StatoilHydro’s troubled production plant for liquefied natural gas, Hammerfest LNG, will be at full capacity for the first time by year-end 2009, though not before two summers of shut-downs to solve flare and liquefaction problems.

The planned summer shut-downs this year and next are blamed for keeping one of two controversial flares in action over Hammerfest, “the world’s most northerly city” site of production plant for the Barents Sea Snoehvit field.

The shut-downs themselves resulted after seawater leaks in production plant and subsequent damage to a heat-exchanger system, a component for cooling gas to liquid. An inability to take in the plant’s full capacity of gas, some 5.7 billion cubic metres per day, has brought a rain of criticism despite being a pioneering arctic effort.

Snoehvit is now producing at 60 percent of capacity, and incremental flow upgrades are expected in 2009 after an autumn-2008 decision on how long to shut-down the following year.

“Our main goal is to have (the heat exchanger system) up and running properly,” StatoilHydro’s Snoehvit public affairs managers, Sverre Kojedal told reporters in Hammerfest.

“Our other goal is get gas production up over 60 percent,” Kojedal added.

He said by the end of 2009, StatoilHydro’s area satellites and prospects, including the Tonderosa project, another unnamed prospect and Eni’s Goliat field, could supply the extra resources needed to build a Snøhvit Train II on site at Melkøya Island.

Train II could produce some 190 Bcm, but would be easier to build, with fewer transports of prefabricated process modules to set up on a corner of the island already envisioned if not cleared or staked out.

Early on Thursday, plant came back on-stream in a six-hour process which surpassed the normal three-week cycle of cooling and processing gas well stream.

Flaring since "first gas" in 2007 has coincided with an increase of emissions and soot in the local Arctic environment, and StatoilHydro has been forced by regulators to pay fines and an emissions levy roughly equivalent to Norway’s offshore carbon tax.

A project to develop “added soot burners” is underway, since the limited production has meant excess gas, some 20 million cubic meters of it, would have to be flared. A low-pressure flare is used for gas evaporated from tanks during start-up, gas which otherwise would be sent onward for a nitrogen removal treatement before being cooled to sellable liquid.

A high-pressure flare burns off gas the production equipment has no capacity for, minus volumes deliberately constricted. An end to repair-related shut-downs by year-end 2009 would close off both flares.

Snoehvit, at 71 degrees north latitude, is Europe’s only export terminal for LNG and the Arctic’s first offshore gas field.

On Wednesday, StatoilHydro began injecting 700,000 tonnes per year of carbon-dioxide into the the 317 Bcm field. The greenhouse gas could potentially freeze, so it is separated and cooled carefull before being pumped back in-field.

Norway’s energy champion StatoilHydro boasts a carbon-injection project at In Salah in Algeria and the Sleipner field offshore Norway. Market strictures for gas’s carbon content decided the Algerian project’s merits, while off Norway at Sleipner, an old carbon tax forced the decision to bury carbon.

ws@scandoil.net

Tags: Snoehvit, StatoilHydro