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In Arctic, Norway steps on the gas

Infrastructure is a key challenge for offshore Arctic energy developers. At Melkøya on the Norwegian Barents Sea coast, Statoil operates the world's only Arctic LNG plant.

Gas production in northern Norwegian waters is steadily making its way. But more discoveries and new infrastructure are needed for the region to become a major supplier to the continent.

Figures assembled by Patchwork Barents show that Norwegian gas production in waters north of the Arctic Circle in 2014 amounted to 7,46 billion cubic meters. That is the biggest volume from the region ever.

A lion’s share of the Norwegian Arctic production comes from Statoil’s Snøhvit LNG project, the world’s northernmost of its kind, which in 2014 reached a production record of 5,22 billion cubic meters.

In the more southernly Norwegian Sea, the fields located in the waters off the county of Nordland in 2014 produced a total of 2,23 billion cubic meters. That volume will increase significantly as Statoil opens its Aasta Hansteen field, presumably in 2017. Included in that project is the construction of the 480 km long Polarled pipeline, a key piece of infrastructure which wlll link the Norwegian Sea with other parts of Norway’s gas grid and ultimately with consumers in Europe.

The Norwegian Sea is about to become an important gas-producing region. However, it is in the more northern Barents Sea that the Arctic resources are the biggest. Several discoveries have been made in the region over the last couple of years and several more are coming up as Norway opens for drilling in bigger parts of the area.

Commenting on the role of Arctic gas at the recent Economist Arctic Summit, Norwegian Foreign Minister Børge Brende said that “falling oil prices do not change the fact that a considerable share of the undiscovered oil and gas in the world is located in the Arctic”.  Despite dramatic shifts in the global gas market, Brende expressed confidence that Norway will continue to seek exploitation of the resources.

” […] It is safe to assume that Arctic gas will have its day”, the minister concluded.

Foreign Minister Børge Brende sees a clear future for offshore Arctic gas.

The statements from Brende come as Norway is breaking new ground in the region with the opening of its 23rd License Round. In that round, licenses will be offered further north and further east than ever on the Norwegian shelf.

The easternmost licenses in the 23rd License Round are located in waters adjacent to the Russian border, waters by many believed to hold major hydrocarbon reserves, and primarily gas.

Furthermore, resources are likely to be even more abundent just across the border, in the Russian part of the Barents Sea. The Fedynsky High, a structure located in the Russian part of the formerly disputed Arctic waters, includes nine perspective structures with an estimated total resource potential of 18,7 billion barrels of oil equivalents, licenseholder Rosneft says.

Should Rosneft start to develop these resources it will open a new chapter in Arctic offshore hydrocarbon production. So far however, Gazprom and Novatek are the most successful in exploiting Russian Arctic hydrocarbons, both of them in land-based projects in and around the Yamal Peninsula.

Further south, Russia has gas production on land also in the Komi Republic. According to figures from Patchwork Barents, a total of 3,37 billion cubic meters were produced in the region in 2014.