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Ormen Lange on stage in Rio

September 10, 2002, 01:00 CEST

The Ormen Lange gas development took center stage in Rio last week when Hydro senior vice president and Ormen Lange Unit committee chair Bengt Lie Hansen presented the project at "the Olympics of the oil and gas industry" - the World Petroleum Congress.

Development operator Hydro was able to confirm the project "is on its way to bringing gas on stream by 2007... that we've so far solved technical challenges, like laying pipeline on the field's moonscape in the subsea Storegga slide and contending with flow assurance of the wellstream in sub-zero temperatures ... and that we're right on schedule," he comments.

Lying off the north-western Norwegian coast at water depths of 800-1,100 meters, the Ormen Lange development is estimated to cost between NOK 35-40 billion (USD 4.7-5.4 billion). The field holds some 400 billion cubic meters of gas and is projected to supply between 15-25 billion cubic meters (bcm) gas per year.

Pipeline decision

"The UK market seems most promising now," says Lie Hansen, explaining that a decision whether to connect the field to existing UK pipelines or build a new transport system will be made by the end of this year. If a new transport system is chosen, a decision between a 42-inch or 48-inch diameter pipeline must be made.

"A 48-inch pipe would be the largest subsea pipeline ever laid. It would travel 1,200 kilometers and weigh 1.4 million tonnes," he explains, adding "that's a lot of steel." The larger pipeline would have an annual 25 bcm capacity and the smaller some 20 bcm per year.

Ormen Lange's gas volumes and pipeline capacity will help push Norway's total gas sales above 100 bcm per year, making it the second largest gas exporter in the world after Russia.

"Ormen's reservoir has the capacity to supply the larger quantity of gas," Lie Hansen affirms. Contrary to the traditional system of selling gas in the Norwegian sector, by way of the now dissolved Gas Negotiations Committee, the individual shareholders of Ormen Lange - Hydro, Shell, BP, ExxonMobil and Statoil - will sell the gas autonomously.

On or offshore

Hydro's recommendation to the partners whether to send the gas to a land-based treatment facility in Aukra municipality or to process the gas offshore is set for Sept. 26. The decision will be based on economic, environmental and socio-economic criteria.

"Hydro is now documenting that it can solve extremely complex technical challenges in one of the world's most hostile environments," Lie Hansen says. "In Rio, it was documented that conditions on Ormen Lange are much tougher than deep water projects off West Africa, Brazil and in the Gulf of Mexico. The project will give Norsk Hydro a competitive edge in new deep-water projects and enhance the company's technological image internationally.

Governance process

Hydro also implemented a new "Ormen Lange governance process," explains Lie Hansen.

"It's a common decision making process accepted by Ormen Lange partners replacing each partner's own value assurance process and owned by the Ormen Lange Management Committee. It provides independent assurance at defined project milestones that the greatest value has been achieved, particularly during the early phases of the project, and it assesses the suitability of the project plans and strategies."