Global Insight Perspective | |
Significance | StatoilHydro is intending to spend up to US$2 billion on the further development of Troll, with work to include the installation of a new gas injection plant, construction of a new gas pipeline, and the replacement of production pipes in several gas wells. |
Implications | The redevelopment work is expected to boost the field’s oil reserve tally by 17 million barrels while maintaining the current gas export capacity at Troll East of 120 mmcm/d. |
Outlook | The work, if approved, will provide for profitable oil production from Troll through to 2030, while sustaining the contribution of Norway's largest gas field to the country's overall production. |
New PDO Submitted
StatoilHydro has submitted a new PDO to Norway's Minister of Energy and Petroleum for the redevelopment of the 1-tcm Troll field in the North Sea, the largest field on the Norwegian Continental Shelf (NCS). The redevelopment work is aimed at boosting oil recovery from the field, while maintaining the existing gas export capacity of Troll East of 120 mmcm/d. StatoilHydro stated the work would optimise recovery from the field, which has been producing oil and gas since the mid-1980s.
The Field
The Troll field lies in the northern part of the North Sea, around 65 km west of Norway. It comprises the main Troll East and Troll West structures, located in blocks 31/2, 31/3, 31/5, and 31/6. The field was discovered in 1979, deemed commercial in 1986, with first gas flowing in 1996. The field is owned by Norwegian state oil company Petoro (56%), StatoilHydro (30.6%), Shell (8.1%), Total (3.7%), and ConocoPhillips (1.6%). StatoilHydro is the operator of the Troll A, B, and C platforms.
Troll is the largest gas field on the NCS, representing some 60% of total reserves, and is expected to continue producing gas for at least another 70 years. It is also one of Norway's largest oilfields; following two decade of production, current oil reserves stand at around 300 million barrels, down from around 1.5 billion barrels on discovery. Daily oil production from the field has reached as high as 400,000 barrels.
The Work Programme
The intended work programme detailed in the PDO includes the installation of a new gas injection plant for improved oil recovery on the Troll B platform. The plant is expected to be completed by 2010-11, and will increase oil reserves at Troll by 17 million barrels. StatoilHydro will also install a new 35-inch rich gas pipeline from the Troll A platform to the onshore Kollsnes gas plant. The pipeline will come onstream in 2011 and is designed to maintain the field's daily gas production capacity. Furthermore, StatoilHydro will replace production pipes in the gas wells running up to the Troll A platform in the Troll East area. The new pipes will have a larger diameter, resulting in a lower pressure drop at the field and increased production from the wells. The PDO has an investment limit of around 10 billion kroner (US$2 billion).
The makeover of the Troll field comes after the cancellation last October of the Troll gas export pipeline. The Norwegian government decided that producing additional gas from Troll would affect the reservoir and jeopardise remaining oil extraction. The new PDO sees StatoilHydro abide by the government's ruling, with gas production to remain constant, and a greater focus on maximising oil extraction as indicated by the construction of a new gas injection plant for improved oil recovery on the Troll B platform. Last year's decision by StatoilHydro and its partners to discontinue the Troll Future Development project thwarted the plans of Belgium, the United Kingdom, and the Netherlands, which had all been bidding to receive the Troll export pipeline to boost gas imports from one of Europe's most reliable gas suppliers. As a result of the project's cancellation, StatoilHydro pulled out of the related Gas Network Expansion (GNE) project to build a new gas export pipeline from the NCS to Europe after pipeline operator Gassco recommended that the companies involved wind up the project.
Outlook and Implications
Troll is a key asset for both its corporate owners and for Norway. The ramp-up of production from Troll was one of the key contributors to the significant growth in Norwegian gas production observed since the mid-1990s, and the field continues to hold substantial reserves, with remaining gas reserves more than double those of the next largest Norwegian field, Ormen Lange. As such, the proper management of the field is vital for Norway—as reflected in the Ministry of Energy and Petroleum's decision last year to disallow greater gas production from the field—and the Ministry can again be expected to scrutinise the new PDO closely. Still, StatoilHydro has clearly taken care to ensure its new plan for the further development of Troll will maximise both oil and gas recovery from the key asset, giving the company a strong chance of receiving regulatory approval for its plans.