1996: Ormen Lange a fortune in the Halten bank

In 1995 the Norwegian State opened up the area off the Møre and Trøndelag coast in the 15th licensing round. And the oil companies were ready to throw themselves into really deep water.

ocean floor illustration

One of the licenses that attracted interest was Ormen Lange on Haltenbanken; it was awarded to Hydro.

A major challenge for both the exploration and development phases was the great sea depth in the area – between 800 and 1200 meters. Up to the middle of the 1990s, drilling had not been carried out below 550 meters on the Norwegian continental shelf, although several oil companies had drilled in deeper waters elsewhere in the world. For example, Hydro had experience of depths of 1200 – 1400 meters from its partnership in Angola.

However, the great depth was not the only challenge. The area in question has particularly inclement weather conditions, strong currents and water temperatures as low as 0.9 degrees Celsius on the seabed. The seabed itself is very uneven as a result of the Storegga slide which occurred several thousands of years ago.

Prepared for the unexpected

The oil companies knew there would be tough challenges. They were aware that they would have to drill through diatomite deposits, which are very soft, and quite unlike the types of clay found elsewhere on the Norwegian continental shelf. There was also a risk of hitting frozen hydrogen gas, and precautionary measures had to be taken in drilling through the first thousand meters below the seabed.

The plan was to drill 10 – 12 exploration wells on the blocks that were awarded in the 15th round. Three-dimensional seismic data was to be collated from an 800 square kilometer area and interpreted before the first well was drilled.

The information available at the time gave a 25 per cent probability of finding around 300 billion cubic meters of gas – in other words a third of the reserves in the Troll field. The probability of finding oil was estimated at five percent.

Rumours

Drilling started. Expectations ran high and progress was followed with interest. Rumours started to spread even before Ocean Alliance had finished the drilling assignment for Hydro. It was confirmed that gas had been found, but it was difficult to say more while drilling was still underway.

The Norwegian Petroleum Directorate in Stavanger noted the great interest in Ormen Lange from the press, and decided to make an exception to usual practice and send out a press release  before drilling was completed stating that “indications of gas had been found”.

Drilling was started on the field, which is 120 kilometers west of Kristiansund, on 27 July 1997, and continued until the end of September. It was found that nearly 10 years of engineering work and extensive resources would bear fruit.
Although information was released sparingly to being with, it was soon revealed that the field could contain nearly 400 billion cubic meters of gas. This would make Ormen Lange the second largest gas field on the Norwegian shelf after Troll.

Drilling on the neighboring licence to the south, which was operated by BP Amoco, later confirmed these estimates. 

A joint solution

underwater cuth through

Hydro was well prepared to be operator of Ormen Lange. “We have shown that we are able to handle major pioneering projects on the Norwegian continental shelf, and have for some time made concrete preparations for this task, which was awarded in 1996,” said Hydro’s President and CEO at the time, Egil Myklebust.

The field was to be developed as a partnership. Hydro was awarded operatorship for licence 209, where most of the field is situated, while BP Amoco was to be operator for the adjacent licence 208. Norske Shell was awarded operatorship of licence 250 outside of the ordinary licence round.

The final solution was a division: Hydro would be operator for the development stage up to production start in the autumn of 2007, and Norske Shell was given operatorship for the operational stage. Shell has extensive experience from deep waters, for example in the Mexican Gulf. The other licensees are Statoil, Petoro and Esso.

Having reduced the number of possible landfalls for the gas from the Ormen Lange field to four, the partners agreed in the spring of 2002 that the best solution would be to land the gas at Nyhamna near Molde. A process plant will also be built at this site.

The total development costs will amount to NOK 55 billion. After a gradual production increase in the first two to three years, the field will deliver between 50 and 70 million cubic meters of gas a day, and is expected to be able to produce for 30 to 40 years.


Updated: August 4, 2016