Caracas July Snøhvit LNG Project: LNG Production. Europe s. Roy Scott Heiersted. Statoil ASA

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1 Caracas July 2005 Snøhvit LNG Project: Europe s First Base-load LNG Production Roy Scott Heiersted Statoil ASA

2 2 Snøhvit - opening the Barents Sea Strategic project: First offshore in the Barents Sea First LNG production in Europe New gas markets for Norway Environmental focus Industrial experience in Arctic. Snøhvit

3 Technology for Snøhvit in the Barents Sea Key technology research and development since the 1980s 3 Statoil is a Technology Locomotive for Norwegian Industry and Research Results are - State-of-the-Art technologies - International recognition - Industrial products and methods Snøhvit license owners now benefit from results of Statoil s achievements in innovation.

4 4 Snøhvit - novel subsea design Located 150 kilometers offshore in 350 meters water depth North Sea achievements are extended in Snøhvit design: Complete subsea systems Multiphase transportation Comprehensive corrosion and hydrate systems Remote control from shore No platforms or manned operations offshore

5 5 Snøhvit - complex land facility design Offshore flow assurance systems and gas processing plant Several first technologies in the Snøhvit land facility design: Flow assurance systems for subsea is located onshore Environmental protection investments made New LNG process technology selected First European base-load LNG production

6 Snøhvit subsea production system 15 years development of the optimal well-head system 6 Standardized components Standardized operation Standardized maintenance. 10/29/ The Snøhvit offshore area design with production pipelines and service lines Remote operations by umbilical system Well-head template production system.

7 7 Snøhvit multiphase flow design 25 years to develop State-of-the-Art methods and know-how Liquid Ratio (bbls/mmscfd) Popeye Malampaya Midgard EM East Spar North Alexandra TOGI Troll Western Hub Mikkel West delta Corrib Mensa Transfer lenght (km) Goldeneye Legend Red:Statoil operated Operating Construction/planned LIMIT OF INDUSTRY EXPERIENCE Snøhvit Kudu Snøhvit streches present international practice by 50 % distance on complex multi-phase fluids: From 100 km to 150 km Rigorous dynamic simulation tools (OLGA) Large scale flow experiments (Tiller loop) Corrosion and hydrate field experiments Step-by-step implementation in Statoil fields.

8 Snøhvit LNG process design 20 years of Statoil LNG R&D creates international competition 8 NG Pre-cooling Section E1A E1B C1 CW1 Statoil LNG R&D, Ph.D.s in LNG related topics at the Norwegian Institute of Technology Liquefaction Section E2 Sub-cooling Section E3 LNG G X1 C2 C3 CW 2A/B CW 3A/B The MFC LNG process design patented by Statoil and Linde in 1997 was selected by the Snøhvit partners in State-of-the-Art process design: MFC liquefaction process efficiency; Specific Compressor Power: = 230 kwh per ton LNG

9 Snøhvit - regional challenges 9 Arctic climate at 70 o -80 o North World s largest pelagic fishery Positive stakeholder response Co-existence in a sensitive arctic environment have to be based on a win-win situation Focus on environment is sustainable development

10 Snøhvit - project execution strategy Site conditions require a novel construction method 10 Site conditions in northern Norway, at the shores of the Barents Sea, requires specific attention to: - Arctic weather conditions - Lack of regional infrastructure - Long logistics chains for both personnel and materials. Snøhvit

11 Hammerfest City and the LNG Plant - how to develop industry in a remote region 11 Airport LNG plant Hammerfest Offshore base Hammerfest City have 9000 inhabitants Limited industrial activities in the region Restricted communication infrastructure.

12 12 Pre-fabrication - a Jig-Saw puzzle The pre-fabrication strategy involves a broad specter of European fabrication yards in a logistic link of pre-fabricated systems and units.

13 13 Site construction a green field plant from 2002 to 2004 Starting from a green field island in the Arctic north, in summer 2002 Making an LNG plant develop in the next 28 months from the first rock blasting.

14 Income and taxes - investments and manning Production during 25 years: Income 300 billion NOK Taxes 75 billion NOK 14 Project development ( ): Investments 51 billion NOK engineering man-years 51% Norwegian contracts 1500 persons at Melkøya on peak Operation from 2007: 160 employees in operation organisation Approximately 350 man-years indirectly.

15 Regional and local deliveries Snøhvit contract strategy reflects a social responsibility 15 Investment contracts aggregated per 2004: International contracts 49 % Norwegian contracts (national) 51 % Part of overall investments: Northern Norway (regional) 8.5 % Hammerfest/Alta (municipality) 5.5 % Nearly 15 % is regional and local deliveries

16 Snøhvit - major milestones From parliament approval to first gas to plant in 48 months 16 March 2002: Norwegian Parliament approval July 2002: Construction work starts on land July 2005: Major hook-up of process systems February 2006: First natural gas to LNG plant October 2006: First commercial LNG delivery

17 17 Snøhvit - LNG market outlets 1.8 mtpa to Cove Point terminal, USA 1.2 mtpa to Iberdrola, Spain 1.3 mtpa equity gas to GdF and Total.

18 18 Statoil at a new frontier in the Arctic Milestone project for the Norwegian Continental Shelf Closing remarks State-of-the-Art technologies Arctic frontier complexity Environmental agenda New market opportunities. Snøhvit is viable investment and experience