Still going strong

Bjørn Vidar Lerøen

Shutting down the Troll A gas platform in the Norwegian North Sea for a year would cost NOK 226 million per day in lost sales revenues. And replacing its output with coal would raise Europe’s CO2 emissions by 150 million tonnes.

Images of this offshore skyscraper attracted attention worldwide.

After almost 25 years on stream, this field remains the guarantor for major long-term gas deliveries from Norway to continental Europe.

It has yielded assets worth NOK 1 500 billion since production began in 1996. And a lot remains to be recovered, with less than half its gas reserves produced.

Troll alone accounts for 40 per cent of Norway’s gas exports, which total well over 100 billion cubic metres per annum, and seven-eight per cent of European consumption of this fuel.

Operator Equinor and its partners are now working on the third development stage, with subsea installations set to ensure that the gas continues to flow.

While this production began from the eastern part of the field, it will be continuing from the western section following the investment of almost NOK 8 billion in phase III.

That will give a breakeven price as low as USD 8 per barrel of oil equivalent (boe). Better profitability would be hard to find on the NCS or in other offshore regions around the world.

Troll is set to produce gas for many decades to come. This calls much drilling to continue and for systematic and thorough downhole maintenance. Three rigs are set to be at work for years.

Gunnar Nakken is head of Equinor’s operations west core region, in charge of 16 installations in the northern North Sea. He does not talk big, but deals with huge numbers.

Fields he is responsible for include Gullfaks and Oseberg, which are also large. But Troll towers over them all. Its gas reserves are vast, and massive oil volumes have also been produced in a spectacular fashion from thin zones beneath the gas.

Awarded

The first part of Troll to be awarded was block 31/2. This was allocated as production licence 054 in Norway’s fourth licensing round in 1979.

Many companies had seen something big in the seismic data acquired from this area as far back as the early 1970s, but water depths and uncertainty were both great.

None of the fourth-round applicants had 31/2 as their first priority. Nor were there many companies capable of taming this Troll.

Shell was one of the players regarded by the NPD and the Ministry of Petroleum and Energy as competent and relevant. After negotiations, it was awarded the 31/2 operatorship on condition that Statoil (now Equinor) could take over when production began.

A wildcat well in the block proved a gas field whose dimensions exceeded all expectations. The reservoir pressure was so great that the Borgny Dolphin rig had to use two flare booms.

It was also clear that the massive discovery extended into three neighbouring blocks to the east – 31/3, 31/5 and 31/6 – which had yet to be awarded.

The Labour government under Gro Harlem Brundtland announced in 1981 that this acreage would go to Norway’s Statoil, Norsk Hydro and Saga Petroleum companies, with the first in a leading role.

These plans were modified after the Conservatives took office following the general election later that year, although a Norwegian-only solution was still the preferred option.

With the new government seeking to curb Statoil’s dominant position on the NCS, the issue unleashed considerable political dissension until the three blocks were awarded in 1983 as PL 085.

All three Norwegian companies were to have independent operator assignments in the exploration phase. Shell and the other foreign companies felt they had been reduced to spectators while domestic solutions were applied to the best fields.

Drilling in PL 085 confirmed the huge reserves and clarified that the bulk of them lay in the eastern area. It also became clear that large oil resources were present beneath the gas.

Plans

When Shell made its discovery in 31/2, it chose with Statoil’s support to regard this as a pure gas find – a view which coloured its first development plans. The oil was actually valued at zero.

The question was how such huge amounts of gas could be placed in the market. Before getting that far, however, challenges seen to lie at the frontiers of technology had to be overcome.

The biggest of these was a water depth of 300 metres. “We need a return ticket to the Moon,” Norske Shell technical manager Chris E Fay commented.

When Nakken now looks back, he emphasises that Troll has been a playground for technology development – with multiphase flow as one of the most important areas of progress.

The decision to build a single large production platform was initially based on processing the gas in situ. But it gradually became clear that this would make the structure too heavy.

No towout route would be able to handle its displacement. With Troll A due to sit on the seabed, its height was given by the water depth. But the topside weight could be reduced.

New documented multiphase flow technology allowed the process facilities to be shifted 66 kilometres from the platform to land at Kollsnes in Øygarden local authority, north-west of Bergen.

No unprocessed wellstream had previously been piped over such a long distance. Since then, this technology has been adopted to link Snøhvit in the Barents Sea with a processing plant 142 kilometres away at Melkøya outside Hammerfest.

Troll A still ranked as the world’s tallest structure ever moved by humans when it reached the field on 17 May 1995. Images of this offshore skyscraper attracted attention worldwide.

Forward-looking

Big tensions and rivalry between the companies in the two Troll licences eventually resolved themselves as rational and forward-looking decisions prevailed.

Where the NPD was concerned, Troll became its great trial of strength over good resource management. A crucial piece fell into place when it concluded that the aquifer underlying the oil and gas was in pressure communication.

That meant the four blocks formed a single reservoir system. The NPD was very concerned to ensure that the oil resources were saved, and Hydro was the first to grasp and act on this desire.

Disputes over the division of roles in the Troll area were finally resolved by making Shell and Statoil responsible for the gas and giving Hydro the job of developing the oil.

And the latter company was first off the mark, producing crude before the gas started to flow. Nor were the amounts involved insignificant – at peak, Troll yielded 440 000 barrels per day.

Over time, more than two billion barrels of crude have been recovered from Troll. That makes it one of Norway’s biggest oil fields.

This output is now in decline. When it was at its highest, however, it equalled Troll’s gas production in value terms. The latter had to be restricted over a number of years to maintain reservoir pressure for maximising oil recovery.

Now that this requirement has been met, gas output is rising. The combined approach means that Troll is the first Norwegian field to pass an overall production of five billion boe.

Even before Hydro started producing this oil, it had implemented the Troll-Oseberg gas injection (Togi) project by installing a subsea module with a single well on the field.

Gas from this facility was piped to the Hydro-operated Oseberg field nearby, where it could be used for pressure support to improve oil recovery and create greater value.

Nakken applauds the NPD and the government for their strong commitment to Troll, and sees it as a good example of public-private interaction to manage resources well and add value.

Geopolitical pawn

Thanks to its huge energy resources, Troll even became a pawn in a geopolitical game involving the Cold War and the direct attention of US president Ronald Reagan.

The latter was very keen to weaken the then Soviet Union’s capacity to increase its military strength. A key way to do this would be to reduce the cash flow from Soviet gas sales to Europe.

Reagan decided that Troll could provide an important alternative source of European supplies. An offensive was thereby launched to persuade Norway to bring the field’s reserves to market faster than new deliveries from the east.

Troll was raised as an issue no less than three times in the US National Security Council. But its development could not be implemented hastily.

Major resources were nevertheless devoted to getting the field on stream as quickly as possible – and not just to satisfy American great-power interests. The huge energy resources involved also had to find a market which could and would buy them.

Norway suffered a major gas-market setback in February 1985, when the UK government under Margaret Thatcher blocked a deal negotiated by Statoil with British Gas for Sleipner supplies.

Until then, the Norwegians had assumed that selling oil and gas would be easy at a time of rising demand and energy security concerns. Norway was, after all, a politically stable supplier.

Troll has made, and continues to make, a crucial contribution to Europe’s energy supply and security. It increases competition in the European gas market and provides an alternative to Russia.

But history repeats itself. President Donald Trump is now worried that more Russian gas is set to enter Europe via an expansion to the Nord Stream system through the Baltic to Germany.

Troll gas is sold in a market undergoing fundamental changes, with a shift from long-term contracts to a more short-term and competition-driven approach.

As part of its role as a state oil company, Statoil was responsible for sales negotiations on behalf of the licensees in Troll and other gas fields.

This monopolistic position came under pressure at a time of market liberalisation. New approaches prevailed, with company-based gas sales and third-party access to transport systems.

Where Troll was concerned, however, negotiations were pursued under the old system with a European buyer consortium in which Germany’s Ruhrgas played the main role.

The sellers were led by Statoil, with CEO Arve Johnsen in a dominant role. It had secured acceptance for its vision of “oil parity” when Statfjord gas was sold some years earlier.

That meant a unit of gas energy would receive the same price as a unit of oil. But the picture had changed when talks began on Troll gas.

First, the buyers generally took the view that high energy prices would be destructive for the world economy. In the mid-1980s, however, oil prices were under pressure and falling.

Second, Norway found itself in a squeeze because of the British refusal to take Sleipner gas. In these circumstances, the Norwegian gas sellers had to accept a substantial discount.

Troll received a price 40 per cent below the contract level for Statfjord gas – an outcome which sparked disputes between the companies and the politicians.

Despite these difficult circumstances, Johnsen and Statoil succeeded in getting the Sleipner gas included as part of the sales agreements.

While Troll could not begin to produce until 1996, adding Sleipner output made it possible to start deliveries as early as 1993. But that also ended up facing big challenges.

Just before the concrete gravity base structure (GBS) for the Sleipner A platform was due to be mated with its topsides, it sank in the Gands Fjord outside Stavanger.

An asset worth billions of kroner vanished into the depths. However, a quick reaction led to the rapid construction of a new GBS so that the gas could be delivered from the agreed start date.

Troll comes across as a great Norwegian industry adventure, which still has many years to run. For millions of Europeans, it is a story of daily energy supplies. For the companies and the government, the field represents bullions in revenues.