Snoehvit gas field and the pipeline to the LNG plant near Hammerfest. Source: StatoilHydro.
Guy Chazan reports (Norwegian Oil Firm Goes to Energy’s Last Frontier) that StatoilHydro's Snoehvit project was ambitious. Remote-controlled gas wells at the bottom of the Barents Sea; 90 miles of underwater pipeline bringing the gas to shore; a liquification plant built in Spain, floated to a remote island in northern Norway on the world's "largest heavy-lift vessel," and floated into position on "a high tide" and "a full moon."
But things haven't gone as well as they might:
The plant finally started production in September 2007, a year behind schedule. But it took months to get it working properly. During that time, excess gas that wasn't being treated in the plant had to be flared, or burnt off. The practice is usually banned in Norway as harmful to the environment, but the local authorities granted Statoilhydro emission permits.
"The town was covered in soot," says Svein Joerstad, editor of a local newspaper. "Cars, boats, houses were turned black. There was a lot of anger." Last May, the authorities in Oslo disclosed that flaring at Snoehvit was the main factor behind a nearly 3% rise in Norway's greenhouse gas emissions in 2007.
The plant was also shut down repeatedly for repairs. Engineers discovered that its seawater heat exchangers -- which play a key role in the gas liquefaction process -- were leaking. Two had to be replaced; four others will be switched later this year. Each outage has been accompanied by more flaring.
"The problem with being so close to the community is that when you have a 100-meter high flame, with black soot coming from it, it's very visible," Mr. Dalland says.
In October, StatoilHydro was forced to raise its cost estimates for Snoehvit drastically. The price tag for the first phase was set at $7.73 billion, up nearly 50% from the original estimate of $5.24 billion. The cost for the next three phases was increased $1.2 billion to $3.34 billion.
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