SNØHVIT – A TRUE ADVENTURE

Adopting new technology has allowed Statoil to achieve what few people had thought possible – the first offshore development in the Barents Sea. Without surface installations, this Snøhvit project involves bringing huge volumes of natural gas to land for liquefaction and export from the first plant of its kind in Europe – and the world’s northernmost liquefied natural gas facility. Arctic LNG supplies from Snøhvit provide new opportunities for Statoil in the US gas market.

New markets for Arctic gas Deliveries from the Snøhvit development will provide Statoil with its entry ticket to the fast-growing US market for natural gas. An annual volume of 2.4 billion cubic metres of liquefied natural gas (LNG) is due to be shipped to the Cove Point receiving terminal in Maryland when this field comes on stream in 2006. Spain represents another important market for Statoil, and 1.6 billion cubic metres of Snøhvit gas will be shipped to that country every year.

The French licensees in the field, Gaz de France and Total, are responsible for exporting their own share of the gas. This totals 1.7 billion cubic metres per year.

Gas liquefaction and shipment represent the most effective method of transport to markets over distances longer than 3 000 kilometres.

A letter of intent has secured Statoil access to increased capacity at Cove Point for a 20year period.

LNG ranks as the world’s fastest growing energy market, with 150 billion cubic metres of natural gas shipped in this form during 2002 – or 26 per cent of all gas transport.

Specially-built LNG carriers are due to ship gas from the Hammerfest LNG plant at Melkøya in northern Norway to the receiving terminals. Each cargo will be the equivalent of 870 million kilowatt-hours of energy.

At the receiving terminal, the LNG is regasified and used for heating, cooking or generating electricity.

Natural gas from Snøhvit will be used to heat American homes. Although they look real, the flames in Tony White's imitation log fire do not crackle. He will soon be able to use Arctic gas to create a cosy atmosphere with his gas fire.

USA

Cove Point

Askeladd

Snøhvit Albatross

Hammerfest

Environment-friendly and forward-looking technology Snøhvit is the first offshore development in the Barents Sea, and the solution chosen rests on the “best available technology” principle. As operator, Statoil aims to produce the field without harmful discharges to the sea. Also embracing the Albatross and Askeladd fields, the Snøhvit project represents the first wholly subsea development on the Norwegian continental shelf (NCS). No offshore installations are visible on the surface. In addition, all the seabed structures can be overtrawled. Statoil has pursued an extensive dialogue about the development solution with the important fishing industry in these waters. Plans call for 20 production wells and one injection well for carbon dioxide to be drilled on the field in 250-345 metres of water. The unprocessed wellstream will be carried for 143 kilometres to the Hammerfest LNG plant through the world’s longest multiphase flow pipeline. Operations personnel will monitor and manage field production and pipeline transport from the Melkøya control room. This remote operating

solution is based on fibreoptic and high-voltage power cables as well as hydraulic systems. Some 700 000 tonnes of carbon dioxide will be separated from the wellstream and piped back to the field for injection in a suitable subsurface formation. For Statoil, the Snøhvit project marks the first stage in an exciting and challenging move into offshore operations in far northern waters. And the development approach adopted opens for sustainable and successful petroleum activities on this part of the NCS, with a long-term perspective. The companies involved, northern Norway and the nation as a whole all stand to benefit.

Bilbao SPAIN

Huelva

NORWAY

World’s most energy-efficient liquefaction plant The Hammerfest LNG plant is the first export facility of its kind in Norway and Europe. Its gas liquefaction plant also ranks as the most energy-efficient in the world. Twelve doctoral studies have contributed to the refrigeration process developed by Statoil and Germany’s Linde group to liquefy natural gas at a temperature of -163°C under normal atmospheric pressure. This conversion process reduces the original volume of the gas 600-fold, simplifying storage and transport. The refrigeration process and a cold Arctic climate help to boost the liquefaction plant’s energy efficiency. This in turn cuts

polluting emissions substantially by comparison with similar facilities. But the cooling process is nevertheless energy-intensive, and 1.5 terawatt-hours will be required to maintain production for 330 days per year. Some natural gas from Snøhvit will accordingly fuel Melkøya’s own power station. The huge LNG storage tanks hold 125 000 cubic metres of gas, and are built on the same principle as a vacuum flask. Well-insulated walls comprising several layers of steel and concrete keep the contents liquid until they can be shipped out. In addition come one tank each to hold con-

densate and liquefied petroleum gases separated from the wellstream. These hold 75 000 and 45 000 cubic metres respectively. The steel modules for the Hammerfest LNG plant have been prefabricated in various parts of Europe and transported to Melkøya by sea. The north Norwegian climate and limited local infrastructure are two key reasons for prefabricating the Snøhvit processing plant further south. Half the contracts for the Snøhvit project have been placed with the Norwegian supplies industry – well above the 36-38 per cent share originally expected to go to domestic companies.

Major regional impact With a price tag of roughly NOK 51 billion, the Hammerfest LNG plant at Melkøya ranks as the largest-ever industrial development in northern Norway. It is contributing substantial value creation and expertise at local and regional level. Some 450-500 jobs will be created in the Hammerfest area when this facility comes on stream, including 160-170 permanent posts in Statoil’s operations organisation at Melkøya. The plant is set to remain operational for 2530 years. During the construction phase, the project has contributed to the creation of new companies in Hammerfest and its surrounding area. Deliveries from north Norwegian companies totalled NOK 2.2 billion to the spring of 2005 – more than three times the original forecast.

Goldsmith Synniva Juhls makes traditional jewellery at Juhls' Silver Gallery in Kautokeino in northern Norway. She concentrates on fine detail in her work while the gas flame keeps the precious metal hot, making it easier to shape.

Facts

Products LNG: liquefied natural gas. Consists of 90 per cent methane which liquefies at a temperature of -163°C. LPG: liquefied petroleum gases, also called natural gas liquids (NGL). Consist primarily of propane and butane. Condensate: light oil. Consists of fractions – pentane, hexane and heptane – which are gaseous in the reservoir but liquid at atmospheric pressure and temperature.

• Cargo capacity: 145 000 cu.m of LNG • Length: 290 metres • Annual shipments: about 70 with LNG. Other vessels will make 15-20 trips with LPG and condensate. Fields Apart from the main field, the Snøhvit project embraces the Albatross and Askeladd satellites. The first gas discovery was made in 1981.

LNG carriers Four new carriers are under construction at Japanese yards for delivery between November 2005 and April 2006. These vessels will be operated by Norway’s Leif Høegh & Co Shipping and Japan’s Kawasaki Kisen Kaisa (K-Line).

Snøhvit web site: www.statoil.com/snohvit

Operation

• Jobs in the operations organisation: 160170.

• Production life for Melkøya: 25-30 years. • No surface installations. Subsea-completed • •

Market Annual exports from Melkøya will total 5.7 billion cubic metres of LNG, 460 000 tonnes of condensate and 220 000 tonnes of LPG. To gain access to the US market, Statoil has acquired capacity at the Cove Point terminal in Maryland. A long-term gas sales contract has also been signed with Iberdrola of Spain. Gaz de France and Total will take care of their own gas volumes. • USA: 2.4 billion cubic metres of gas • Spain: 1.6 billion cubic metres of gas • France: 1.7 billion cubic metres of gas

Investment About NOK 51 billion in current money for field development, pipeline and land-based plant. In addition comes the cost of building LNG carriers. • Construction phase: 2002-06.

• • • •

production wells with a pipeline to land. Pipeline: length 143 kilometres, internal diameter 65.5 centimetres Wells: 20 producers, one for carbon dioxide injection Water depth: 250-345 metres Reservoir depth: 2 040-2 375 metres Reservoir pressure: 209-267 bar Reservoir temperature: 65-91°C

Licensees Statoil ASA (operator) Petoro AS Total E&P Norge AS Gaz de France Norge AS Amerada Hess Norge AS RWE Dea Norge AS

33.53% 30.00% 18.40% 12.00% 3.26% 2.81%

Grafisk 040549. Photo: Scanpix, Eilev Leren, Roar Lindefjeld, Statoil. Illustration: BUG, Statoil, Petrolink. May 2005

Recoverable reserves 193 billion cubic metres of natural gas, 13.8 million tonnes of condensate, 6.6 million tonnes of LPG.