sea. Large volumes of natural gas are transported through a 143-kilometre pipeline to shore and cooled at Europe’s first production facility for Liquefied Natural Gas, Hammerfest LNG.

* Snøhvit is the first major development on the Norwegian shelf where the entire production facility is placed on the seabed, between 250 and 345 metres below the sea surface.

* At the LNG plant on Melkøya the well-stream is separated and the natural gas is cooled to minus 163 degrees Celsius before being shipped to the market.

* Partners: Statoil (36.79%) (operator), Petoro (30%), Total E&P Norge (18.40%), GDF SUEZ E&P Norge (12%) and RWE Dea Norge (2.81%).

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Press Release, October 2, 2012