France's Total and Norway's Statoil said last week the Snohvit gas field, in the Barents Sea, has begun production, with some of the output bound for the United States in the form of liquefied natural gas (LNG).

Total holds an 18.4% interest in the project, which is operated by Statoil (33.53%). The partners are Petoro (30%), Gaz de France (12%), Hess (3.26%) and RWE-DEA (2.81%). Statoil said production began Sept. 13.

Gas produced offshore in water depth of 310-340 meters (1,017-1,115 feet) on the Snohvit field is sent onshore through a 143 kilometer (89 mile) multiphase pipeline to a 4.2 million tonnes/year LNG plant at Melkoya, near Hammerfest, in northern Norway, where it is processed and liquefied. The LNG will be shipped to European and U.S. markets. Carbon dioxide (CO2) extracted from the gas is re-injected in a Snohvit field reservoir.

Contractual LNG deliveries are scheduled to begin in the fourth quarter. Gas production is expected to ramp up to a plateau in 2008 of nearly 5.7 billion cubic meters per year (550 MMcf/d). Nearly 23,000 b/d of condensate and liquefied petroleum gas (LPG) will also be produced at the Melkoya plant.

The Snohvit project is the first gas development in the Barents Sea and has involved the construction of the first LNG plant in arctic conditions.

After five years of development, the most northerly gas liquefaction plant in the world has come on stream, Statoil said.

"Snohvit is a fantastic industrial adventure we've been working on for many years," said Tim Dodson, Statoil acting executive vice president for exploration and production in Norway (EPN). "The start-up of LNG production 24 years after the discovery of the Barents Sea's Snohvit field is one of the absolute highlights in the project."

When the plant is in full production, one tanker will arrive at Melkoya every five or six days to collect LNG and transport it to customers in Europe and the United States, Statoil said.

"The Hammerfest LNG plant is the largest ever industrial development in north Norway," Dodson said. "We have developed the fields in the Tromso Patch and the Hammerfest LNG plant by implementing technology developed using previous experience from projects in the North and Norwegian Seas, in addition to long-term research and development."

In order to market its one billion cubic meters per year share of gas production, Total has chartered on a long term basis a newly built LNG carrier designed to operate in arctic conditions, with a 145,000 cubic meters capacity of LNG.

Total said it holds interests in four regasification terminals: Altamira in Mexico, Fos Cavaou in France, Hazira in India, and South Hook in the United Kingdom, and reserved capacity in Sabine Pass in the United States. The company recently agreed to acquire a stake in the Brass LNG project in Nigeria, in the Ichthys LNG project in Australia, in the Qatargas 2 project in Qatar and has made an agreement with Gazprom to cooperate in the study for the development of the first phase of the Shtokman field.

In 2005 Dominion Resources and Statoil ASA signed a 20-year agreement that gives Statoil access to increased capacity at the Dominion Cove Point LNG terminal on the Chesapeake Bay in eastern Maryland (see NGI, June 21, 2004). The deal is to take effect in 2008-2009. Statoil said it had secured a fourfold increase in its access to LNG in the U.S. market.

Cove Point's location "is strategically important [to us] for two reasons," Peter Mellbye, executive vice president for natural gas in Statoil, said in 2004. "One relates to the sailing distance for LNG from our Snohvit development in the Barents Sea and possible future LNG projects. The other is the terminal's proximity to important end-user markets with a big demand for natural gas around Washington DC and New York."

After Snohvit comes on stream, Mellbye estimated in 2004 that Statoil would be importing 0.25 Bcf/d through Cove Point.

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