So far, not enough attention has been paid to the logistics challenges involved in constructing and operating processing facilities in the Barents Sea.
The Norwegian Parliament approved the management plan that opened up the Barents Sea for petroleum development in June 2006. In 2007, the Snøhvit-LNG plant will come into operation and it is expected that the Goliat oilfield will be declared commercial and that a decision will be made to start on Snøhvit’s second construction stage.
On the Russian side, the development of the Shtokman field is likely to dominate the overall situation. This field development is scheduled to have a more or less continuous construction period of 20-25 years when realising the three development stages that will result in both LNG and pipeline gas for Europe.
Only a very few wells have so far been drilled on the eastern part of the Norwegian shelf. Major discoveries are, however, expected, and field developments and shore-based processing plants are likely to follow within the next 10-15 years. A possible situation in 2020 might be as shown on the map.
Norway is now preparing for a situation when there will be spare capacity in the North Sea gas grid. This situation calls for more gas to be put into the Norwegian pipeline system farther north in order to secure the future gas supply to Germany and Great Britain. The map shows a proposed extension of the Norwegian pipeline system to the Barents Sea called the Western Arctic Pipeline. This will be in addition to the Russian plans to connect the Barents Sea by a gas pipeline to the Baltic Sea pipeline. A system like this contains the necessary flexibility that the consumer nations are aiming for and allows Norway to optimise the utilisation of its gas grid in the south.
Very long pipelines
The major challenge from a development point of view might be the distance to shore. Processing facilities and year-round shipping terminals cannot be established on Svalbard, so very long pipelines have to be built to the mainland. This situation calls for a new kind of cooperation among the oil companies (and countries) when possible “far distant fields” are to be developed in the most cost-effective manner.
So far, not enough attention has been paid to the logistics challenges involved in constructing and operating processing facilities in the Barents Sea. Construction work has to take place all year round and in accordance with a very tight time schedule, taking into account weather conditions, etc. The Snøhvit development, which took place in a sheltered area, has shown us that when developments take place in more exposed areas and involve construction materials having to be delivered all year round, a lot of attention has to be paid to the maritime transport system and related logistics back-up system.
Other important elements
In that respect, the ongoing discussions about Shtokman have had too much focus on “who will be the winners”, based on the companies’ experiences in warmer climates. A realistic time schedule and proper attention to the logistics challenges might be just as important elements as experience in constructing shore-based processing facilities elsewhere.
Date: 25 August 2006