LNG

Global liquefied natural gas cargo prices from North Asia to the European Union continued their upward trend for a fifth week, defying the record storage levels at the end of the winter season amid market concerns about possible energy policy or geopolitical threats that could undermine sentiment in the months ahead.

The North Sea Transition Authority (NSTA), the UK regulator seeking more oil and gas exploration and production in British territorial waters that will affect future import needs for pipeline gas, LNG and oil has offered a total of 24 licences in the second tranche of the 33rd oil and gas licensing round.

Asian spot liquefied natural gas prices fell and European wholesale values declined by a bigger margin as the early European Union gas storage build continued at a steady pace, while German import volumes dropped off and China’s deliveries increased.

Equinor, the Norwegian state energy company and supplier of pipeline natural gas and LNG to Europe, has won 26 new production licences from Norway’s Ministry of Petroleum and Energy in the latest awards for predefined areas.

The awards included 18 licences with Equinor as operator and eight others as a partner to various other energy players.

“The rounds are important, and we are very pleased with the awards,” said Jez Avery, Equinor’s senior vice president for subsurface in Exploration & Production in Norway.

Equinor noted that as the production from existing oil and gas fields declines continued exploration and replenishment is essential to maintaining long-term, important energy deliveries from Norway.

The company said that its analyses show that active exploration activity is the most important single measure to ensure continued value creation towards 2030 and beyond.

Three basins

Equinor's production licences are divided into 16 in the North Sea, nine in the Norwegian Sea and one in the Barents Sea.

The company plans in 2023 to participate in 25 exploration wells, most of them around existing infrastructure.

“Around 80 percent of the exploration wells will be drilled in known, mature areas,” explained Averty

“Discoveries near existing infrastructure require less volume to be commercially developed and can be quickly put on stream and with low carbon-dioxide emissions,” he said.

“We thus maximize the value creation from existing infrastructure that has been developed over a long period on the NCS,” the Equinor executive added.

“Exploration is essential to our ambition to transform the NCS from and oil and gas province to a broad energy province,” he stated.

In total the Ministry offered 47 new production licences in the latest NCS licensing round.

“I was able to offer 47 new production licenses in the predefined areas to a wide variety of companies. Further exploration activity and new discoveries are important to maintain the production of oil and gas over time, both for Norway and Europe,” stated the Minister of Petroleum and Energy Terje Aasland.

The 47 production licenses offered in this year's round are distributed over the North Sea (29), the Norwegian Sea (16) and the Barents Sea (2).

A total of 25 different oil and gas companies, from large international companies to smaller Norwegian exploration companies, were offered shares in one or more of these licences and 12 companies were offered one or more operatorships.

TechnipFMC, the US oil and gas services company based in Houston, was awarded an engineering, procurement, construction and installation contract by UK major Shell plc for the Jackdaw gas development in the UK North Sea to help offset rising LNG imports.

The company said the contract, whose value was not disclosed, covered pipelay for a 30 kilometres tieback from the new Jackdaw platform to Shell’s Shearwater platform, as well as an associated riser, spool-pieces, subsea structures and umbilicals.

The tieback will use pipe-in-pipe technology, which is designed for high-pressure, high-temperature usage.

“We’re excited to embark on this significant project together in the UK North Sea,” said Jonathan Landes, President, of Subsea at TechnipFMC.

“Our strong technical record and our ability to design, engineer, construct and install were key to our success in winning this award,” stated Landes.

Shell in the UK took the final investment decision in July 2022 to develop the Jackdaw gas field following regulatory approvals granted earlier in the year as European countries tried to underpin their domestic supplies hit by the Russian war in Ukraine that led to sanctions.

Development plan

The Jackdaw field is located about 250 kilometres (155 miles) east of Aberdeen, Scotland, and is adjacent to the UK-Norway median line.

The field is 100 percent owned and operated by an affiliate of Shell UK which became part of the Shell group of companies in 2016 after BG Group was taken over.

The Jackdaw development consists of a new Wellhead Platform (WHP), four production wells and the 30km pipeline from the Jackdaw WHP to the Shearwater gas hub.
Peak production from the field is estimated at 40,000 barrels of oil equivalent per day.

Shell said that the UK North Sea remained one of Shell’s core Upstream positions, attracting capital to high margin hydrocarbon projects that can be resilient to commodity price cycles.

The gas from the Jackdaw field will come ashore at the St Fergus gas terminal in Scotland.

The project is expected to come on stream by 2025 and at peak production rates could represent over 6 percent of projected UK North Sea gas production in the middle of this decade.

Shell has said that the Jackdaw gas field was part the company’s broader intent to invest up to £25 billion ($30Bln) in the UK energy system in the next decade.

The company added at the time that the St Fergus terminal that will handle the Jackdaw gas will also be part of the development of the Acorn Carbon Capture and Storage project, which will aim to sequester carbon dioxide from industrial clusters in Scotland, the UK and northern Europe.

Gassco, the Norwegian natural gas pipeline operator and one of the main competitors to LNG, hit a record for summer season deliveries to Europe and will soon be opening its new Polarled pipeline to carry even more volumes from the Norwegian Continental Shelf.