Oil sands in Canada
We acquired North American Oil Sands Corporation (NAOSC) in the Canadian province of Alberta during late April in a transaction worth almost USD 2 billion. This purchase strengthens our resource base and market position in North America. At the same time, producing oil sand also presents an environmental challenge.
Tordis in place
A new subsea installation was placed on Tordis, close to the Gullfaks field in the North Sea, on 12 August. The 1,250-tonne structure was lifted into place by the Saipem 7000 crane barge. This seabed separator will make it possible to recover an additional 35 million barrels of oil for piping to Gullfaks C, where it is processed, stored and exported.
Ship’s anchor moves gas pipeline
A routine inspection in the autumn of 2007 revealed that the gas pipeline from the Kvitebjørn field to Kollsnes near Bergen had been pulled out of position by a ship’s anchor. External damage was also caused to the weight coating. More detailed checks led to a shutdown of the pipeline, which delayed the start of production from Kvitebjørn until January 2008. Repairs to the pipeline are weather-dependent and will be carried out in the summer of 2008.
Three fatal accidents
A 48-year-old man drowned on 12 August after falling overboard during work on the Saipem 7000 crane ship close to the Gullfaks field in the North Sea. On 27 May, a 49-year-old man was killed in a work accident on the Goodwood gas carrier in the Port of Mongstad. A road tanker driver died in Sweden on 1 September as a result of an accident on the E4 highway between Örnsköldsvik and Husum.
Libya contracts under the microscope
Statoil was informed on 26 September about possible unlawful consultancy contracts and transactions related to Hydro’s activities in Libya, which were transferred to us through the merger. After a preliminary assessment by Statoil’s corporate internal audit function, the chief executive resolved in consultation with the board to initiate an external investigation of the relevant conditions. This remains to be concluded.
US law firm Sidley Austin LLP is conducting the review together with Norwegian lawyers Simonsen Advokatfirma DA, and with support from our corporate audit function. Other consultancy agreements related to Hydro’s international petroleum operations are also being reviewed. Hydro and we are collaborating to secure the documentation and information required to establish the facts of the matter.
Stock market debut
The first trading day for our share on the Oslo Stock Exchange was celebrated on 1 October, the date when we officially became operational. Eldar Sætre, our chief financial officer, had the honour of ringing the bell to start trading.
Ranked as Scandinavia’s largest company by market value, we have almost 100,000 shareholders.
Hydrogen car deal with Japan
A letter of intent was signed during November with Mazda Motor Corporation in Tokyo as part of the HyNor project to develop a hydrogen-based transport network in Norway. According to this deal, Mazda will deliver 30-40 RX8 sports cars with hydrogen-fuelled engines over a two-year period.
Gas from Statfjord to UK
The Tampen Link gas pipeline which links Statfjord in the North Sea with St Fergus in Scotland via the British Flags system was opened in mid-October. After producing oil for 25 years, Statfjord is converting to gas production. This will make it possible to continue operating the field profitably until 2019.
Complicated start for Snøhvit
The running-in phase for the gas liquefaction plant we operate at Melkøya outside Hammerfest in northern Norway was affected by instability and extensive use of the high-pressure flare. Such flaring and emissions of soot proved an extra inconvenience for the residents of Hammerfest, without the public health authorities finding any evidence of serious health problems. The start-up also caused higher carbon emissions than expected. In addition, leaks in heat exchangers meant that the plant had to be shut down periodically and uncertainty persists about the level of total production in 2008.
Agreement with Gazprom
We signed an agreement on 25 October with Russia’s Gazprom to become a partner in phase one of the Shtokman project in the Barents Sea. The deal gives us a 24% interest in Shtokman Development AG, where Gazprom has 51% and France’s Total holds 25%. This joint venture will be responsible for planning, financing and developing infrastructure to bring the huge gas field on stream.
First gas from Njord
European customers were able to take delivery of the first gas from Njord in early December. An investment of NOK 1.2 billion permits this Norwegian Sea field to produce until 2020. It is currently yielding some 20,000 barrels of oil and six million cubic metres of gas per day. Njord is tied to the Åsgard Transport gas pipeline by a new 40-kilometre spur.
Halten carbon project halted
Shell and we resolved in December to cease work on the Halten carbon dioxide project in the Norwegian Sea. This involved a joint assessment of building a gas-fired power station at the Tjeldbergodden industrial complex with carbon capture and storage (CCS), and the use of carbon injection to improve oil recovery from Draugen and later Heidrun. The decision was prompted by the poor economics of the power station, a complex commercial model and inadequate clarification of frame conditions for CCS.
Oil discoveries in Gulf of Mexico
Operator Anadarko Petroleum Corporation announced in December that oil had been discovered on the deepwater West Tonga prospect in the Gulf of Mexico. ExxonMobil made a new oil discovery the following month on the Walker Ridge, 420 kilometres south-west of New Orleans. We are a substantial licensee in both fields, and now participate in 15 interesting discoveries in the US Gulf.
Share price down
On 7 December, we presented forecasts for our total oil and gas production, investment and exploration costs in 2008. These figures showed increased activity in a number of areas, but were also negatively affected by developments during 2007. None of the elements in the forecast were expected to have any negative effect on our resource base. The stock market announcement led to an immediate fall of almost 10% in our share price.
Oil spill on Statfjord A
A total of 27,500 barrels (4,400 cubic metres) of crude leaked into the sea while the Navion Britannia shuttle tanker was loading from the Statfjord A platform. Extensive clean-up measures were instituted. A monitoring programme found no significant environmental consequences. However, an investigation reported serious weaknesses and recommended a number of technical, organisational and management measures.
