Development plans: for Snohvit could be on the cards
Statoil eyes Snohvit output boost
Norwegian oil and gas producer Statoil said today it was mulling over increasing liquefied natural gas output from its Snoehvit field in the Barents Sea.
Statoil said it may take a decision on a "second train" of LNG production at its Snohvit facility, which now exports mainly to the US, after another well is drilled into the Barents Sea reservoir later this year.
"We are looking to firm up more gas (supplies) for perhaps for a second train at Snohvit," Ivar Aasheim, Statoil's senior vice president for northern operations told Reuters on the sidelines of a conference in northern Norway.
Aasheim said that the Snohvit decision would also have to take into account large-scale discoveries of shale gas in the US which had depressed gas prices and led to more LNG imports to Europe.
"Shale gas has put pressure on gas prices in the US and lots of people are sending LNG to Europe, which is again hitting us," he said.
"When we do the investment decision on Snohvit, we will have to have a projection of the gas prices. It looks to me that there will be a shift and oil and gas prices will go their different ways in the future," he added.
Statoil has joined the race for US shale reserves in a venture with natural gas company Chesapeake Energy, and together with South Africa's Sasol the two also plan to drill for such deposits in South Africa.
Aasheim said that because of the complexity and costs of developing oil and gas projects in the remote Norwegian Arctic, it was essential that energy prices stay high.
"The oil price should be at least at today's level to develop these resources," Aasheim said.
Statoil has had trouble with Snohvit since it came on stream in late 2007, mainly with the liquefication process.
After a major overhaul at the plant last year, Statoil said this month that it believes the problems have been solved, although another one-month maintenance stop is due around the middle of 2010.
Besides Snohvit, Statoil is a minority partner in the only other offshore development in the Barents Sea, the Goliat oil project, run by Italian producer Eni.
A number of dry wells drilled in the Barents over the past years have disappointed Norway's oil and gas industry, which had hoped for more discoveries to help offset dropping production from maturing North Sea oilfields.