KING OPENS TROLL GAS GIANT AS NORWAY PREPARES NEW SUPPLIES FOR EUROPE

BERGEN, 1996-06-19. — King Harald V today formally opened the Troll gas development, marking the arrival of a major new source of Norwegian energy for continental Europe. The ceremony crowns years of construction offshore and on land, and brings into public view a project whose commercial foundations were laid a decade ago. Gas production began in February; the formal opening comes as the development prepares for its principal contractual deliveries later this year. For Norway, Troll represents both an engineering achievement and a substantial enlargement of the business of supplying European households and industry with fuel.

The field lies roughly 80 kilometres north-west of Bergen, beneath waters more than 300 metres deep. Discovered in 1979, it ranks among the largest gas accumulations found in the North Sea. Its development has required much more than a production platform: pipelines, shore installations and onward transportation must work together before offshore reserves become dependable deliveries to customers. Today's occasion therefore concerns an entire supply system. The commanding offshore structure is its most conspicuous component, but the processing works at Kollsnes, on the coast west of Bergen, is equally essential to bringing the gas to market.

Troll A, the concrete platform serving the gas development, rises approximately 472 metres from its foundations to its highest point. Much of that height disappears beneath the sea. Built on the Norwegian coast and towed to the field last year, the structure stands on the seabed rather than floating above it. Its extraordinary dimensions answer practical requirements imposed by deep water and the need to support an offshore production installation. The spectacle has attracted attention far beyond the petroleum trade, but its commercial purpose is straightforward: to provide a durable base from which a great gas reservoir can be worked.

The development departs from the familiar picture of an offshore platform carrying virtually every stage of treatment. Gas from Troll A is taken by pipeline to Kollsnes for processing on land. There, liquids can be separated and the gas prepared for onward transmission into the export system. Moving substantial processing duties ashore has helped determine the design of both installations. It also makes the coastal works a central part of the field's operation, not merely a receiving station. Norway's new export capacity consequently rests upon close coordination between crews at sea, plant operators ashore and the managers of the pipeline network.

Norske Shell has led the development of the gas project, with Statoil occupying a central position in Norway's wider gas business and transportation arrangements. The undertaking combines international petroleum experience with extensive Norwegian participation. Parliamentary approval for the initial development plan came in 1986, the year in which the principal Troll gas sales agreements were also concluded. Those decisions supplied the political and commercial basis for the construction now being celebrated. Today's opening is thus not a fresh discovery or a sudden decision to drill, but the visible completion of a long passage from reserves in the seabed to an operating supply undertaking.

For the European purchasing companies, the important development is the approach of contracted deliveries, scheduled to begin in October. Gas projects of this size are not generally built in the hope that buyers will appear after construction. Long-term commitments help justify the immense expenditure on wells, platforms, processing and pipelines, while purchasers obtain a basis for planning their own distribution systems. Troll's commercial reception has accordingly been expressed most decisively in contracts rather than in a single day's market quotation. Its opening strengthens Norway's position as an established supplier competing for a larger place in Europe's energy accounts.

The political background reaches further back than the Troll agreements. In 1971, a parliamentary committee set out principles for the petroleum industry, including the requirement that “National supervision and control must be ensured for all operations on the Norwegian continental shelf.” Another principle declared that “Petroleum must be landed in Norway except in those cases where socio-political considerations dictate a different solution.” These are statements of national policy, not promises made at today's ceremony. Nevertheless, the combination of offshore production, processing at Kollsnes and Norwegian participation gives the new undertaking a recognisable place within that established programme.

Troll is also an oilfield, and that distinction matters when assessing what has opened today. Oil production from the separate Troll B installation began last year. The field contains different reservoir areas, and recovering oil from comparatively thin layers presents problems unlike those of producing its great gas accumulation. The Troll name therefore covers related but distinct enterprises, rather than one platform performing every task. Today's gas inauguration adds another major element to the exploitation of the discovery. It should not be mistaken either for the first petroleum production anywhere in the field or for the completion of every possible development within it.

The economic promise is considerable, though the ceremonial opening cannot by itself settle the eventual return. Construction expenditure must be recovered over years of production, and receipts will depend upon contractual terms, deliveries and the broader course of energy prices. Operating a large offshore installation also demands continuing maintenance and dependable performance from its associated shore plant. The immediate business significance is that equipment on which buyers and sellers have based their plans is now entering service. For Norway, the prospect is a prolonged stream of export earnings; for customers abroad, it is access to another substantial source of pipeline gas.

Attention now turns from the royal ceremony to the work of commissioning, coordinating and delivering. The offshore wells, the Kollsnes works and the export connections must function as one chain if the promised supplies are to reach their destinations on schedule. That is the practical test remaining after today's celebration. Troll has already passed the stages of discovery, parliamentary sanction, sales negotiation and construction, each of which could have delayed the enterprise. With production under way and the principal delivery date approaching, Norway can point to a new industrial asset whose importance lies less in its exceptional height than in the fuel it is being prepared to supply.