As the debate surrounding just how much liquefied natural gas (LNG) will actually find its way to U.S. shores continues, a historic delivery of LNG from the Norwegian continental shelf arrived in the United States last Thursday, according to StatoilHydro. The shipment of Snohvit LNG marks the first delivery of gas from Europe to the world's largest energy market.
According to the Norway-based energy conglomerate, the LNG carrier Arctic Discoverer docked at Dominion's Cove Point LNG import terminal in Lusby, MD, at 2:30 p.m. EST last Thursday after a voyage of 12 days across the Atlantic Ocean. Its cargo comes from the world's most northerly export facility for LNG at Melkoya outside Hammerfest in Finnmark.
"This is an historic occasion," said Rune Bjornson, StatoilHydro executive vice president for the company's natural gas business. "For over 20 years StatoilHydro has supplied the American market with crude oil from the North Sea and the Norwegian Sea. Now we are also supplying gas from the Norwegian continental shelf. For the American market, this means improved security of supply. For our part, we will continue to develop to become an even more flexible supplier of energy for our customers."
The subject of LNG and how much of it will find its way to the United States has been a hotly contested topic by industry and government agencies over the last few months. While some see a virtual tidal wave of supply making it to North America and driving domestic gas prices lower (see NGI, Feb. 18a; Jan. 14), others say the cargoes won't make it because of the lofty prices and voracious demand of Western European and Asian markets (see NGI, Feb. 18b; Feb. 11). Some within the energy industry say it is too early to tell how the LNG situation is going to play out (see NGI, Feb. 18c).
StatoilHydro, which has a significant gas position, calls itself Europe's second largest supplier of gas. Through the development of the Snohvit field in the Barents Sea, StatoilHydro's marketing of gas is becoming even more global.
"In order to meet future energy demand I believe that we will see shipments of gas between continents in the same way as we have seen with oil," Bjornson said. "Through the LNG production from the Snohvit field, gas can be distributed over the whole world. Gas is becoming a global commodity."
The licensees for the Snohvit-field are operator StatoilHydro with a 33.53% stake, Petoro (30%), Total E&P Norway (18.40%), Gaz de France (12%), Hess (3.26%) and RWE Dea Norway (2.81%). Snohvit is the first development in the Barents Sea and has no surface installations, so natural gas is brought to land and cooled for liquefaction at the export facility. StatoilHydro said it hopes to market a total of 4 billion cubic meters of gas annually at the field's full capacity.
The company has a long-term throughput arrangement with the Cove Point terminal and has delivered LNG to the facility from suppliers in Trinidad, Algeria and Egypt since 2003. StatoilHydro currently delivers a third of the import capacity at the terminal, which amounts to around 2.4 billion cubic meters of gas annually.
The import terminal at Cove Point is now being expanded, and StatoilHydro said it has secured all of the new capacity. Under the expansion plan, which is expected to be completed later in 2008, Cove Point's sendout capacity will expand from 1 Bcf/d to 1.8 Bcf/d, and storage capacity will increase from 7.8 Bcf to 14.6 Bcf (see NGI, Oct. 9, 2006). The project includes expanding the Dominion Cove Point pipeline in Maryland and adding a pipeline and storage capacity in Pennsylvania. Once completed, StatoilHydro said it will achieve access to capacity amounting to some 10 billion cubic meters of gas annually from 2009.
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