No Oil Development at Snøhvit

26 September 2007

The Snøhvit partnership has decided to cease all work relating to oil zone development at the Snøhvit field in the Barents Sea. Evaluations undertaken show that such a development would not be economically viable.

The Snøhvit project, which just recently started production, is the first gas development in the Barents Sea and also involves the construction of the first LNG plant in Arctic conditions. Snøhvit also represents the first large-scale LNG project in Europe. (Earlier post.)

An appraisal well was drilled in the Snøhvit structure earlier in the summer to confirm the presence of oil and the thickness of the oil zone in its western part. The well confirmed the presence of oil with well data being analysed and evaluated together with other geological information.

These analyses show the presence of oil to be significantly less than we expected to find in this structure. When this is now evaluated alongside possible development solutions and current costs, it becomes clear that it isn’t economically viable to develop and produce oil from the area.

This decision is final, since the start-up of gas production from Snøhvit shortly will prevent the oil zone being developed at a later stage.

—Geir Pettersen, senior vice president for the Tromsø Patch business cluster

The partners have informed the Norwegian government of the decision. Licensees in the Snøhvit field are Statoil with a 33.53% interest, Petoro (30.00%), Total E&P Norge (18.40%), Gaz de France (12.00%), Hess Norge (3.26%) and RWE Dea with 2.81%.