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Shell backs away from subsea gas compression technology

11th April 2014

Revolutionary subsea gas compression technology is no longer going to be commercially trialled at the Norwegian Ormen Lang field by Shell and its partners due to uncertainty over its cost viability

The technology, designed by Aker solutions, is designed to recover higher levels of natural gas from offshore fields by compressing the gas at subsea levels, making it unnecessary to have round-the-clock permanent staff based offshore.

“The decision is based on an updated economic assessment incorporating new cost information for the current concepts and updated analysis of the reservoir. The current concepts do not provide an economic return based on the required capital investment and expected production volumes. The updated reservoir analysis also shows that offshore compression timing is not critical to the ultimate recovery of the field,” said chairman of the Ormen Lange Management Committee, Odin Estensen.

“The oil and gas industry has a cost challenge. This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible. The Ormen Lange licence remains committed to the ambition of maximizing the ultimate recovery from Ormen Lange in a sustainable manner.  Significant new information both on reservoir behaviour and technology developments will become available in the next few years, and provide basis to re-evaluate new options,” explained Estensen.

Aker has yet to make a comment.

“The Ormen Lange Licence believes in the subsea compression technology, and still regards the qualification of this technology to be an important stepping stone for the Ormen Lange future development alternatives. Subsea compression technology is a key contributor for ongoing and future field developments on the Norwegian Continental Shelf,” said Estensen.

The decision is supported by all Ormen Lange partners, except Petoro.

Ormen Lange Partnership: Shell (Operator 17.81 per cent), Petoro (36.49 per cent), Statoil (25.35 per cent), DONG Energy (14.02 per cent), ExxonMobil (6.34 per cent).

Statoil is still moving ahead with its own subsea compression project at the Aasgard field in the Norwegian Sea and expects to be the first in the world to have such a project running when it starts up in 2015.

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