15 Jan /13

Under the North Star- Arctic waters are set to revolutionize LNG supply routes

Hammerfest gas plantThe Norwegian LNG plant at Hammerfest is Europe’s first export facility for cooled, liquid natural gas and the world’s northernmost liquefied natural gas facility. Without surface installations and fixed or floating units, the installation involves subsea production facilities as well as a 143 kilometer long pipeline which transports natural gas to land for liquefaction and export. The plant capacity of 4.3 million tpy of LNG is based on a liquefaction process that is optimized for the arctic condition – the so called Mixed Fluid Cascade process for base load production of LNG.

Naturally, operating a liquefaction plant in the extreme conditions of the Arctic creates a set of unique and especially challenging problems. Shortly after becoming operational, Hammerfest was shut down due to sea-water leak in a heat exchanger in the cooling system. Since then, costly periodic maintenance and upgrading closures are part of the operational routine of the plant, but the only way to avert potentially deadly situations for the crew and even more costly production stops. While  winterizing  the facilities and working areas – in other words, protecting them against wind, ice and snow – is a major technological challenge for Statoil, last year’s audit ofthe Petroleum Safety Authority Norway (PSA) verified that Hammerfest has established a functioning management system to monitor and manage risks for groups of employees and working capacities.

Hammerfest was developed with exports to the US in mind and based on the assumption that a major part of its production will be shipped to the North American market. The changes in Arctic climate conditions further raised expectations that sea traffic along the far northern sea route will increase significantly in the years to come, thereby adding strategic importance to Hammerfest’s geographic location. However, recently the rapid commercial exploration of domestic shale gas in the United States has curbed the demand for imported gas forcing Statoil officials to rethink their export strategy. As the rapid sea ice melting in the Arctic as well as Hammerfest’s location also allows for significantly shorter delivery times to Asia, Statoil is now considering turning the LNG plant into an export hub for the booming gas markets of Japan and South Korea. In the light of the Fukushima nuclear disaster, particularly Japan has developed a growing appetite for gas imports and become the world’s largest importers of LNG.

As the North Sea gains importance as a major shipping route for LNG, other exporters are preparing to enter the race for control of the ice waters. In October, Gazprom’s Ob Rivebecame the world’s first LNG tanker to transit the North Sea Route, sailing from South Korea to Murmansk. The tanker did not carry any LPG but was merely mapping the route. But only a month later, the Gazprom-chartered ship loaded its cargo at Snøhvit LNG plant at Hammerfest. 28 days later the vessel arrived safely in Tobata, Japan on 5th December 2012, becoming the first tanker carrying LNG that had successfully traversed the North Sea Route. Encouraged by the successful voyage of the Ob River, Russia commissioned the construction of multiple LNG tankers to be built in Korean shipyards that will be able to navigate the North Sea year-round.

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