Hydro to send gas to UK via Langeled in October

Energy Trade

Norwegian natural gas will start arriving in the UK via the new Langeled pipeline in October, helping ease concerns about meeting UK demand, Norsk Hydro ASA, Norway's second-largest oil company said. The southern end of the pipeline will be ready in October to deliver gas from Norwegian deposits, including the North Sea Troll field, to Easington on England's eastern coast, Hydro said today. The pipe will start delivering gas from Ormen Lange, a new field under development, in 2007. “The intention is to get gas into the market this year from Troll before production starts at Ormen Lange,” said Tom Roetjer, head of the Ormen Lange project, at a press briefing in Stavanger, Norway today. “The project is on schedule.” Several of the world's largest pipelay vessels are involved in installing the Ormen Lange project's gas pipelines. At present, two of them are meeting 100 kilometres off the coast of Romsdal in western Norway, where pipelines are to be laid down the edge of an ancient landslide, as steep as the landing slope of Oslo's ski jump, Holmenkollen.

At 1,200 kilometers (746 miles), Langeled will be the world's longest sub-sea pipeline and will be capable of shipping 70 million cubic meters of gas a day. The entire Ormen Lange project, named after a ship owned by Viking king Olav Tryggvason, includes an onshore processing plant. Langeled will cost about 3 billion kroner ($479 million) less to develop than its initial budget of about 20 billion kroner, Roetjer said. The entire Ormen Lange project was estimated to cost about 66 billion kroner. It is Hydro, operator for the development phase of the project, that – with the help of the huge vessels “Solitaire” and “S7000” – is in the process of making new oil and gas history, by carrying out one of the most demanding development projects in the world. Great sea depths, an uneven sea floor and powerful currents, combined with subzero temperatures, extreme wind conditions and enormous waves make Ormen Lange a complicated project. But Hydro and the engineering company Reinertsen have spent several years becoming familiar with the seabed, and finding the optimal pipeline route between underwater peaks and troughs, along the floor of the continental shelf and down the steep, 35 degree incline of the Storegga slide area.

Gas prices have risen an average of 60% in the past year in the UK because power stations, factories and households rely more on imports and gas stored underground as production declines in the North Sea. Hydro said in March it would send gas through the pipeline to the highest-priced market, either the UK or mainland Europe. Gas prices for delivery in October at the National Balancing Point, the main UK trading hub, fell 1% to 46.85 pence a therm at 9:37 a.m. in London, according to broker Spectron Group Plc. The price equals $8.90 per million British thermal units.

The laying of the world’s longest subsea pipeline, Langeled, is also proceeding according to plan. In November 2005, the “Acergy Piper” finished laying the southern part of the pipeline that when complete will run all the way from Nyhamna in Norway to Easington in the UK. So far this year, the vessel has laid over 300 kilometres of the northern part of the pipeline, running from Nyhamna to Sleipner. The southern section of Langeled will be opened for Norwegian gas exports between Sleipner and Easington in October 2006. For Hydro and its partners, it will cost 66 billion kroner to develop the Ormen Lange field, complete with subsea installations, pipelines and the land-based processing plant. When, in October 2007, the gas stream is finally able to pass through the world’s longest subsea pipeline – from the processing plant at Aukra in the county of Møre and Romsdal, Norway, to Easington on the east coast of England – the Norwegian gas field will be able to supply British consumers with 20% of their gas requirements. The Ormen Lange/Langeled project is now 75% complete, and is both on time and on budget. (Bloomberg, hydro.com)
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