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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This North Sea Nation Is About To Lose 90% Of Its Natural Gas Production

Another tidbit of news on Iran’s emerging oil and gas bid round this week. With that country’s oil ministry saying yesterday that 29 E&Ps from 12 countries have been pre-qualified to bid, including Shell, Total, Eni, Petronas, Gazprom and Lukoil.

One surprise in that list was the omission of BP. With that company reportedly deciding to pull out of the bidding over concerns about Iran sanctions.

And in BP’s backyard, the North Sea, there was another big petro-development this week. With one of the region’s largest natural gas fields facing a sudden closure.

That’s the Tyra field, located in the sliver of the North Sea owned by Denmark. Which represents the largest source of natural gas for the Danish market — in fact, almost the entirety of national supply.

Tyra’s owner and operator Maersk Oil said over the weekend that aging infrastructure at Tyra is becoming a critical issue. With management having been unable to come up with an economically-viable solution for modernizing the development.

Maersk is therefore planning to shutter this mega-field. With the company saying it has begun to notify relevant authorities of the decision to move toward decommissioning — and that, starting next month, it will begin channeling financial resources toward the shutdown. Related: 2017 – The Year Of The Drone

This is a huge development for the Danish energy sector, given that Tyra provides a full 90% of national natgas production. And it could have some important implications for the European energy picture beyond Danish borders.

With Denmark being a relatively small gas consumer, the nation also sends pipeline exports to neighbors including Sweden and northern Germany. Sweden particularly has few other suppliers, while Germany’s other import points are mainly in the south and west of the country.

That could mean a reorganization of gas flows — and potentially some local shortages — as Tyra winds down. Maersk said it plans to have the field fully shut by October of next year — watch for subtle but important shifts in European gas flows over the coming 22 months.

Here’s to retiring a giant.

By Dave Forest

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  • JHM on January 03 2017 said:
    I'd love to see their economic analysis. In the long run, solar will be super cheap, making the economic life of the infrastructure much shorter than the operational life. In the near-term, LNG can make up the lost supply. But it does not look good for LNG long-term, if domestic production is not worth sustaining.
  • Dan on January 07 2017 said:
    Solar might not be cost effective in Northern hemisphere countries during Winter months at any price. The loss of this income will have a dramatic effect on Socialist dreams of Denmark and Greenland. This does increase the market for U.S. natural gas drillers as your climate change scientists claim Atlantic current shifts are accelerating and will bring perhaps a mini ice age to Europe and NE U.S. Ice covered solar panels won't help and may hinder true preparedness with U.S. LNG contracts locked in for survival.

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