Page 11 - EurOil Week 26

EurOil PIPELINES & TRANSPORT EurOil

Norway’s best option for Arctic

gas is pipeline not LNG: Rystad

NORWAY NORWAY would do better to commercialise is great,” Rystad analyst Dane Inglis explains.
its Arctic gas resources by building a pipe- “When the economics are more marginal, the
But there is a risk that line rather than expanding its LNG terminal simpler pipeline solution is most likely the right
neither option will be in Hammerfest, Oslo-based Rystad Energy one.”
advanced, given waning concludes. Norwegian gas grid operator Gassco pro-
interest in the Barents In a research note on June 26, the consul- posed adding 1,000 km to the length of the exist-
Sea. tancy said that extending Norway’s pipeline ing Aasgard pipeline and another 830 km to the
system northwards was “a more viable solution” Polarled transmission system. This would lift
for expanding Hammerfest, which currently overall export capacity to at least 10 bcm, and
exports gas from the Snohvit field in the Barents possibly as high as 20 bcm, per year. For these
Sea. However, Norwegian producers would need levels to be achieved, a further 40 bcm of gas
to find an extra 40 bcm of gas in the country’s far would need to be found in the Barents Sea in the
north to make the pipeline plan feasible, Rystad next five years, bringing the total resource base
said. to 130 bcm.
The Hammerfest LNG plant has an export However, “the high level of activity in the
capacity of 7.4bn cubic metres per year and is Barents Sea over the past five years has generated
expected to reach this limit until 2026. After this rather meagre results,” Rystad says. “And given
point, the region’s gas production will be con- the likelihood of relatively weak oil prices for the
strained by its export capacity. foreseeable future, there is a chance that 2020
Rystad estimates that the Barents Sea holds could be the final year of significant exploration
around 90 bcm of discovered gas that could activity in the region.”
underpin new export capacity being built. If Expanding Hammerfest would be no simple
capacity is not expanded, projects will have to be or cheap task, the consultancy argues. The origi-
phased which will destroy substantial value, the nal project was completed eight months behind
consultancy said. schedule and 50% over budget, largely because of
“The cards appear to be increasingly stacked logistical difficulties.
against further development of LNG. High pro- “A new pipeline export route wins out in
ject costs, technically complex solutions and terms of offering the lowest cost, on a per unit
harsh environmental conditions don’t make for basis, for additional gas export volumes,” Rystad
happy bedfellows, even when the opportunity concludes. ™

Week 26 02•July•2020 www. NEWSBASE .com P11