Transport of oil and gas from Valhall and Hod

The question was which other options existed. Possible offshore loading of oil, as on Statfjord, would not provide a transport solution for gas and natural gas liquids (NGL).[REMOVE]Fotnote: Report no 92 to the Storting (1976-1977), Ilandføring av Petroleum fra feltene Valhall og Hod, 9. Although the gas reserves in Valhall and Hod were relatively small, the government maintained that an acceptable plan for utilising them was a precondition for producing the oil.

It viewed natural gas as “a valuable resource in a world of energy scarcity”[REMOVE]Fotnote: Report no 92 to the Storting (1976-1977), Ilandføring av Petroleum fra feltene Valhall og Hod, 10., and refused to allow flaring. The Amoco/Noco group accordingly had to find a way of bringing the gas ashore. A dedicated gas pipeline to Norway was out of the question, because crossing the deepwater Norwegian Trench which hugs the country’s coastline presented substantial technical difficulties. Laying costs would in any event be too high, and unsustainable for the relatively small reserves involved. Nor was there any domestic market for gas in Norway at the time.

On the orders of the Ministry of Industry, a separate gas pipeline to Denmark via fields on the Danish continental shelf was considered.

This option was rejected because the Danish discoveries had yet to be declared commercial, and justifying its costs would again require relatively substantial recoverable reserves.

Opportunities for installing a gas-fired power station on Valhall, with the electricity generated being transmitted to Norway or Denmark by submarine cable, were also studied. Although technically feasible, this solution would call for heavy investment while being fairly inefficient. Less than 40 per cent of the energy in the gas could be converted to power. Both this proposal and the idea of a pipeline to Denmark were considered uncertain in financial terms.  Including Valhall in a gas-gathering pipeline linking several fields on the Norwegian continental shelf (NCS) was also assessed, but it was uncertain when such a facility would be laid. In fact, no line of this kind has been built.

Injecting the gas back into the reservoir was not relevant, either, since the properties of the formation would not permit such an approach.[REMOVE]Fotnote: Report no 92 to the Storting (1976-1977), Ilandføring av Petroleum fra feltene Valhall og Hod, 11.

Using Norpipe

The outcome was that the Valhall and Hod licensees applied to the government for permission to land the oil and gas by pipeline to Teesside in the UK and Emden in West Germany respectively. This involved tie-ins to the existing Norpipe system which ran from Ekofisk, about 35 kilometres away. The permit for Norpipe A/S specified that shippers other than the owners – the Phillips group and Statoil – could use the system under certain conditions Nevertheless, the negotiations between the Amoco/Noco group and the Ekofisk licensees during the winter of 1976-77 proved far from straightforward.

The Phillips group was critical of the solution, in part because it believed that transport capacity in the oil line to Teesside was too small and would all be needed for Ekofisk.

Second, the system on and around the latter field was large and complex. That would make it difficult to fit in new pipelines from Valhall and Hod.[REMOVE]Fotnote: VG, 27 April 1977, “Ny oljeutbygging sikrer arbeid”. The initial talks broke down, but industry minister Bjartmar Gjerde pressed for an agreement to be reached. He made it clear to the two sides that they had no other choice. Several preliminary agreements on transporting oil and gas were entered into in March-April 1977 between the Amoco/Noco group and the licensees for Ekofisk and Norpipe.[REMOVE]Fotnote: Kostnadsanalysen norsk kontinentalsokkel , volume II, 258–259.

A more detailed transport contract was then signed on 2 September 1982 in connection with the start to production from Valhall.

These deals included a clause that oil and gas from the seven fields in the Ekofisk areas would take priority in the event of capacity constraints, mechanical faults or shutdowns.[REMOVE]Fotnote: Transport agreements for Valhall natural gas, Emden line-Norpipe, and for Valhall crude petroleum, Teesside line-Norpipe; processing and terminal agreement for Valhall, Teesside line-Norpipe Petroleum UK. Executed on 2 September 1982. In such eventualities, Valhall production would have to cease. Development plans for Valhall, including the transport solution, were approved by the Storting (parliament) on 2 June 1977.

Strict specifications

Meeting strict specifications set by the Phillips group for oil and gas in Norpipe meant Valhall needed extra process equipment for dewpoint control, NGL recovery and stabilising crude. Another option would have been to perform first-stage separation on the field and utilise the Phillips facilities on Ekofisk.

That would have yielded substantial savings on Valhall, but the Ekofisk operator was not prepared to process output from the other field. It claimed to need all the capacity itself.[REMOVE]Fotnote: Kostnadsanalysen norsk kontinentalsokkel , volume II, 258–259. The specifications have later been modified for the Emden pipeline, and oil and gas have been delivered for direct transport via Ekofisk.

Another consideration with regard to processing on Ekofisk was the need to pay a tariff for this. Conditions on Valhall also called for relatively substantial compression capacity to recover oil and gas.

Ekofisk 2/4 G

A dedicated riser platform – Ekofisk 2/4 G – had to be installed at the Ekofisk field centre as the interface between Valhall production and the Norpipe system.

Two 20-inch pipelines, for oil and gas respectively, were laid from Valhall to this facility. Both were 36.8 kilometres long. A bridge carried the piping from 2/4 G to the Ekofisk tank.

On the latter facility, output from Valhall and Hod was mixed with oil and gas from the seven Ekofisk-area fields before entering the pipelines to Teesside and Emden. The Valhall licensees initially owned and operated Ekofisk 2/4 G when it came on stream in 1981, but Phillips took over the operatorship as early as 1982.
As part of the major Ekofisk II project for redeveloping the field’s facilities, a new 24-kilometre gas pipeline from Valhall was tied directly into Norpipe for onward transport to Emden. Ekofisk 2/4 G was shut down, and the oil pipeline from Valhall was tied into the new Ekofisk 2/4 J process platform. This serves as the hub for output from all the fields in the area.

The transport agreement with Ekofisk/Norpipe expired in the fourth quarter of 2011, but was extended. Loading the oil into shuttle tankers on the field rather than piping it to Teesside was considered as an alternative.