Friday, July 06, 2007

Hands Across the "North" Sea: British-Norwegian Gas Connections.

On October 1st 2006, Norwegian gas exports began to arrive in the UK via the Langeled gas pipeline and the issue currently reigns of whether more gas imports are to be expected from the Troll field, or if that consignment will instead go to Belgium or the Netherlands. The Langeled pipeline stretches some 1,200 kilometres from the Nyhamna terminal in Aukna, Norway via the Sleipner Riser platform in the North Sea to Easington, and is scheduled eventually to carry 70 million cubic metres of gas daily, which is equal to 20% of Britain's entire supply of gas. The pipeline is intended to be opened in two stages: it was the southern section (Sleipner Riser to Easington) that began the operations on October 1st 2006, while the northern section (Nyhamna to Sleipner Riser) is due to open in October 2007.

The Langeled project involves welding 100,000 sections of pipe to create the world's longest subsea pipeline, combining to a total length of 1,200 km. This implies that each section is about 12 metres long. Modifications to the Sleipner facility are also central to the programme of work as indeed is the construction of the reception facility at Easington.

The aim of the pipeline is to transport natural gas from the Ormen Lange gas process terminal to the U.K., but since it operates via the Sleipner Riser "connector" there is a further option of sending gas through the existing Gassled network to continental Europe. The annual capacity of Langeled is around 20 billion cubic metres which will augment the Vesterled gas-system running from the Heimdal Riser platform in the North Sea to St. Fergus in Scotland, with an annual capacity of close to 12 billion cubic metres. It is believed that when the full output from the Ormen Lange gas field comes on stream in October 2007, it will be able to fulfill 20% of the UK's gas needs for several decades. When Ormen Lange reaches plateau production in 2010, Norway will move up the league table of world gas-exporters from third to second place (after Russia).

The UK government has launched a strenuous lobbying campaign to persuade Norway to build another vital gas pipeline to this country rather than to continental Europe, and which is thought essential to the final mix of energy supplies that the Royal Society have concluded are necessary to power Britain at least until the year 2050. The putative new pipeline would provide another 18% of the UK total demand for natural gas by the time it came on stream in 2012 (coincidentally also the year of the London Olympics, and I would suggest the more important of the two events!). It would further reduce the reliance of the UK on obtaining its gas from continental Europe - a clear case of cutting-out the middle man - and safeguarding supplies against potential gas-supply "shortages" as occurred when President Putin closed the gas-valves on several former USSR countries (e.g. Ukraine and Georgia) which further disrupted exports to western Europe.

Within the potential outcome of plans to expand the giant North sea,Troll gas-field the new pipeline might go to three destinations: St Fergus in Scotland, Den Helder in the Netherlands or Zeebrugge in Belgium. Several Department of Trade and Industry officials have met with their equivalents in Norway to press-home the case for Britain; Willy Rickett the DTI energy group's director general, flew to Oslo last month for negotiations and it is understood that National Grid and Centrica are both acting to support the government's efforts. A decision is expected within a month or so. One industry expert is quoted as saying: "Losing the pipeline would not necessarily mean losing the gas as it would go to the continent. But that market is not as transparent as ours."

Since the UK has changed its status from being a net exporter to a net importer of gas, it is mandatory that the country's energy supplies are secured. In a white paper published last week, a clear decision was unveiled to implement a new generation of nuclear power plants, which has been on the cards for while now but without a definitive conclusion one way or the other - "yes or no" - but now it looks to be "yes". It is considered these will be an essential component of policy in averting an otherwise growing energy gap in Britain. The government predicts that by 2010, gas imports could be providing up to one third of total gas used in the UK, a proportion that could potentially rise to 80% by 2020. Not all of this is from Norway, however, and a huge gas terminal is being constructed at the harbour town of Milford Haven in south west Wales, with five giant gas-holders lagged with "loft-insulation", intended to accommodate liquefied natural gas shipped from Qatar in the Persian Gulf, which will supply an additional 20% of the UK's gas.

Related Reading.
(1) "UK presses Norway to direct new gas pipeline to Scotland", by Sylvia Pfeifer, Sunday Telegraph:
(2) "Gas from Langeled reaches the British market":

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