Shell has shelved plans for an innovative subsea gas compression project in the North Sea over fears about the project’s cost.
The Anglo-Dutch supermajor had been developing a system using subsea compressors on the Ormen Lange project in the Norwegian Sea that would run without an offshore platform.
The project was looking at how to extract more gas from the multi-billion pound field, which provides a fifth of the UK’s entire gas supply.
But after six years of work on the project to find a concept that would work on the giant gas field, the firm has has now decided to postpone the project.
“The decision is based on an updated economic assessment incorporating new cost information for the current concepts and updated analysis of the reservoir,” said the project’s chairman, Odin Estensen.
“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.”
The field, around 120km north-west of Kristiansund, sits in water of up to 1100m. Gas from the field has been developed through a 1200km pipeline from Nyhamna, where it is processed, to Easington.
The field, thought to contain around 300billion cubic metres of gas, has been producing around 70million metres a day since coming onstream in 2007.
The project had been looking at ways of extracting more gas from the field either through a platform-less subsea compression techniques developed by Aker Solutions, or by installing a tension leg platform on the site.
Shell said it still supported using subsea compression on the field, but that the current economics of the project had forced it to be shelved.
“The oil and gas industry has a cost challenge,” admitted Mr Estensen.
“This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project economically no longer feasible.
“The Ormen Lange license remains committed to the ambition of maximizing the ultimate recovery from the Ormen Lange in a sustainable manner.
“Significant new information both on reservoir behavior and technology development will become available in the next few years.
“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 future.”
The first phase of the field project has cost around £5billion ($8.5billion), with Shell operating alongside partners Petoro, Statoil, Dong Energy and ExxonMobil. Petoro were the only ones to have objected to the decision to shelve the project.
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