Statoil Shaves Arctic Gas Pipeline Cost
August 21 2015 - 08:28AM
Dow Jones News
OSLO-Norway's Statoil ASA [STO] said Friday that it expected to
spend nearly a third less than planned to build the Polarled
pipeline, which is set to bring gas from an Arctic field to the
Norwegian mainland, after the pipeline-laying vessel crossed the
Arctic Circle this morning.
"We are currently expecting to deliver way below budget," said
Statoil project manager Alfred Øijord.
The Polarled pipeline was budgeted at 11.1 billion Norwegian
kroner ($1.35 billion), but the operator Statoil now expects it to
cost around NOK7.5 billion, partly due to favorable market
conditions.
Lately, Statoil has been pushing suppliers to reduce costs, amid
oil prices that are more than halved on the year, with Brent
trading Friday at around $46 a barrel. The company has delayed
several high-profile projects, notably the Arctic Johan Castberg
oil field, in a bid to reduce development costs.
The 482-kilometer (300-mile) Polarled pipeline, the deepest-ever
off Norway and the first to cross the Arctic Circle, will take gas
from the Aasta Hansteen gas field in the Norwegian Sea to Nyhamna
on the country's western coastline, for processing and exports to
Europe through the country's vast ocean-bottom pipeline
network.
Future discoveries in the Norwegian Sea may be attached later
through six additional connection points, and Statoil said the
pipeline may trigger future exploration in the area, which is less
well-explored than the mature North Sea province.
"Polarled will open up for gas export to Europe from a
completely new gas province, and with the infrastructure in place
it will also be more attractive to explore the surrounding area,"
said Håkon Ivarjord, Statoil's Polarled project venture
manager.
The Arctic pipeline is placed on the sea bottom by the world's
largest pipeline-laying vessel, Allseas Group S.A.'s Solitaire, at
a pace of around four kilometers a day. The vessel started its work
at Nyhamna in March and is expected to reach its destination at
Aasta Hansteen in September, if the weather remains good.
A hefty supply of pipes is required to keep the pace. As each
piece of pipe is only 12.2 meters long, it takes two to three
shiploads each day to supply the roughly 300 pipes that Solitaire
is laying down daily, Statoil said.
The Polarled licensees also include Petoro, OMV AG, Royal Dutch
Shell PLC, Total SA, RWE Dea AG, ConocoPhillips, Edison, A.P.
Möller Maersk A/S, GDF Suez and Wintershall AG.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
(MORE TO FOLLOW) Dow Jones Newswires
August 21, 2015 08:13 ET (12:13 GMT)
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