SHELL POSTPONES NORWAY

Royal Dutch Shell has announced the postponement of a Norwegian subsea gas project because of increasing costs and complexity.

Shell said on Friday it would not be providing subsea compression at the North Sea's Ormen Lange, the second-biggest Norwegian gas field, despite the objections of a key licence partner.

According to the company, it will not reassess the decision for several years, until it has new technology and reservoir information.

In order to save on rising costs in Norway's vast offshore oil sector and earn more cash for dividends, major developments are being cancelled or delayed by various oil firms.

Although Shell gave no cost estimate, a subsea compression project by Statoil at the Aasgard field is estimated to cost 15bn crowns ($2.5bn).

Ormen Lange is more complex because waters are deeper and there would be no platform nearby to supply power and other equipment.

Ormen Lange management committee chairman Odin Estensen said the oil and gas industry is witnessing a cost challenge.

Shell, which is not ready to build a platform, has already delayed its $15.5bn Arctic Johan Castberg projects.

Norwegian oil services firm Aker Solution designed and built the compression-pilot project for the field, hoping Shell and its partners would use the technology.

Ormen Lange partners Statoil (25.4%), Dong Energy (14%) and Exxon Mobil (6.3%) supported the delay, but Norway-based Petoro (36.5%) opposed it.

The gas field is situated 120km northwest of Kristiansund, where seabed depths vary between 800m and 1,100m.

offshore-technology.com