The potential expansion of gas transportation from the Barents Sea region by Gassco would be best achieved through pipeline expansion on a cost-basis, according to analysis conducted by Rystad Energy.
Norwegian gas transport system operator Gassco said in January that expanding transportation capacity from the Barents Sea South “can lay the basis for further value creation from Norway’s petroleum resources.”
If Norway’s gas resources in the area are to be further developed and exploited, Gassco sees a number of profitable options. Rystad analysed the two main options for increased gas supply to reach markets, Kallanish Energy reports.
By comparing Gassco’s options to either expand Norway’s gas pipeline infrastructure or its Hammerfest liquefied natural gas (LNG) plant capacity, Rystad determined the pipeline option to be a more cost-effective solution, with gas costs of around $1 per Million British thermal unit (MmBtu).
Gassco’s pipeline expansion option would include adding 1,000 kilometers to the Aasgard pipeline and a further 830-kilometer pipeline to the Polarled transmission system.
Rystad’s analysis determined that this would increase total export capacity to “at least 10 billion cubic meters (Bcm) and potentially as much as 20 Bcm per annum.”
In comparison, expanding the Hammerfest LNG plant would present a significant investment of resources and logistic obstacles would also incur further costs. Rystad estimates this option to have a cost as $8.5 MmBtu, including liquefaction and transportation costs.
“The cards appear to be increasingly stacked against further development of LNG,” said Dane Inglis, analyst at Rystad Energy. “High project costs, technically complex solutions and harsh environment conditions don’t make for happy bedfellows even when the opportunity is great.”
This post appeared first on Kallanish Energy News.