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The Hammerfest LNG
plant has an export
capacity of 7.4 bcm per
year and is expected
to reach this limit until
2026.

Norway’s best option for Arctic

gas is pipeline not LNG: Rystad

PIPELINES & NORWAY would do better to commercial- is great,” Rystad analyst Dane Inglis explains.
TRANSPORT ise its Arctic gas resources by building a pipe- “When the economics are more marginal, the
line rather than expanding its LNG terminal simpler pipeline solution is most likely the right
in Hammerfest, Oslo-based Rystad Energy one.”
concludes. Norwegian gas grid operator Gassco pro-
In a research note on June 26, the consul- posed adding 1,000 km to the length of the exist-
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 Expanding
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 Hammerfest
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 would be no
north to make the pipeline plan feasible, Rystad next five years, bringing the total resource base
said. to 130 bcm. simple or
The Hammerfest LNG plant has an export However, “the high level of activity in the cheap task, 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 consultancy
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 argues.
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.™

P16 www. NEWSBASE .com Week 26 03•July•2020