The giant gas field that holds around 40 percent of total gas reserves on the Norwegian Continental Shelf (NCS) is set to produce a record amount of gas this year, just as gas demand in the UK is on the rise.
Output at Norwegian field Troll—operated by Statoil—is expected to rise to record levels this year after Norway increased its production allowance for the field’s gas output, Bloomberg quoted a senior Statoil manager as saying.
“They are gently and carefully opening the valve for Troll,” Tor Martin Anfinnsen, senior vice president for marketing and trading at Statoil, told Bloomberg in a phone interview last week. “There is higher demand in particular from the U.K. now but that doesn’t affect how much we produce in total, it more affects where we route the gas,” Anfinnsen noted.
The UK—a large consumer of Norwegian gas—has vowed to shut all coal-fired power plants by 2025. In addition, UK energy company Centrica said last month that it “intends to make all relevant applications to permanently end Rough’s status as a storage facility.”
Moreover, UK’s gas production from the North Sea is expected to decline, and dependence on gas imports should rise. According to the Oil and Gas Authority (OGA), UK’s gas import dependency would rise to 78 percent in 2035, compared to 48 percent dependency estimated for 2017.
According to UK’s regulator Office of Gas and Electricity Markets (Ofgem), last year, around 32 percent of gas demand came from GB North Sea fields and 44 percent from Norway. Interconnector flows nearly doubled in 2016 compared to 2015, Ofgem said. Coal’s share of the electricity generation mix dropped below 10 percent last year, while the share of gas rose to more than 40 percent. Wind and solar contributed to just below 15 percent of the mix, the regulator said.
Last year, Troll produced 31.86 billion cubic meters of gas, which accounted for 27 percent of Norway’s gas production, according to Bloomberg estimates.
Last month, Statoil was allowed to raise production at Troll by 3 billion cubic meters for the 2017 gas year that starts on October 1. Norway has raised the production quota for Troll to 36 billion cubic meters from 33 billion cubic meters for the current gas year.
And according to Statoil, there is room for further production increases.
“Over the years the annual permit has started to creep towards the technical maximum but it is not there yet. This is due to resource management from the state side,” Statoil’s Anfinnsen told Bloomberg.
Gas produced at Troll meets more than 7 percent of the total gas demand in the EU, according to Statoil.
Last year, Norway exported about 115 billion cubic meters of gas, mainly to other countries in Europe. This was the largest volume of gas ever exported from the Norwegian shelf. Norwegian gas meets around 25 percent of the EU’s gas demand, while Russian gas provides some 31 percent of the EU’s total gas needs, according to Norwegian government figures.
Most of the Norwegian gas is delivered to Germany, the UK, Belgium, and France, where Norway’s gas accounts for between 20 percent and 40 percent of total gas consumption.
In the UK, Norway is the biggest gas supplier, and increased production from the giant Troll field could help Norway further raise that share at a time when Britain’s demand for gas is growing.
Earlier this year, the UK and Norway said it a joint statement:
“Norway is the UK’s most important energy supplier, particularly as an external supplier of gas. British interest in Norwegian gas is set to grow as the UK looks to phase out power generation from unabated coal in the transition to a lower carbon energy mix.”
By Tsvetana Paraskova for Oilprice.com
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