Shell Delays Offshore Compression Project for Ormen Lange

UK-based Royal Dutch Shell postponed the Offshore Compression Project for Ormen Lange, mentioning changed economic assessments. The project is designed to recover more natural gas from its Ormen Lange field offshore Norway.

“The current concepts do not provide an economic return based on the required capital investment and expected production volumes. The updated reservoir analysis also shows that offshore compression timing is not critical to the ultimate recovery of the field”, chairman of the Ormen Lange Management Committee, Odin Estensen, said in a note released on Friday.

The company said that the oil and gas industry is going through financial difficulties. 

“This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible. The Ormen Lange licence remains committed to the ambition of maximizing the ultimate recovery from Ormen Lange in a sustainable manner.  Significant new information both on reservoir behaviour and technology developments will become available in the next few years, and provide basis to re-evaluate new options,” Estensen says.  

Shell is the operator of the field with 17.81% working interest. Petoro (36.49%), Statoil (25.35%), DONG Energy (14.02%), ExxonMobil (6.34%) are the other four partners.

All but Norway’s state-owned Petoro supported the decision to delay the compression project.