The Ormen Lange Offshore Gas Project on the Norwegian Continental Shelf Implementation of Systematic

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The Ormen Lange Offshore Gas Projecton the
Norwegian Continental Shelf Implementation of
Systematic Management WorkProcesses when
managing Deep water Projects

• Senior Vice President Bengt Lie Hansen, Norsk
  Hydro
• Chairman of the Ormen Lange Unit Committee
• The World Petroleum Conference
• Rio de Janeiro, September 1-5, 2002

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(No Transcript)
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Norsk Hydro ASA Operating revenues 2nd quarter
2002
Aluminium
Oil Energy
Agri
NOK 13.4 bn USD 1.8 bn
NOK 18.5 bn USD 2 .5 bn
NOK 9 bn USD 1.2 bn
The second largest producer of oil and gas on the
Norwegian Continental Shelf
The largest European aluminium company and among
the top three worldwide
The worlds leading supplier of plant nutrients
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Ormen Lange location
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Features
Ormen Lange
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Facts
Location Production start Gas
production Recoverable gas reserves Water
depth Field investments Pipelines
investments Operator for development and
construction Operator for production
120 km northwest of Kristiansund 2007 15 - 20
GSm3/yr 400 GSm3 800 1 100 metres NOK 35 -
40 bn (USD 4.7 5.4 bn) NOK 5 - 17 bn (USD 0.6
2.3 bn) Norsk Hydro ASA A/S Norske Shell
Ormen Lange
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Key Project Milestones
Appraisal WellJuly 2000
Concept SelectionEnd 2002
Prod StartEnd 2007
Contract AwardMedio 2004
2007
1997
Proven by Drilling 1997
Feasibility Study 2000
Submit PDO/PIO End 2003
Marine Install. End 2006/7
Ormen Lange
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Key Development Challenges

• Technology
• Extremely uneven seabed for subsea- and pipeline
  design and installation
• Main production area in an avalanche / slide area
• Extreme temperatures, minus 2C at seabed
• Extreme waves and winds
• Strong currents
• 1 000 metres water depth
• Commercial
• Transition from joint sales to company based gas
  sales
• Short term gas agreements
• New gas transportation system

Ormen Lange
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Demand for Gas in UK

• Decline expected in UK production from 2004
• UK expected to increase import significantly (up
  to appr. 60 BCM after 2010)
• UK demand expected to increase to more than 120
  BCM

Demand
Supply
Ongoing production Demand
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Gas Supply and Demand in Europe
BCM
Existing Contracts
DEMAND (non weather corrected)
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Possible Gas Suppliers to Europe
Reserves and distances
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Ormen Lange provides new significant gas
transport capacity
Ormen Lange
Trondheim
Kristiansund
Vesterled 10 BCM
Gullfaks
Statfjord
Troll
Oseberg
Kollsnes
Frigg
Kårstø
Europipe II 21 BCM
Sleipner
St. Fergus
Draupner
Europipe I 13 BCM
Ekofisk
Norpipe 14 BCM
Zeepipe 13 BCM
Franpipe 15 BCM
Dornum
Emden
Total capacity 86 BCM
Zeebrügge
Dunkerque
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The Top Reservoir Structural Depth Map
6305/1-1
6305/4-1 drilled spring 2002 GIIP prognosis
confirmed
6305/5-1
6305/8-1
6305/7-1
Faults identified
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The Storegga Slide
The Ormen Lange field is located close to the
steep back wall left by the Storegga submarine
slide.
1200m
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Local Topography
The Storegga slide was probably triggered by a
major earthquake at the end of the latest glacier
period (approx. 8 000 years ago)
Local slide blocks of sizes up to 50 - 70 metres
were left near the Ormen Lange Field
Comprehensive slide investigations have been
performed as part of the Project No information
so far indicates any risk of more slides
Automatic Underwater Vehicle (AUV) mapping of
seabed terrain
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Pipeline installation down the slide escarpment
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Concept Selection Late 2002
Alternative 1 of 2 Complete Subsea Production
Facilities in combination with Onshore Process
and Export Plant
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Gas Treatment Terminal, Nyhamna
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Possible Subsea Development
Complete Subsea Production Facilities in
combination with Onshore Process and Export
Plant
Two 30 pipelines bringing the gas up the
escarpment and out of the Storegga area
Production templates
Pipeline End Manifold (PLEM)
Production templates
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Concept Selection Late 2002
Alternative 2 of 2 Full Process and Gas Export
Offshore Platform
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Full Processing and Export Offshore Platform
The Tension Leg Platform Concept (TLP)
The SPAR Platform Concept Alternative
The Semi submersible Platform Concept (SEMI)
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Concept Selection Late 2002
Full Process and Gas Export Offshore Platform
Subsea Concept (SEMI case)
Risers
Satellite wells and manifolds
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Concept Selection Late 2002
Tension Leg Platform (TLP) with both wet (subsea)
and dry (platform) wells, and condensate storage
vessel
SPAR Platform with both wet (subsea) and dry
(platform) wells, and condensate storage vessel
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Concept Selection Late 2002
Semisubmersible (SEMI) Platform in
combination with wet subsea wells concept
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Key Project Management Processes
ORMEN LANGE GOVERNANCE PROCESS
RISK MANAGEMENT
SELECTION
DG3 CONCEPT SELECTION
STAKEHOLDER MANAGEMENT/ COMMUNICATION
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Governance Process
Approval of Concept Short List
Partnership Approval to Issue PDO/PIO
Approval to Start Operation
Approval of Project Initiation
Approval of Development Concept
Approval to Start Execution
Post Implementation Assessment
2000
2001/2002
2003
2004
Concept Selection Phase
Preparation for Execution
Feasibility Study Phase
Execution
Operation
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2
3
4
5
6
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October 1st, 2007
Project Phases
Decision Gates
Decision Gates Reviews
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Governance Process

• A common decision process accepted by Ormen Lange
  partners that
• Replaces each partnerss own value assurance
  process
• Is owned by the Ormen Lange Management Committee
• Provides independent assurance at defined project
  milestones that
• Greatest value has been obtained, particularly
  during early stages of the project
• Assesses the suitability of the project plans and
  strategies
• Appraises the readiness of/justification for the
  project to proceed into the next phase
• Provides a framework for work program, budgets
  and scheduling within the project

Ormen Lange
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Governance Process
Decision Gate no. 1 Is there a basis to initiate
a project?
Decision Gate no. 2 Is the project effectively
framed in relation to uncertainties? Do we have
a realistic plan towards next Decision Gate?
Decision Gate no. 3 Do we have an asset and a
basis for selecting the right concept? Is there a
realistic plan towards next Decision Gate?
Decision Gate no. 4 Do we possess the optimum
plans and resources to start project execution?
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Governance Process
Key Aspects

• A Decision Gate Support Package prepared by the
  project ahead of Decision Gate Reviews
• Decision Gate Reviews undertaken
• In accordance with agreed mandates
• By a team comprising experienced senior personnel
  from each partner
• With a Team Leader with suitable qualifications,
  selected by the Ormen Lange Management Committee
• Covering Technical, Economic, Commercial,
  Organizational and Political issues
• Addressing the full development scope from
  reservoir to market

Ormen Lange
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Sweeping statment

• Ormen Lange is one of the world's most challenges
  deepwater offshore gasprojects under development
• Ormen Lange is systematically meeting its
  milestones to come onstream as a major European
  gas source in 2007

Ormen Lange
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Selection Processes
Key Value Areas
Economic Development
Social Responsibility
Environmental Protection
Ormen Lange
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Concept Selection
Identify Criteria
Evaluate Options against Criteria
Economics
Society
Environment
Ormen Lange
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Selection Processes
Concept Selection
Full Process (FPO)
Semi/SPAR/TLP System
Condensate Handling
Offshore Processing
Subsea System
Subsea to Land (SSL)
Future Compression
Selected Concept
Onshore Processing
Site Selection
Onshore Site
Transport
Transport Selection
Mid 2002
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Selection Processes
Main Decisions (Road Map)
Examples
DG3
DG4
DG5
Dry tree requirement ? Type of well completion ?
(size type) Well layout Principle ? No. of
wells ?
D A D A
D D
Well Technology
Do we have flow assurance ? Production level
? Swing production capacity (daily/monthly) Build-
up of profile ? (1 or 2 steps) Future compression
? (when and how) Onshore or Offshore Field
Development ? Power supply onshore plant
? Project functional descr. (OL/Mid Norway hub)
D D D D A D D D
D
Main Decisions
Field Development
Ormen Lange
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Risk Management
Risk Management Process on Ormen Lange
DEFINED OBJECTIVES/MILESTONES
RISK EVALUATION/ CLASSIFICATION
DEVELOPMENT OF ACTION PLANS
RISK IDENTIFICATION
RESPONSE
Ormen Lange
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Risk Management
Risk Classification
PROBABILITY
Very likely 50 - 100
Likely 20 - 50
Less likely 5 - 20
Unlikely lt 5
OPPORTUNITY
THREAT
Significant
Small
Minimal
Significant
Small
Minimal
Very Significant
Very Significant
CONSEQUENCE
Level 1 MC Key Risks
Level 3 Watch List
Level 2 Project Key Risks
Level 4 Negligible Risks
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Stakeholder ManagementCommunication Plan,
Processes and Methodology
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Key Challenges Ahead

• Verify slide stability
• Establish Market and Transportation Strategy in a
  new commercial environment
• Select Ormen Lange Development Conceptin 2002
• Submit Plan for Development and Operationto the
  Authorities autumn 2003
• Select and implement Project Execution
  Procurement Strategy

Ormen Lange
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Thank you for your attention
Ormen Lange - going further
Ormen Lange