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Norway Taps A Vast Underwater Vein...But Europe Is Still Ravenous For Gas (Int'l Edition)


International -- Spotlight

NORWAY TAPS A VAST UNDERWATER VEIN...BUT EUROPE IS STILL RAVENOUS FOR GAS (int'l edition)

It's taller than the world's tallest building, Chicago's Sears Tower. At 678,000 metric tons, it's the heaviest object ever transported by man, having been built in a fjord off Stavanger, Norway, and towed to its site by 10 tugs. Now it sits in 308 meters of water in the North Sea. On Oct. 1, it will start pumping riches into Norway's coffers in the form of natural gas from deep under the continental shelf, marking a turn in Norway's economy from reliance on petroleum to gas.

The Troll platform is an engineering marvel. When the contracts were signed in 1986, it was called the Norwegian Man on the Moon Project. At the height of construction, 2,500 people were employed to get it done on time. The cost: $5 billion, including two pipelines to bring the gas to shore. Statoil, the state-owned oil and gas company, will take over the rig in June, 1996.

Mike Steere, who supervised construction for A.S. Norske Shell, plans to retire after 40 years with parent company Royal Dutch/Shell on the day before Troll starts pumping. "There's going to be one hell of a party," says the compact Englishman of the Oct. 1 startup. Steere points out proudly that no one was seriously hurt or killed in the three years of building the rig. On similar but less complex projects in Norway, three or four workers have lost their lives. "I've lived, breathed, and eaten Troll for the past three years. It gives me a buzz," says Steere, who has put in 60-to-70-hour weeks since construction began. "Of course, my wife might see it a little differently."

Why did Norway build such a behemoth? It saw the future, and it was gas. North Sea oil production, which has given Norway a cushy standard of living for decades, will peak next year. But the Troll field, discovered in 1979, is Europe's biggest offshore gas reserve, holding an estimated 1.3 trillion cubic meters. And Europe is hungrier for gas, not only as a direct source of energy but also as a fuel to produce electricity. With carbon dioxide emissions standards tightening and fierce opposition to nuclear power, gas-fired electricity is seen as an environmentally acceptable middle ground.

To tap resources fully, the platform was designed to weather the often-violent North Sea for 70 years. Peter Mellbye, Statoil executive vice-president for gas marketing, figures that by 2000, Statoil will give the Continent 62 billion cubic meters of gas annually, compared with today's 12 billion to 14 billion. Under contracts running through 2022, Statoil expects to pump $100 billion worth of gas to Europe, mainly to Germany, France, and Belgium.

Mellbye also points out that because of "the single most important decision we made during the whole project," the Troll gas will be especially profitable. Bucking tradition, refining will be done on shore. That means only 30 to 40 workers will be needed on the platform, rather than 180. Statoil's operating costs will be lower, and it will suffer far fewer headaches in flying personnel back and forth.

Oddly, one spur to Norway's gas empire was the battle against the Evil Empire. Russia, with vast natural gas, has long been the No.1 supplier to Continental Europe. But in 1985, when the then-Soviet Union announced plans for big increases in exports to Europe, the Reagan Administration flipped at the notion of deepening Western dependence on the Soviets. Contracts for exports from the Troll field were signed in 1986.

Today, Norway is gaining ground because buyers of Russian gas are worried about the stability of the supply and the crumbling pipeline system. The Czechs recently signed on to buy Norwegian gas beginning in 2000, the first time they have bought from anywhere but Russia. And Finland has been pressing for a Nordic gas pipeline as a hedge against reliance on Russian imports.

Already, Norway's long-term gas contracts call for more than what Troll and the nearby Sleipner field can supply. This fall, gas producers Statoil, Saga, and Norsk Hydro will decide whether to develop the giant Halten Bank field on Norway's west coast or explore further in the North Sea.

Higher development costs for the North Sea will have to be weighed against the difficulty of bringing up the gas at Halten Bank. But if Troll proves to be the economic success Statoil is counting on, more monster rigs may be on the way.EDITED BY HARRY MAURER By Ariane Sains in Bergen, Norway


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